Friday, February 15, 2008

A Win/Win Proposal

Dion's announcement today, regarding infastructure funding, is a solid proposal that blunts any fiscal criticism. In a sense, Dion's idea represents the best of both worlds politically:
A Liberal government would spend any windfall surpluses beyond $3-billion on fixing Canada's failing infrastructure, Liberal Leader St├ęphane Dion promised Friday.

He said the first $3-billion of any surplus would be used to pay down the national debt....

If the Liberals were in government now, Mr. Dion's pledge would mean Ottawa would dole out as much as $7-billion to new infrastructure spending after the books had closed this current fiscal year. A planning surplus of more than $10-billion has already been projected for the year ended March 31, 2008, all of which the Tories have pledged to paying down the debt instead.

I like this proposal for a number of reasons. First and foremost, it offers a distinct contrast with the Conservatives. The Liberals demonstrate fiscal responsibility, acknowledging the primary need to pay down the debt, while pledging to invest in infastructure beyond that. Dion's proposal innoculates the Liberals from any criticisms that they won't be able to fund their promises, because the initiative only kicks in if there is a healthy surplus. Whether or not that surplus materializes in the future is debatable, so in a sense Dion's proposal achieves the political goal of recognizing the need, without a firm commitment to do anything.

It's a pretty basic idea, that Canadians will understand. You pay off your bills first, any remaining money in the bank is put against your mortgage and then if there is still more, you do some maintenance or renovations. Simple, concise, and best of all, immune from Conservative criticisms that your promises are fiscally irresponsible.

19 comments:

Billy Jack said...

Sorry, Dion's idea is a poor one. I think the entire surplus should be used to pay down the debt. How many billions over the years have been lost to interest payments? And at the rate Dion proposes, the debt will never be retired being a millstone that will be around the necks of our great-grandchildren.

Besides, infrastructure is under provincial jurisdiction, I believe. Let the provinces worry about the money.

Steve V said...

b j

Dion is paying down the debt here, but the idea acknowledges other needs. Our infastructure is falling apart, you can either deal with that now, or delay, and squander even more in the future. I would add, our debt to GDP ratio is steadily falling, we aren't saddling future generations in the way you describe.

Billy Jack said...

Yes, but isn't infrastructure a provincial concern? Why should the feds be involved?

I agree with you that our GDP to debt ratio is falling, but we are still in the red for about 1/2 a trillion. I would like to see politicians of all stripes work to aggressively get that number down.

Just my 2 cents worth...have a good one!

Scott Tribe said...

Governments don't just sit in office collecting taxes to do nothing with them, Billy Jack. Progressive-minded governments use some of the money they collect for the betterment of the society and to improve the welfare of others. That's what liberalism is all about (social liberalism of course, not neo-liberalism)

MarkCh said...

Given that the vast majority of infrastructure needs are in provincial jurisdictions, I would rather see the feds lower taxes, allowing provinces to raise taxes and fund their own infrastructure. This kind of intertwined jurisdiction reduces accountability, with no benefit to anyone except certain politicians.

Steve V said...

"I would rather see the feds lower taxes, allowing provinces to raise taxes"

This way you can ensure the money is allocated where you want. Also, good luck trying to convince the provincial governments on the optics of higher taxes, even if it makes sense- sort of like the GST arguments.

Mushroom said...

This year is 2008. Not 1993.

Reminds me too much of Chretien's Red Book, the public works project designed to get Canada back to work.

MarkCh is right on one thing. The money to invest in infrastructure will make barely a dent. This means you allow Private Finance Initiatives to complement the money governments invest in. In the end, construction companies and multinational banking corporations are the big winners.

The way to end this dependence on private finance initiatives is to raise taxes. I suggest Dion put in a surtax on individuals earning more than $80,000 a year to build a social welfare state Canada can be proud of.

Will it win votes? How about junking a "richer, fairer, and greener Canada" to "A Fairer and Just Canada For All"? Better slogan if you are running on a social democratic agenda.

Anonymous said...

"I suggest Dion put in a surtax on individuals earning more than $80,000 a year to build a social welfare state Canada can be proud of."


Tax, tax and tax. Is that the best you can do? 80G's isn't even that much anymore and anyone with any real wealth will just leave.

J said...

The Government already has a 7 year30 billion dollar infrastucture program.

Pay down the debt. Let the provences pony up the rest.

But it will make a good wedge issue.

mississaugajoan said...

Most infrastructure projects are done jointly with the provincial governments (50%, 50% split) and/or with municipal governments (33 1/3% federal government, 33 1/3% provincial government, 33 1/3% municipal government). As a result, $1 spent by the federal government becomes $3 in infrastructure/investment.

