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15 Oct 08: Challenges for the Next Canadian Government

Edward Campbell

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Although we are more than a week away from the 14 Oct 08 general election, some of the important and difficult challenges facing Canada are already quite evident - beyond an economic crisis that is, hopefully, transitory in nature. We have discussed some of them in out own real issues thread but there are many more.

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from yesterday’s Globe and Mail,is an excellent article by Edward Alden on one of the many challenges facing the next government:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081003.wcoessay1004/BNStory/specialComment/home/?pageRequested=2
The Great Wall of the United States

EDWARD ALDEN

From Saturday's Globe and Mail
October 4, 2008 at 12:22 AM EDT

Stephen Harper has said that, if he is re-elected, he wants a "fresh start" with the new U.S. administration on dealing with the border, to see if ways can be found to reassure the Americans on security while easing restrictions that are causing costly delays for Canada.

John McCain, who made the unusual gesture of delivering a campaign speech in Ottawa in June, said he recognizes that the backups caused by new security measures "can pose a serious impediment to trade." Barack Obama has wanted nothing to do with Canada since a Canadian official embarrassed him by leaking one of his adviser's private reassurances over NAFTA, but he too is likely to be sympathetic to the Canadian concerns.

There is little reason, however, to think that dealing with border issues will be any easier after the elections in both countries; indeed, it is likely to become harder.

Canada and the United States long defined what it meant to have an open border. The orange cones that were placed at night across rural border crossings from Vermont to B.C. symbolized an extraordinary level of trust, rarely achieved by two neighbouring nations. That trust permitted ever deeper, and in some ways riskier, economic ties, from an automobile industry that grew up in virtual disregard of the border to a free-trade agreement that set rules since imitated on a global scale.

Since Sept. 11, 2001, we no longer live in a high-trust world. In the eyes of many Americans, 9/11 was a failure not of its foreign and military policies, or even of its intelligence agencies, but rather of its open borders. In seven years, the United States has doubled the number of its Border Patrol agents and tripled its enforcement expenditures and it is now deporting more than 250,000 illegal immigrants a year, all in the elusive quest for border security. On the Canadian border, it's known as "thickening"; on the Mexican border, it comes closer to warfare.

In the months after 9/11, some in the Bush administration turned to Canada in the hopes of building what they called "the border of the future" - one that would be open to trade and tourism but impervious to terrorists, drug smugglers and illegal immigrants. The virtual shutdown of the border after the terrorist attacks had been disastrous for the auto industry and the regions that relied on it, and both Ottawa and Washington were determined to prevent anything similar in the future. Tom Ridge, the White House homeland-security czar, had grown up on the shores of Lake Ontario and, as a former Pennsylvania governor, he understood the value of trade with Canada.

The result was the 2001 Smart Border accords, a laundry list of measures that was a remarkably cool-headed, sophisticated response to the trauma of 9/11. Its architects on both sides of the border believed two seemingly contradictory things: that the safeguards against terrorists crossing the border had to be maximized, but that barriers to legitimate cross-border traffic must be minimized for the prosperity of both countries. The way to do so was to "manage risk." By using modern information technologies and co-operating closely, the two governments would be better armed to recognize threats to security. Low-risk traffic — the commercial truck filled with auto parts or the nurse crossing daily from Windsor to Detroit — would be sped through, saving precious inspection resources that could instead be devoted to more suspicious targets.

SQUARING THE CIRCLE

That model was, and remains, the only way to square the circle of security and commerce, but the Smart Border Declaration has never quite delivered on its promise. There are many reasons why; most have to do with lack of trust. One promising idea, for instance, was to begin moving inspection facilities away from the bridges and other chokepoints. NEXUS and FAST lanes are a fine thing, but not if the backups are so long that preferred travellers must wait in line just to reach them. Ottawa had offered land inside Canada for U.S. "preclearance" facilities. But after more than two years, negotiations fell apart last year, although the Harper government was willing to take the politically risky step of allowing U.S. Customs inspectors to carry guns on Canadian soil. Washington, though, wanted its agents to have full powers under U.S. law to take fingerprints and make arrests inside Canada, a concession no sovereign country could offer. So we are left with the crowded bridges.

The new U.S. identification requirements under the Western Hemisphere Travel Initiative make considerable sense from a security perspective. It's hard to manage risk if you're not sure that someone crossing the border is who he says he is. But Canada's concerns over the implementation of WHTI have largely been ignored. And more is coming; the Department of Homeland Security is moving ahead to implement a law that will not only require Canadians and others to identify themselves every time they enter the United States, but every time they leave, too. The hope is that by embedding fingerprints and other personal data in remotely readable travel documents, these new security mandates will produce only minimal additional delays, but the technological complexities are immense. The only silver lining in the recession that is now likely to hit both countries is that cross-border traffic will fall further, allowing border inspectors some breathing room to work the bugs out of these new systems.

Canada has certainly tried hard to accommodate U.S. security concerns - probably too hard. After 9/11, for instance, Ottawa agreed to co-ordinate its policies on refugees with Washington. Canada has always been more generous than its neighbour in admitting refugees, but to assuage concerns that this could be a loophole for terrorists, Canada has since 2004 refused to consider refugee applications from anyone who originally lands in the United States. This decision has condemned many to languish for months in American prisons, due to new U.S. policies under which most refugee seekers, and their families, are incarcerated while their claims are considered.

QUEST FOR PERFECTION

But the measures the Washington is taking to harden its border have little to do with what Canada has or has not done to shore up it defences against terrorists. Canada is facing a tamer version of the same thinking that is leading the United States to build hundreds of miles of steel barriers on its Mexican border. It is the quest for perfect security.

Alongside the risk managers surrounding Mr. Ridge, there was a different, and more powerful, faction in the Bush administration that was convinced that protection from terrorist attacks would come only once the United States had taken total control over its borders. In part, the terrorism rationale was hijacked by those in the administration and Congress whose real aim was to crack down on illegal immigrants, but it had a certain logic: If illegal migrants can find holes in the border, how can Americans be sure that terrorists will not do the same? Turning that reasoning into reality, however, would be an unprecedented feat, especially for a big, rich country that attracts large numbers of immigrants. One former senior official in the Department of Homeland Security told me: "In the history of the world, nobody's ever secured borders. The Great Wall of China didn't work. It's never worked, and we are trying to do it." Despite the inauspicious historical record, he was supremely confident that his country would succeed.

It won't, and at some point Washington will need to reconsider, but a chorus of "we told you so" from north of the border will not be terribly persuasive. Instead, the next Canadian government will have to sit down with the next U.S. administration and gently try to nudge it back to the spirit of the Smart Border accords. Ottawa will have to try to persuade the new White House to separate the northern border issues of security versus commerce from the far more complicated southern border stew of drugs, gangs, corruption and illegal immigration. They will have to point out that a modern, global economy cannot function without a high degree of trust.

It will be a hard sell. The American public is scared, feeling betrayed over 9/11, over Katrina, over Iraq, over an economy that has delivered little to its middle classes, and now over a massive bailout of Wall Street financiers that will not save the homes or jobs of ordinary people. They are desperately seeking security, in whatever guise it is offered. At other such times in its history, the United States has turned inward, not recognizing that its openness is its greatest strength. Canadians, too, are less than likely to be in a generous mood after their election, as the economic downdraft from the United States will again raise long-standing questions about whether Canada's economic fortunes should be tied quite so tightly to its southern neighbour.

But making some effort to rebuild the waning trust is critical for both countries. The two nations have a long history of showing others what it means to co-operate across borders. The obstacles to doing so today are perhaps greater than they have ever been, but the stakes are higher as well. We know what the alternative is, and good fences do not make good neighbours.

Edward Alden was the Washington bureau chief of the Financial Times, and the newspaper's bureau chief in Toronto from 1998 to 2000. He is currently a senior fellow at the Council on Foreign Relations in Washington and author of The Closing of the American Border: Terrorism, Immigration and Security Since 9/11.


It has been said many times before but it bears repeating: for early 21st century America, security trumps trade and trade agreements.

For Canada, on the other hand, the challenge remains the same one we faced throughout the last century: how to profit from our lopsided relationship with the USA.

Both need to relearn the old lesson that Alden repeats: For each, “openness is its greatest strength.”

In the USA the Lou Dobbs faction of neo-isolationist, economically illiterate mouth breathers will scream “America First!” In Canada the loony-left, mindlessly anti-American, economically illiterate mouth breathers will complain that any sensible act towards establishing continental* borders is “knuckling under to Uncle Sam.” Both factions are wrong – but there is just enough of a tiny grain of truth and much more of popular myth (which is better than truth (see, e.g. peacekeeping)) in each position to give them huge credence in their respective populations.

Alden presents the challenge, clearly, as: ”the next Canadian government will have to sit down with the next U.S. administration and gently try to nudge it back to the spirit of the Smart Border accords. Ottawa will have to try to persuade the new White House to separate the northern border issues of security versus commerce from the far more complicated southern border stew of drugs, gangs, corruption and illegal immigration. They will have to point out that a modern, global economy cannot function without a high degree of trust.”

Despite the ongoing economic crisis, the USA remains a large, rich, nearby, secure (by laws) and friendly market – exactly the market we need for our prosperity. We need a true common market for goods, services and people. We, Canadians, can compete successfully with the Americans – and they with us – in such a market. But it requires a leap. Every good, every item in Canada must be ‘acceptable’ in the USA, every person in the USA must be ‘acceptable’ in Canada, and so on – in both directions. In other words, we need a common, continental border. We need to harmonize production and import standards and (especially tariff) regulations for goods and services - a task that is already about 95% complete, I have heard/read. Common immigration standards and the free movement of people might will be more difficult but need not be managed coincidentally with goods and services.

But it – a ‘smart’ but above all open border – is one of the first challenges with which new Canadian and US governments need to deal. It is an important issue for the USA - one of many, it is vital issue for Canada.


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* But, of necessity, excluding Mexico which, despite impressive progress, is not a modern, sophisticated, capitalist, liberal democracy in which the rule of law and the principle of equality at law have much sway.

 

Edward Campbell

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This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is, essentially, the Harper/Conservative position and one with which The Ruxted Group concurred:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081004.wafghan1004/BNStory/International/home
Afghan victory impossible to achieve, British commander says

JILL LAWLESS
The Associated Press

October 4, 2008 at 10:46 PM EDT

LONDON — The senior British commander in Afghanistan says that a decisive military victory there is impossible and the Taliban may well be part of a long-term solution for the country.

The Sunday Times newspaper quotes Brig.-Gen. Mark Carleton-Smith as saying that the alliance is not going to win the war.

He says the issue now is about reducing the war to a manageable level of insurgency that's not a strategic threat and can be managed by the Afghan army.

General Carleton-Smith says the alliance may well leave Afghanistan while there is still a low but steady rural insurgency.

He also said a deal with the Taliban might be on the table.

The British commander says that if the Taliban is prepared to sit on the other side of the table and talk about a political settlement, that's the sort of progress that could conclude the insurgency.

Although Britain and its NATO allies are engaged in a fierce campaign against Taliban militants in Afghanistan, British officials have voiced interest in trying to talk the Taliban into laying down their arms and joining the government.

On Saturday, the British government denied a claim that the U.K. believes the military campaign in Afghanistan is doomed to failure, after a French newspaper reported that London's ambassador to Kabul had said foreign troops added to the country's woes.

On Wednesday, France's weekly Le Canard Enchaine published what it said was a leaked French diplomatic cable recounting talks between Britain's Ambassador Sherard Cowper-Coles and a French official.

The newspaper said the French cable reported that Mr. Cowper-Coles had said Afghanistan might best be “governed by an acceptable dictator” and that the cable quoted him as saying foreign troops were adding to the country's problems by helping shore up a failing government in Kabul.

Mr. Cowper-Coles was quoted as saying that “the American strategy is destined to fail” and that the presence of foreign troops in Afghanistan was “part of the problem, not the solution.”

The prospect of a dictatorship “is the only realistic one and we must get public opinion ready to accept it,” the report quotes the alleged cable as saying.

The newspaper, a weekly publication known for its investigative stories, published excerpts of the cable, including a passage that quoted the British ambassador as criticizing both U.S. presidential candidates over pledges to send more U.S. troops to Afghanistan.

“It is the American presidential candidates who must be dissuaded from getting further bogged down in Afghanistan,” an extract of the cable published by the newspaper quoted Mr. Cowper-Coles as saying.

The newspaper said it had obtained a copy of the two-page cable, which it reported was sent from Kabul to Paris on Sept. 2.

It said the cable was written by France's deputy ambassador in Afghanistan, Jean-Francois Fitou, following his meeting with Mr. Cowper-Coles.

It said the cable was sent to French President Nicolas Sarkozy and Foreign Minister Bernard Kouchner.

French Foreign Ministry spokesman Eric Chevallier declined Saturday to comment on the alleged cable, refusing to either confirm or deny its existence.

However, Mr. Chevallier said the content of the alleged cable, as reported by the media, “doesn't correspond at all with what we hear from our British counterparts in our discussions on Afghanistan.”

Britain's Foreign Office said Mr. Cowper-Coles had held a meeting with a French counterpart, but insisted that the reported comments did not reflect the government's views.

Writing on his website Friday, Britain's Foreign Secretary David Miliband described the report as “garbled,” and insisted that Britain does not support a move toward a Kabul dictatorship.

“The future of Afghanistan is not about appointed dictators or foreign occupation; it is about building Afghan capabilities with the confidence of the Afghan people,” Mr. Miliband wrote.

A Foreign Office official, who demanded anonymity to discuss the purported leaked cable, said the claim that Cowper-Coles advocated a dictatorship in Afghanistan was “utter nonsense.”

The official said the comments attributed to the ambassador were likely to have been a distortion, or exaggeration, of what he had actually said in the meeting.


Many people will recoil from this thesis – as did Jim Davis, father of the late Cpl. Paul Davis. But, while Ruxted agrees that we should stay the course until sensible’ victory conditions’ are obtained, those conditions are, essentially, what Brig* Mark Carleton-Smith describes: the Afghan people being able to make their own social and political decisions – even decision with which we will disagree – in their own ways, subject only to not, once again, making their state a de facto terrorist/enemy base; and the Afghan government being – minimally - able to look after its own security.

Canada ought not to leave Afghanistan, not in 2011, perhaps not until, as Thucydides said until 2015 or later, But, our current mission, may – arguably should - change quite radically.

The challenge for the next government is to present a clear, coherent strategy to Canadians – not just for Afghanistan but for Canada’s place and ‘role’ in the world.


--------------------
* Note to media: here are no brigadier generals (Brig.-Gen.) in the British Army. The rank is brigadier. There were brigadier generals (in the British Army) during the First World war but, around 1920, here was a great hue and cry in the British parliament re; the Army being “all bands and brigadier generals” or something like that. The army responded, by renaming the brigadier generals as brigadiers and rebadging them to look more like colonels. Voila! Problem solved. 