I commend Dion for expressing what would be in a Liberal budget rather than just criticizing the Conservative budget.

It means that someone in Ottawa is seriously planning for an election, and they should be commended for doing so.

Re: those suggesting we do not add any new expenditures so we can continue paying down the debt. In most circumstances I would agree with this suggestion, but we are entering (if we are not already) in a recession.

A government should/needs to spend money when in a recession, and save money and pay down debt when times are good.

Canada is the only G8 country that has been paying down it's accumulated debt every year for the past decade.

Gayle said...

I live in a province where our government was obsessed with paying down the debt, at the expenxeof everything else.

Now they are talking about going back into debt to pay for all those infrastructure needs that were neglected in order to pay down the debt.

Our schools are falling apart and our roads are crumbling.

There is no point ignoring our infrastructure needs, and suggesting we leave it to the provinces is simply poor management.

lance said...

Steve said, "This way you can ensure the money is allocated where you want."

The fundamental difference between conservative and liberal economics is where to spend someone else's money.

Gayle said, "Now they are talking about going back into debt to pay for all those infrastructure needs that were neglected in order to pay down the debt."

Gayle, that isn't just an Alberta thing, so don't go thinking you're province is special just cause you don't have to hawk health-care to pay for bridges. [/sarcasm]

Cheers,
lance

Steve V said...

"The fundamental difference between conservative and liberal economics is where to spend someone else's money."

Spending has increased 17% the last two years with this government. What were you saying again? ;)

lance said...

"some one else's money" i.e. what the feds give to the Provinces.

You implied forcing the Provinces on where to allocate funds.

Decentralized vs. centralized gov't.

Conservative vs. Liberal economics.

Steve V said...

"You implied forcing the Provinces on where to allocate funds."

You mean like the Eco money that Baird and Harper announced? Didn't Harper announce an infastructure expenditure with strings attached?

Lance, these are federal dollars, not provincial dollars. The federal government is a national institution, why is it so horrible to want to earmark funding? The provinces have plenty of latitude and tax points to act independently, but a nation needs nationals standards in certain areas. People that rail against this approach, fail to realize that we already have the most de-centralized federation in the world. If the federal government thinks we need an investment in infastructure, then they should have some say that the money actually goes to the need addressed. Seems pretty reasonable, but apparently the idea of a cohesive country is somehow distasteful to the tribalists.

lance said...

Yes, I mean precisely like the Eco fund and the gov'ts infrastructure plans. Just another example of the so-called conservatives being just another middle of the road 'tax and spend' party.

I'm sure we've been all through this before, if not you and I, then you with another de-centralist and I with another centralist.

We already know our arguments; you'll argue standards, I'll say standards aren't funding, you'll bring up health-care and equalization, I'll say lower taxes and let the provinces pick up the difference, you'll say that's unfair to the lower populations, I'll say the provinces should compete, you'll say it's a race to the bottom, I'll say fair competition . . . and on and on.

I won't convince you and you won't convince me.

Suffice to say I don't like paying for Quebec tax cuts or their shoddy built bridges, just like they shouldn't be paying for our pot-hole prone highways.

Cheers,
lance

Cyberwanderer said...

It's about time somebody help out the municipalities. It's ridiculous that the Feds are getting surplus while municipalities have to assume more and more responsibility. Their source of revenue is mostly property tax, so it keeps going up. This is not sustainable.

This plan would serve as a very good contrast between the Conservative and Liberal policy.

burlivespipe said...

Lance,
but the gov't you support and want re-elected is doing just that. Spending beyond others, handing out patronage appointments that qualify as amazing (various bagmen to positions they are 'qualified;^))' for), polling and focus grouping to new levels, and then shuttling wheelbarrows of cash for Quebec tax cuts.
To not assist the provinces in invigorating deteriorating structures, while also creating jobs during economic tough times, seems prudent, just as fixing a leaky roof when you've still got 10 years to go on a mortgage. But maybe you're just use to the drip.

Steve V said...

lance

If you follow your logic through, then why not just forget Canada, let the provinces become their own nations, and be done with it. That's where that philosophy ultimately leads, if you truly believe it. So 19th century, in my view the world is getting smaller, we don't have time for false tribalism, based on political opportunism for personal gain. A Premier is a narrow entity by design, why we take their musing on the state of Canada seriously is beyond me, their opinion is necessarily narrow, and the circumstances demand a contrast with the evil feds. People in Calgary face many of the same challenges as the evil Torontians, I know that because I've seen both first-hand. I just laugh at all the defining, the differences, its mostly psychological construct, there is nothing there except perception and the power of geography. The narrow people with agendas need a us vs them, they thrive on it, it creates a "team", they find unity in a common "opponent". It's so small, inaccurate, fictious. It's nonsense actually.