 

The Bread Guy

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<slight hijack>

And if you want to see how other media outlets picked up and covered the same comments, check here:
http://forums.army.ca/forums/threads/80304.0.html

</slight hijack>

Back to your regularly scheduled thread....
 

Edward Campbell

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It might be fun to imagine some of the goings-on in Official Ottawa later this fall, after 15 Oct 08.

It’s early in the morning, on a dull, wet late fall day, in the office of the Clerk of the Privy Council in the Langevin Block, an imposing, even handsome building across the street from Parliament Hill.

The Clerk has invited the Deputy Minister of National Defence for a working breakfast. It’s just the two of them, none of the other very senior officials from PCO or DND are present. The two are old friends; back in the ‘80s they were bright young economists in the Department of Finance - they have not worked together since but each has a high personal regard for the other. It’s a fine breakfast; the Clerk’s personal assistant has ensured that each is getting just what he likes, the way he likes it. Breakfast is served at the small conference table in the Clerk’s office. The conversation goes a bit like this:

Clerk (hereafter C): “Thanks for coming, name, I want to give you a heads up about the new government’s plans and priorities.”

Deputy Minister (hereafter D): “I appreciate that – I imagine that we are all going to have to adapt to some pretty major shocks.”

C: “Afghanistan is still a bit of a bleeding sore for your Department. The PM is adamant: we are ending the combat mission – the 800 or so soldiers doing the actual fighting and dying are coming home in 2011. But we are not leaving Afghanistan – not for quite a while. The PM understands that rebuilding Afghanistan is a Canadian commitment and it is one that he wants us to do well.  I can easily imagine that we will still be in Afghanistan, in a nation building role, in 2021 and even beyond.

What will change is what we are doing, where we are doing it, with whom we are doing it, who reports on it to Parliament and the public and, to a lesser degree who is doing it. We will keep the PRT in Afghanistan but not in Kandahar. Name (a very senior official from Foreign Affairs) is in Brussels today negotiating a move of the PRT – we will want to work with European or Australian, maybe NZ troops. The PRT will have more and more civilians added, but it will still be a military unit, with a military commanding officer and it have a military security force – I’m guessing that 100 to 150 soldiers will be enough. There will be a base – much smaller than Kandahar Airfield, with a large civilian contracted work force. I expect that you will have about ⅓ of the force that’s here now – maybe 850 people, all up. Finally, the Minister of Foreign Affairs will answer for the new mission in Parliament.

The biggest job for DND in 2011/2012 and 13 will be to retain more of your really great people and recruit and then train thousands of new people. Your Army will get another operational pause but this time there must be something to show for it.

During the Army’s operational pause the Navy will have to do more, to keep up Canada’s reputation for ‘punching above its weight’ in the world.

We see the rebuilt Army as having three ‘forces’:

1. A Defence of Canada Force which will also do about half of the ongoing PRT work and will look after Haiti which, we believe, is sure to require more help, from time to time, for decades. It’s obviously something you need to discuss inside your Department, but: The political guidance is that the Defence of Canada Force is to be centred on Valcartier;

2. A light, quick reaction force able, on short notice, to send a battle group, maybe supported by a six pack of fighters, anywhere in the world on very short notice. I’ll want to hear from you on what degrees of notice are reasonable under varying circumstances; and

3. A heavy force – one that can produce and sustain battle groups like the one we have in Afghanistan for years and years, far away from home.

The PM has been briefed by name and name (two highly regarded international strategic specialists) and they scared him nearly witless. He is convinced that we need bigger, better armed forces – soon. This is your chance to reshape DND and the Canadian Forces into a modern, flexible, effective tool of national policy. You have support from the very top – from me and from down the hall, from the PM, himself. You’ve got to make it work – within budget.”

D: “Make what work, name?”

C: (Chewing on his breakfast) “The total transformation of the whole place – the Department and the military. I don’t think Rick Hillier, for all his vision and imagination, ever understood what real transformation is all about. I want an effective and efficient defence organization – your part and Natynczyk’s part, too. You need more people, over all, but they need to be better organized and better utilized – you can start by telling the military that it is time that they learned how to manage and how to command and control efficiently. I know all about the dilemma of small forces and minimum HQ staffs and so on but, with respect to the uniformed people, there must be better ways – if they cannot find them then you and I may have to show them how to do it, and they wont like that one little bit!”

D: “Within budget? You’re kidding me, right? The ‘Canada First Defence Strategy’ is a bad joke. We - you, me, the PM and the whole government - are actually planning to shrink my budget over the next 30 years, as a share of GDP. You’re asking me to empty the ocean with a teaspoon.”

C: “Settle down, name, you’ve won your big war. Your new, ‘Canada First’ budget is for routine, ongoing expenses including one major – but not as big as Afghanistan, and one minor overseas operation and several small detachments on UN duty and that sort of thing. Unscheduled, unforecasted operations, like Afghanistan, will be funded by the centre – by me and Finance. Your people have said that you can grow and live with that. It’s not everything you wanted – you still have to fund some operations out of your budget – but it’s more than I thought you would get. There’s enough money there for thousands of new people, new ships, new aircraft and most of the other new kit your admirals and generals say they need.

D: “Well, thanks, name, that’s good news. We’ll find ways to manage efficiently and effectively.”

C: “OK, good; now here’s what scares the PM: The people over at DFAIT and my people in the Foreign/Defence, Security/Intelligence Secretariats and in the International Assessment Staff think that West Asia and the Middle East is going to remain a very serious problem – one with nuclear peril. They tell us that Africa, especially Sub-Saharan Africa is going to blow up into a series of, first, and then one great big social, political, economic, humanitarian and military crisis. The scale of human suffering may be more than you and I can really imagine – millions and millions dead, chaos, disease and then more and more killing.”

D: “I’m hearing similar things in my office – quiet words, for now, but really, really frightening.”

C: “Our people say we have to be ready before 2015. Ready means having bigger, better combat forces that can go, quickly, to some of the most difficult and remote places in the world, sustain themselves there and, simultaneously, fight some really bad guys, do some nation building and reconstruction, and some old fashioned, blue beret style peacekeeping.”   

D: “How much bigger?”

C: “People are guessing that we may have to have 2,500 or more combat troops plus all the appropriate support/logistics and others forces. We keep hearing that you are straining to sustain a force of 2,500 in Afghanistan. My guess is that you’ll need to sustain more than twice that number in Africa.”

D: “OK, that’s a fair planning estimate. And we need to have that by 2015, right?”

C: “Right. The retention, recruiting and training programmes have got to work or the military will have failed the country. We, here in the centre, will provide enough, maybe just enough money, but the military has to get its wits about itself and do the damned job. There can be no excuses this time. If they cannot retain and recruit the people we need then I’m go to say, “Failure of leadership!” to the Prime Minister. Tell Natynczyk that’s a promise, not a threat.”

D: “Will do; but he’s a good guy, you know, he’s on our side. He understands efficiency, but it’s a big, slow, awkward machine – a big ship to steer. So is my side of the organization. I hear you on efficiency and effectiveness but I’m going to have to put blood on the floor, civilian and military blood, to make the kinds of changes you and I want.”

C: “I know, name, it’s gong to be tough. But the world is getting more and more dangerous and you and Natynczyk and your people must be ready for real, deadly threats. It’s too bad you’re all in this hole, ’tit Jean Chrétien really put the fiscal boots to DND and the CF and I understand how hard it is to dig your way out of the hole he put you in but you must do it. Start with leaner, meaner, tougher management and command teams. I’ll back you up when the civil service unions scream bloody murder; tell Natynczyk to do what he has to do to get the military staff to work – I’ve seen the numbers, I cannot believe that the defence headquarters is so HUGE.

I’ll take some actions here: we’re working on a new defence procurement system, on the lines of the Australian model. That will save people, time and money. I’ve already told name at Treasury Board that she must streamline the defence spending approval process so that you get what you need when you need it – so long as your budget will support it.

I cannot promise you that your budget is sacrosanct. This financial crisis is priority one, priority two and priority three around here these days but you, name and DND are the PM’s priority four. You may get cut, if our tax revenue is cut too deeply, but you wont be slashed like Chrétien and Martin did back in the ‘90s – you’ll take the same cuts as other departments, maybe even smaller ones.”

D: “Fair enough; that’s all we can ever ask for.”

C: “Well, that’s all I have for you. Thanks for taking the time to come and see me. Good luck.”

D: Thanks, name, and thanks for the breakfast and the guidance. We, Walt Natynczyk and I, will do our very best.”



Edit: punctuation
 

Edward Campbell

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Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail are some thoughts on tomorrow:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081014.election14/BNStory/politics/home
Leaders face tough fight beyond finish
Economic turmoil, internal rifts take toll on campaigns; today's outcome may put parties' top jobs in jeopardy

BRIAN LAGHI

From Tuesday's Globe and Mail
October 14, 2008 at 12:36 AM EDT

Canada's political landscape will undergo fundamental change after today's federal election, with the next government forced to focus on an economy in turmoil and at least some party leaders wondering about their future.

Regardless of who wins the vote, deep economic anxiety will shape the parliamentary calendar for the foreseeable future, compelling whoever becomes prime minister to push aside other priorities. That winner will also be dealing with a distracted United States and a new president who will spend much time coping with the country's own financial crisis.

If Stephen Harper retains the prime minister's chair, Canadians can expect to see a significantly shuffled cabinet. The Prime Minister lost one of his most steady hands when Foreign Affairs Minister David Emerson decided not to seek re-election, and he will be searching for Quebec representation at the cabinet table, which may be difficult, according to polls taken near the end of this campaign. Finance Minister Jim Flaherty may also be moved after senior business leaders criticized his handling of the financial crisis and because of his rocky relationship with Ontario Premier Dalton McGuinty.

“The [political parties'] campaigns have been broadsided by the meltdown in the U.S. and as a consequence the [election] campaign has not set up any kind of a government response to this,” said Roger Gibbins, head of the Calgary-based Canada West Foundation. Prof. Gibbins said it was odd that the parties did not propose policy options for the campaign's biggest issue. Depending on today's outcome, the leaders of the NDP, Conservatives and Liberals could all find their jobs under review.

Liberal Leader Stéphane Dion is under particular pressure to come up with a surprising performance today, given that his party has steadily lost support since he took over and looks the most likely to lose seats. At this point, only Bloc Québécois Leader Gilles Duceppe seems immune from internal difficulties.

Some argue that Canada could be in line for a coalition of the Liberals and the NDP, should a Harper minority government falter in the House of Commons. The other possibility is that Canadians get sent to the polls again after a short period of time, should the opposition parties see Tory support flagging.

With polls suggesting that the Tories are headed – at the very least – for a minority government, party leaders spent much of yesterday in a final effort to woo voters in key swing ridings. Mr. Harper was in the Maritimes and in British Columbia to push the argument that his party is best placed to run the economy in difficult times, while Mr. Dion flew from the East Coast to the West Coast to try to lure Green Party and NDP votes. Meanwhile, NDP Leader Jack Layton tried to eat into Liberal support in Toronto, while Mr. Duceppe argued that Quebeckers can prevent a Conservative majority.

Prof. Gibbins said Mr. Harper's difficulties in Quebec could sow problems for him within the Conservative Party if he doesn't win a majority today. He said that core Conservative supporters in the West could become impatient with the party's courting of the Quebec vote.

Moreover, any reduction in seats the Tories might experience in Quebec would leave the country without a national party that has a strong presence in all the country's regions, he said. The number of Quebec MPs considered ministerial material threatens to shrink after today, an outcome that could force Mr. Harper to pull back on such ideas as his pledge to restrict the power of the federal government to spend in areas of provincial jurisdiction.

Liberals said Mr. Dion will have a large hill to climb if the party doesn't win at least close to the 95 seats it held at dissolution.

One Liberal said that Mr. Dion will need to win at least 28 per cent of the vote and 90 seats to make the case that he should stay on as leader. Twenty-eight per cent was what was earned by former Liberal leader John Turner, who won only 40 seats in the 1984 election, when there were 282 seats up for grabs, 26 fewer than today.

“If [Mr. Dion gets] under 90 seats, then he has to get out before the mob gets him,” said the Liberal source, who asked for anonymity to avoid reprisals.

Mr. Harper's difficulties during the campaign should have produced a strong opportunity for a Liberal victory, the party member said.

Mr. Layton's potential problems stem from the high bar he set for himself when the campaign began. Mr. Layton went after Mr. Harper rather than Mr. Dion, an effort to polarize voters between his party and the Tories. However, polls suggest that Mr. Layton is only modestly ahead of his party's performance in 2006, and he will have difficulty running such an audacious campaign next time around if he isn't seen to have created momentum toward eventually replacing the Liberals as the Tories' main opposition. Mr. Layton earned 17 per cent of the vote in 2006 and the party is hovering at about 20 per cent today. Although the NDP may well pick up seats, it will not be the breakthrough it had envisioned if the party doesn't break past its high of 43 seats, won in the 1988 campaign.

Mr. Layton has said during this campaign that he is willing to entertain working with other parties in a minority Parliament. But Prof. Gibbins warned yesterday that an NDP-Liberal coalition backed by the Bloc could prompt national-unity problems.


If, and it is a HUGE IF the market found its ‘bottom’ last week then, aside from one more rough year (2009), this will not be a bad time to govern Canada and Dion and Layton might want to form a coalition. But, as I have mentioned before, and as Prof. Gibbins notes, while it is fair to for the Liberals and NDP to join with the Bloc to defeat the government, I don’t think Canadians will support any BQ participation in a government. Still, the Liberals and NDP might be able to govern for a while with tacit BQ support – until the Bloc’s demands become too much, as they certainly will.

Most likely, however, the Liberals are only gong to get 25-27% support and Dion will be on his way out and Layton will not want to form a coalition with a party in transition and the Liberals will not want to topple Harper until they have a new leader – by which time things may be looking better and parliament will have been in session long enough for Harper to demand that the GG give him another election.

With regard to Harper’s cabinet: he should still have a few “stars” like Stockwell Day – who has done surprisingly well in the public safety portfolio, James Moore, Jay Hill, Diane Ablonczy, Jim Prentice, Jason Kenny, Laurie Hahn and so on, across the country to Peter McKay. There is enough talent to fill the key ministries: finance, foreign affairs, justice, treasure, trade, industry and defence. 
 

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Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s National Post is Don Martin’s analysis of last night and tomorrow:

http://www.nationalpost.com/news/canada/election-2008/story.html?id=882329
Tories get another minority, but a stronger one

Martin, National Post

Published: Tuesday, October 14, 2008

CALGARY -- The Calgary convention centre crowd was strangely muted until their leader took the stage, party faithful clearly disappointed at finishing just shy of absolute power.

They needn't fret. The Conservatives have won a majority in political power if not in name.

Prime Minister Stephen Harper finished close to his dream of painting half the Commons seats a dark blue on Tuesday night with 143 seats, less than a dozen shy of his end-to-dysfunctionality control goal for Parliament.

Riding an unexpected jump in economy-spooked Ontario's support, which gave them six new seats ringing the Liberal's Toronto fortress, the Conservatives are now set to lead the an absolute-power minority, perhaps the strongest in history.

To the relief of campaign-weary Canadians, who voted their displeasure with the lowest voter turnout in history, this result ends the threat of another election for two years or more.

With the Liberals a fading force, losing popular vote in four consecutive elections, and a do-over leadership convention on the horizon for 2009, Mr. Harper will have an even weaker Liberal opponent to tackle with even less money to fight back.

His crime and economic agenda can confidently run roughshod over the Liberals, whose defining position is going to be the fetal curl until the Official Opposition gets its act together, which could take years.

There will be grumbles that Mr. Harper had his three strikes at elevating the Conservatives into the majority stratosphere and has hit an electoral ceiling of voter support.

There will be people who argue breaking the spirit of his own fixed election laws and squandering $300-million for an election when only about three dozen seats changed hands was a waste of time and effort.

And there's bound to be a backlash against Quebec's fickle election voting behaviour, embracing do-nothing Bloc Quebecois while denying the Conservatives a critical payoff.

That may well be the big aftershock of this vote -- how a minuscule arts funding cut and an optional youth sentencing provision could derail the Conservative's cruise-control to a majority, this after the government crafted so many policies and programs to appease Quebec.

The next time the prime minister advocates a Quebec-only benefit or directs great gobs of political payola toward that province, he will face grinding-teeth objections from inside his western base.

But Mr. Harper's leadership is obviously secure given the strong results with apparent gains in every other region of the country.

He can, if he wants, take a fourth grasp for a supersized mandate, although given a victory speech that basically echoed the agenda he left behind to force the election, might not be necessary to accomplish his goals.

The discipline of power and Mr. Harper's legendary control tendencies will keep any disgruntled MPs with leadership ambitions cowering in the corner until the prime minister decides to leave.

The same cannot be said for Liberal leader Stephane Dion. He had competition from defeated Green leader Elizabeth May for the night's biggest loser, but at least Ms. May lost a seat she couldn't win and her party's share of the vote went up.

Mr. Dion had no such comfort to fall back on after losing 19 seats to finish below what even John Turner posted in 1988. He lost Atlantic heavyweight Robert Thibault and Toronto maverick Garth Turner to the Conservatives, while giving his rivals a toehold on P.E.I. for the first time in more than 30 years.

The third minority in a row opens up multitudes of options as Canada's political parties regroup over the election post-mortems to see if it's finally time to form a coalition of the willing on the left to finally challenge Conservatives settling in for a long run in power.

Mr. Dion cannot last, of course. He may try, insisting he's no quitter, but if he refuses to leave voluntarily he will suffer the same mutiny of caucus support experienced by former Canadian Alliance leader Stockwell Day in 2001. At best, he's a marker holding a symbolic leadership until a convention to crown his replacement can be organized. I'm betting he's gone within a month, replaced by interim leader Ralph Goodale.

New Democrat Jack Layton, for his part, can claim better than expected results and will stand pat, waiting for his next deluded run to become prime minister. He was in danger of losing his only Quebec seat, thus getting rid of a wannabe leader Thomas Mulcair, and at this writing had a shocking lead for an Edmonton, where caucus chair Rahim Jaffer was behind at press time.

He also deserves considerable credit for resonating with voters with hard-targeted message on jobs long before the rest of his opponents grasped the ballot box issue.

And so, with another minority the ultimate result of this oddball dirty campaign, the question remains: Has the dysfunctionality of Parliament that prompted this election been resolved -- or merely extended?

dmartin@nationalpost.com

National Post


Notwithstanding Danny Williams all three national parties are competitive in Atlantic Canada. It is not a Liberal fiefdom. Conservatives can win ⅓ of the seats there.

Harper managed to hold on to 10 of the Conservative’s Québec seats. There are, now, four Québecs:

1. Montréal – an allophone, multicultural enclave with 15± seats (more than six of the ten provinces) that remains, for now, a Liberal stronghold – but the NDP made an inroad;

2. Small city Québec – the Québec City area and the Eastern Townships where the Conservatives do well. There are 15+ seats there;

3. West Québec – Gatineau and the Pontiac, where all four parties are competitive, there are 5 ridings there; and

4. Rural Québec – 40 ridings, more seats than in BC or Alberta, which is dominated by the BQ.

It seems to me that, for the next few elections, Harper’s Conservatives are only competitive in 20+ seats. Their ambition must be 10 or 15 with probably none in Montréal. His policy towards Québec needs to be to appeal to ‘small city’ Québec where both law and order and the anti-culture stance did no real harm

Ontario is up for grabs. I think the Liberals have a ‘lock’ on only 20 seats and I think another 10 ‘belong’ to the NDP. That leaves 75 seats in which the Conservatives are competitive. They got 50 this time, 60 is within each. Neither ‘law and order’ nor the ‘culture cuts’ did any appreciable arm in Ontario.

That makes 105 seats in Central/Eastern/Atlantic Canada (out of 213) in which the Conservatives are, at least, competitive, they won 71 of those 105 this time out.

There are 95 seats West of Ontario. The Conservatives are competitive in 80 of them; they won 72 of those 80 this time.

Big gains in Ontario and in BC came from the courting of the multicultural ‘community.’

All that to say that I think Don Martin is right:

Harper has a new ‘mandate’ and, despite what Bob Rae and Jack Layton are saying to every microphone with range about holding him ‘accountable,’ he will have an effective majority for 18 months or more;

Dion must go – but it’s not obvious that either Ignatieff or Rae have broad enough support in the Liberal Party to be the ‘leader’ who can unite the party and beat Harper in, say, 2010 or, maybe, even 2011. The Trudeau/Turner and Chrétien/Martin ‘wars’ still rage – and an Ignatieff vs. Rae, right vs. left war may be is the last thing the Liberals need. Several morning radio news reports suggested that John Manley might want to jump in, for a few years, to oversee the restoration of Liberal fortunes.

Caveat lector: I know John Manley; I like and respect him, too.

I think he could reunite the Liberals and aim them towards a more traditional liberal and Liberal space in the political spectrum. But: he’s old; not as old as either Ignatieff (born in 1947) or Rae (1948) but older than Harper (1959) or Jim Prentice (1956) in an era that positively worships youth. Bigger BUT: he might just be another St Laurent: someone Canadians actually ‘like’ (they ‘liked’ Mike Pearson and Jean Chrétien, too) but, generally, Canadian PMs (Diefenbaker, Trudeau, Mulroney and Harper) are not much liked, even when some Canadian adore them. St Laurent parlayed ‘like’ and good, solid administration into several years of Liberal power just when Canadians were truly sick and tired of the Liberals under Mackenzie King.

Now, there will be a faction in the Liberal Party of Canada that will want a new, English leader, who can serve for about five years, hopefully (for Liberals) winning a minority government in 2010/11 so that, in 2013/14 Justin Trudeau (born 1971) can perform well as a minister and then take over (from an ‘old’ leader) as leader/’saviour’. It’s more hope and dream than real ambition – for now. Ignatieff or Rae are the best choices for the Trudeaumaniacs.

But there are other contenders: Martha Hall Findlay (born 1959, same year as Harper), a ‘right’ wing Liberal, and Gerard Kennedy (born 1960), a ‘loony leftie,’ for example who would perpetuate the Trudeau/Turner and  Chrétien/Martin wars for another generation and frustrate the ambitions of the Trudeaumaniacs.

In any event: Harper has time to rebuild his campaign team, to govern Canada through the economic crisis and to win a majority, albeit not a large one, in 2010/11.

 

a_majoor

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I suspect the time factor can derail the "best laid plans". Mr Dion will have to be shown the door (or carried out) quickly lest there be a destructive bout of infighting within the party, while a standoff between Rae and Ignatieff will also lead to destructive infighting. As well, both Rae and Ignatieff have baggage which can negatively affect them both inside and out: Rae's disastrous tenure as Premier of Ontario and Ignatieff's perceived "pro American" bias based on his writings and works (all produced in the United States where he has been for the bulk of his adult life). On the other hand, the party and leaders mired in debt (something the MSM seems to conveniently overlook), which tends to limit options. The party might be frozen in place without funding to carry on day to day operations.

Since the Liberals still do not seem to have realized they have no coherent ruling philosophy, the next step might be for them to draft the "young Dauphin" posthast to stem the infighting and try to capitalize on the magic of the Trudeau "name" as a counter to the anti charismatic Harper. (This seems a bit odd, since my personal impressions of the Young Dauphin and Prime Minister Harper are in opposition to the perceived realities; then again after sitting through a dull and uninspiring speech by young Trudeau or meeting the Prime Minister does tend to strip off the caricatures the MSM creates of these people).

Given the lack of charm, experience and accomplishments of the young Dauphin, I expect the Liberals might learn the true meaning of "be careful what you wish for".
 

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This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, not Afghanistan, not Africa, is the first, big problem that will confront the new government:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081016.wrecession1016/BNStory/Business/home
BMO projects Canadian recession

HEATHER SCOFFIELD

Globe and Mail Update
October 16, 2008 at 3:30 PM EDT

OTTAWA — A second big Canadian bank is now forecasting a recession.

Bank of Montreal said Thursday Canada's economy will contract in the final quarter of 2008, and the first quarter of 2009, meeting the popular definition of recession.

“Canada cannot escape the knock-on damage of not only the U.S. recession, but also the wealth destruction arising from the plunge in our stock market and the slowdown in our housing markets,” chief economist Sherry Cooper said in a commentary.

Since commodity prices are being pulled down by a drop in global demand, Canada's energy sector can no longer be counted on to support the Canadian economy, she said.

“The boom has turned to bust. Canada, too, is headed for recession and our government will awaken to the need for deficit spending.”

BMO joins the Bank of Nova Scotia in forecasting an imminent recession, as well as economists at the University of Toronto, among others.

Still, the Conference Board of Canada, Royal Bank of Canada, forecasting firm Global Insight, and Toronto-Dominion Bank have all recently updated their expectations for Canada's growth, and figure the country should narrowly avoid a recession.

They're all in the same ballpark, however. The recession forecasters are not expecting a deep downturn, while the growth forecasters aren't expecting much growth.

For its part, BMO Nesbitt Burns forecasts a 1.7 per cent annual pace of growth in the third quarter for Canada, but a 0.7 per cent contraction in the fourth quarter, followed by a 0.5 per cent contraction. Growth should resume, but barely, in the second quarter, with a 0.6 per cent pace of expansion.

In the United States, BMO sees a 0.8 per cent contraction in the third quarter, a 1.8 per cent decline in the fourth quarter, a 0.6 per cent dip in the first quarter, and finally a bit of growth in the second quarter, at a 0.5 per cent annual pace.

In Canada, Ms. Cooper said, “we have a very sound banking system, and far more prudent households, but we are fully globalized in our financial and economic dealings. Our recession will be milder than in the U.S. and other countries with housing bubbles, but we should expect challenges through much of 2009.”

It will take years for the world to adjust to reduced leverage, she added, and the United States will no longer pay for its Middle East oil purchases with a huge current account deficit financed by China.

“The current crisis will mark the end of an era,” she said.

The sharp slide in stock markets around the world reflects market players waking up to the fact that banks and their liquidity and solvency issues are just one part of a pending global slump, Ms. Cooper said.

“Unfortunately, the likelihood of a protracted and deep recession in the U.S. is high, with the rest of the world mirroring the U.S. in varying degrees,” she said.

In Canada, no province will be left untouched, said economists at Toronto-Dominion Bank in a report on Thursday.

Central Canada is faring the worst, but the Atlantic provinces don't do much better. Even the West will see subdued growth, with only Manitoba and Saskatchewan seeing more than 2 per cent growth in 2009.

“Growth rankings arguably matter much less when nearly everyone is stuck in the slow lane, as is the case this year,” said TD economist Pascal Gauthier.

The Bank of Canada does not have a recession in its official forecast for Canada, but is widely expected to significantly slash its forecast for Canada next week when it releases its quarterly outlook.

The C.D. Howe Institutes monetary policy council recommended Thursday that the central bank lower its benchmark overnight rate by half a percentage point to 2 per cent. Royal Bank of Canada said it expects the central bank will cut rates by half a point.

The central bank cut its key lending rate by a half-percentage point last week, in tandem with central banks around the world.

The Bank of Canada has, in the past, stressed how beneficial high commodity prices have been for Canada's income, even while output has stalled. But falling commodity prices have no doubt changed that kind of optimism.

Still, the central bank may have some lingering concerns about inflation, said economist Michael Gregory at BMO Nesbitt Burns. That's because the dollar is now so low that imports will feel more expensive to Canadian shoppers.

But deflation is the theme of the day in the United States for now, with consumer prices softening significantly and expected to drop outright in coming months.

“Inflation pressures across the world are set to fade rapidly over the coming months,” said analysts at London-based Capital Economics. “Indeed, with oil prices plummeting, food prices set to fall and much weaker levels of demand and activity likely to create large amounts of spare capacity, some economies could be on the road to deflation.”

Even the economists who say we will not go into recession tell us hat growth will be small and slow and government revenue will fall. The Conservatives will, first, want to cut expenditures and it will be hard, politically, to cut social programmes and then ask the Grits and NDippers to pass the budget. Defence spending may well be cut – although the government will doubtless promise to meet its long range Canada First Defence Strategy budgetary goals.

 

GAP

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Actually, I wouldn't count on anything over the next year to year and half.....we are going to get walloped hard...
 

a_majoor

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WRT the economy, I think the various nostrums being floated or practiced now are dangerous nonsense. Nationalizing the banks or the debt will further distort the economy and lead to inflation, with many negative effects that will spill over our borders no matter how insulated and well run our internal economy is. Someone needs to take the lead with a more radical approach that restores liquidity and confidence without breaking the bank. My prescriptions for Canada:

a. Eliminate business income tax entirely. Business does not pay tax anyway, they just pass on the costs to consumers. Dropping the tax will free up massive amounts of resources to retool, pay off debts or whatever else the owners see fit, and give the overall economy a huge boost. The political downside can be contained by pointing out that every business and region will benefit without prejudice or special favor, and the amount of funds released to the productive economy will create many new jobs (the $50 billion that Jack wanted to take back is the resources to create 1,000,000 new jobs. That's a lot of kitchen tables! I don't have the figures for how much the Federal government receives in business income tax, but it is probably in this order of magnitude (I actually believe the $50 billion was a cumulative figure, but never could get to the bottom of that).

b. Institute a single tax (AKA flat tax). Eliminating all loopholes, exemptions etc will make revenue collection much easier, and also deflect criticism from the Left. As well, it can free up an estimated $3 billion in compliance costs to Canadians, who pay lots of money and take lots of time working out their taxes. More money in the productive economy pot.

c. Eliminate corporate subsidies to pay for "a". Actually, given the corporate world will get a huge boost from the elimination of business tax, this is a fair trade off. As well, by painting the elimination of the tax as the way of assisting all business, the calls for corporate subsidies to "selected" industries can be muted.

The Prime Minister has demonstrated that he is a skilled political tactician and "could" take steps to implement this program even with a minority government. Inviting selected Liberal, BQ and (gasp) NDP members to cross the floor and join a "national unity" cabinet will certainly provide the horsepower and votes, although this particular plan would have to be sold two different ways to appeal to the business wing and business minded members of the Liberals and BQ, while the direct benefits to the working Canadians would have to be heavily emphasized to the NDP. (The fact this plan can actually satisfy both imperatives just shows the power of classical economics)
 

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Thucydides said:
WRT the economy, I think the various nostrums being floated or practiced now are dangerous nonsense. Nationalizing the banks or the debt will further distort the economy and lead to inflation, with many negative effects that will spill over our borders no matter how insulated and well run our internal economy is. Someone needs to take the lead with a more radical approach that restores liquidity and confidence without breaking the bank. My prescriptions for Canada:

a. Eliminate business income tax entirely. Business does not pay tax anyway, they just pass on the costs to consumers. Dropping the tax will free up massive amounts of resources to retool, pay off debts or whatever else the owners see fit, and give the overall economy a huge boost. The political downside can be contained by pointing out that every business and region will benefit without prejudice or special favor, and the amount of funds released to the productive economy will create many new jobs (the $50 billion that Jack wanted to take back is the resources to create 1,000,000 new jobs. That's a lot of kitchen tables! I don't have the figures for how much the Federal government receives in business income tax, but it is probably in this order of magnitude (I actually believe the $50 billion was a cumulative figure, but never could get to the bottom of that).

Agreed!

Thucydides said:
b. Institute a single tax (AKA flat tax). Eliminating all loopholes, exemptions etc will make revenue collection much easier, and also deflect criticism from the Left. As well, it can free up an estimated $3 billion in compliance costs to Canadians, who pay lots of money and take lots of time working out their taxes. More money in the productive economy pot.

A single tax, yes, but not an income tax which is a tax on savings and investment and, therefore, a tax of productivity.

Institute a comprehensive carbon tax with two aims:

1. Raise revenue; and

2. Change behaviour – make people use less carbon and more alternative sources.

Thucydides said:
c. Eliminate corporate subsidies to pay for "a". Actually, given the corporate world will get a huge boost from the elimination of business tax, this is a fair trade off. As well, by painting the elimination of the tax as the way of assisting all business, the calls for corporate subsidies to "selected" industries can be muted. 

Yes, agreed, eventually, but not until we negotiate a ‘level playing field’ with our rading partners and competitors.

We pay for “a” with the carbon tax.

Thucydides said:
The Prime Minister has demonstrated that he is a skilled political tactician and "could" take steps to implement this program even with a minority government. Inviting selected Liberal, BQ and (gasp) NDP members to cross the floor and join a "national unity" cabinet will certainly provide the horsepower and votes, although this particular plan would have to be sold two different ways to appeal to the business wing and business minded members of the Liberals and BQ, while the direct benefits to the working Canadians would have to be heavily emphasized to the NDP. (The fact this plan can actually satisfy both imperatives just shows the power of classical economics)

Yes, there are a few – two or three maybe even four or five likely candidates in the BQ and Liberal ranks, including former “conservatives” Scott Brison and Keith Martin – maybe, just maybe one (Stoffer) in the NDP.


Edit: typo
 

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A registered party does not need very many registered MPs to obtain official recognition in Parliament - 12 IIRC.  That would also be enough members to form a viable majority voting block in Parliament.  All that is needed is 12 centre-leaning dissenters from the LPC, NDP, and Bloc - perhaps with one or both of the independents - to split off, form themselves as a party, and the three other opposition parties would have to think a lot harder and longer about being less obstructionist and more productive lest they be disregarded as entirely irrelevant.
 

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Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is more on the financial crisis with some specific references to defence spending:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081016.wtories17/BNStory/politics/home
Ottawa on track for deficits: TD

STEVEN CHASE

From Friday's Globe and Mail
October 16, 2008 at 8:55 PM EDT

OTTAWA — The federal government is on track to run budget deficits in each of the next four years – as deep as $10-billion in two of them – unless the re-elected Harper Conservatives move to avert the red ink, a senior Canadian economist projects.

The forecast, which came as a second big bank predicted an imminent recession, suggests a big challenge ahead for Jim Flaherty, whom sources say will remain as federal finance minister when Prime Minister Stephen Harper assembles his post-election cabinet.

Keeping Mr. Flaherty in his post is aimed at avoiding an unsettling change of economic leadership as Canada grapples with spillover from global financial turmoil. On Thursday the Bank of Montreal joined the Bank of Nova Scotia in predicting a recession, saying the economy would start contracting in 2008's fourth quarter.

Toronto Dominion Bank chief economist Don Drummond forecasts a balanced budget for the current fiscal year ending March 31, 2009. But he projects a deficit of $10.4-billion in the next fiscal year, 2009-2010, as well as a $9.9-billion deficit in 2010-2011. He also forecasts deficits of $5.5-billion and $2.4-billion respectively in the two subsequent years.

His estimates are based on spending and tax plans as set out in the 2008 budget and assumes that revenue collected by the government will “soon begin to deteriorate” as the worsening U.S. economy drags down Canada.

“I really couldn't see a credible scenario in which they [deficits] didn't last for a long time,” Mr. Drummond said.

The economist said his deficit projections show that the Tories will be under pressure to trim spending.

“Many economists have said it's acceptable to run a modest deficit for a short period of time, but there's virtually nobody on record as saying it's acceptable to run deficits for many years in a row,” Mr. Drummond said.

“I don't think you can tolerate a deficit of that magnitude going on for four years,” he said of his projections.

During the election campaign Mr. Harper vowed to keep budgets balanced and not raise taxes – commitments that leave spending cuts as his only option. On the hustings, however, he dismissed questions about where he'd reduce spending as “a ridiculous hypothetical scenario.”

At the same time, however, Mr. Drummond said he thinks the Tories will be hard-pressed to balance the budget when facing potential annual deficits of $10-billion, saying it's very hard to cut that much spending because many programs are politically risky to touch.

“If you want to get something like 10 billion dollars [in savings] you've got to go and nuke a whole bunch of programs,” Mr. Drummond, a former federal Finance Department official, said.

“I can't imagine they will trample into things like old age security and the major transfers to the provinces and probably not defence while Afghanistan is still going on.”

Mr. Drummond suggested the Tories may have to focus cuts on later years. “I think they will have to cut [spending], but not necessarily in 2008 or 2009, when the economy will be at its weakest.”

Mr. Harper is expected to take about 10 days or more to put together a new cabinet. One senior Tory said he doesn't expect the cabinet to be named until at least the last week in October.

But Canadians can expect that Mr. Flaherty will attend the Nov. 8 and 9 Group of Twenty finance ministers' meetings in Brazil, sources say – an event that will almost certainly take place after Mr. Harper's cabinet is announced.

Mr. Harper will have to find a replacement for departing Foreign Affairs Minister David Emerson. It's possible, Tories say, that the capable and trusted Industry Minister Jim Prentice could be shuffled here – although Mr. Harper may want to keep another economic minister right where he is now.

There's a big question mark over the future of Agriculture Minister Gerry Ritz, who drew fire during the campaign after it emerged he'd made light of the tainted meat listeriosis tragedy, calling it “death by a thousand ... cold cuts.”

Mr. Harper, whom the latest counts indicate won 19 seats more than his 2006 election showing, has a number of new women MPs with impressive backgrounds to choose from when cabinet-making.

They include: Gail Shea, a former PEI cabinet minister; Lisa Raitt, most recently president and chief executive officer of the Toronto Port Authority; Shelly Glover, a Winnipeg police officer; and Kamloops-Thompson-Cariboo MP Cathy McLeod. A registered nurse, she offers the party a spokesperson on social issues that it has lacked.

With reports from Brian Laghi and Heather Scoffield


There are some ways to make some money:

Sell the CBC – that ought to raise several hundred millions over three or four years and, by the end of, say, 2011, there ought to be nearly $1 Billion/year, year after year, in savings;

Auction off more radio spectrum – specifically at the top end of the UHF TV band, but there are other small bands that are attractive, too. The 700MHz (channels 60+) TV spectrum has already been reallocated in the USA. Canada still reserves it for a few lazy broadcasters. While that auction will not, as the most recent PCS/cellular one did, raise $4 Billion, it ought to net $1 Billion; and

Cut transfers to some provinces – so that Ontario is no longer a ”poor relation”. Provinces that are able to spend quite a bit more (per capita) than Ontario are not “have not”. It’s not as simple as a direct, percentage cut, but some provinces get too much.

I understand Drummond’s reasoning about not cutting transfers but, I think Harper can get away with it if:

• He does it very, very quickly, while the crisis is front page news; and

• During the next campaign he reminds Canadians that he just did what Chrétien/Martin did in the mid ‘90s: reduce the federal government's deficit by offloading it onto the provinces.

 

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I'd agree with your agreements Edward  ;), except for the time factor. The Government just ran an election against a carbon tax, so pulling a P.E.T and instituting one will seriously damage their credibility, hence the call for a Single Tax instead. A graduated reduction of the single tax (perhaps by increasing the number of legitimate means of sheltering income like RRSP's, the $5000/year sheltered savings account, changing RESP's to resemble RRSP's, introducing Registered Medical Savings Plans (RMSP's) while introducing a Nordic Carbon Tax (similar to a VAT or Sales Tax, not the Green Shaft Shift for people joining the discussion).

Negotiating subsidy reductions with our trading partners will take a lot of time (but should be done regardless); in this environment I actually see subsidies and protectionism rising around the world as panic stricken reactions to the economic events of the day. Unilaterally withdrawing subsidies seems like a risky step (and it is), but I would count of the revocation of business income tax to provide the econoomic horspower that corporations need to compete. The other advantage is the companies will essentially be forced to innovate and become more productive in order to stay afloat; one of your long standing issues has been to improve productivity so here is one answer!
 

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Rifleman62 said:
Harper will not be able to, and no other PM could, punish Quebec cause the Lieliberals and the NDP, let alone the Bloc, will suck up to get the Quebec vote. Without Quebec seats, very difficult to form a government, let alone a majority. And Quebec knows that, and utilizes that fact ...

Here, in a column reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail national affairs columnist Jeffrey Simpson continues his analysis of Québec’s ‘new’ place in society as a demandeur rather than as a participant:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081017.wcoessay1018/BNStory/specialComment/home
Quebeckers' mental Bloc
In the wake of the Bloc Québécois's sixth consecutive electoral success, Stephen Harper has been reintroduced to the Quebec political culture


JEFFREY SIMPSON

From Saturday's Globe and Mail
October 18, 2008 at 12:00 AM EDT

After each of the six elections since 1993, a chorus of Quebec commentators explained why the Bloc Québécois, once again, had won the largest number of seats in the province.

It's always been something: reaction against the defeat of the Meech Lake accord, the Liberal Party's sponsorship scandal and, this time, Conservative cuts to two little cultural programs and one announcement on juvenile sentencing.

Undoubtedly these somethings contributed to the Bloc's successes. Federal parties did things and adopted policy positions that were difficult to swallow, but then the same reaction occurs elsewhere without people running to parties that defend only the interests of their region or group.

Explanations after each election missed more fundamental interpretations that, outside Quebec, are worth pondering. They could lead to a reassessment of how to deal with the province.

By voting Bloc for six consecutive elections, the largest number of francophones in Quebec turned their backs on Canada, while not expecting that the rest of Canada would ever turn its back on Quebec.

Bloc voters obviously feel comfortable with the party. Some are separatists; others are not. They apparently welcome a party that wants no part of governing Canada while continuing to demand more and more from it. More and more in the sense of more money for Quebec, more jurisdictional power, a larger international presence and other way stations to the Bloc's eventual goal of an independent Quebec.

The Bloc seldom speaks of separation because, for the moment, most Quebeckers don't want to hear of it. Instead, the Bloc has transformed itself for political purposes into the "defender of Quebec's 'interests.'." Separation of Quebec from Canada, however, has been the fundamental reason for the Bloc's existence since its creation by Lucien Bouchard in the wake of the collapse of the Meech Lake accord.

MPs and 'their' turf

MPs all try to "defend" their regional interests in the federal government. From Confederation until the Bloc's creation, however, Quebec MPs tried, like those elsewhere in Canada, to defend their province's interests inside federal political parties, which is another way of saying within Canada.

Since 1993, the largest number of francophone Quebeckers apparently has wanted no part of federal parties, and therefore of the government or governance of Canada. Canada is no longer a country they wish to participate in governing, but one from which they wish to withdraw cash, like an automated teller machine.

They want to influence decisions in Ottawa without taking any responsibility for those decisions. They want neither to separate from Canada, nor to govern it. They want, through the Bloc Québécois, a variation of an old and enduring ambition: to be part of Canada, but only sort of, and on their terms, which means some sort of associate status, égal à égal, separate but not fully separate, sovereignty but with association, autonomous but still tied, somewhat in but somewhat out, or, in the metaphor of the brilliant Quebec journalist Jean Paré, parishioners in a church called Canada they seldom attend except for important occasions like Christmas, Easter and maybe marriages. They want to take but not to give. And they always prefer leaders, when given a choice, from Quebec.

It is historical fact, reinforced again this week, that Quebeckers have always voted for a party led by a Quebecker when confronted with a choice between such a party and one led by someone from outside the province.

This suggests that any leader from outside the province is handicapped to the point of being doomed in Quebec, even if his French is acceptable, as is that of Prime Minister Stephen Harper. As long as the Bloc is around, led by a Quebecker, the largest number of francophones will vote for the Bloc. It is always possible that this pattern of not preferring one of their own could be broken, but it hasn't been for 141 years.

By winning between 38 and 54 seats, as the Bloc has done since 1993, majority governments have become difficult. (Prime minister Jean Chrétien did win three majorities under strange circumstances, a divided right.) National political parties — the bestriding, elastic political formations that helped for most of Canada's history to broker regional interests — are weakened, since none can easily form a truly national government.

Weaker national parties weaken Canada, which is the Bloc's ultimate objective, however cleverly it is disguised. Nor could an effective "coalition" be formed with the Bloc, since the party does not believe in governing or in Canada.

Parties of the 'Other'

Conservatives and Liberals in Quebec now appear like parties from the "other," that is to say, the rest of Canada. This perception, in turn, allows the Bloc to portray Quebec's interests as unrepresented in those parties and therefore threatened by them. This dynamic becomes a vicious circle, whereby national parties lack Quebec voices inside of them, and so make errors in Quebec and do not have enough spokespeople on the ground in Quebec to defend themselves and, by extension, Canadian federalism.

The Bloc is quite brilliant at depicting anything Ottawa does that is remotely favourable to Quebec as a consequence of Bloc pressure, whereas anything that does not correspond to Quebec's "interests" is the fault of these insensitive, threatening parties that represent the "other," and of the imprisoning federal structure.

No national party has found an answer to this political dilemma. The Harper Conservatives believed they had an answer, but it blew up in their faces. Its explosive failure will now cause people outside Quebec to wonder: What is the point of acquiescing to Quebec demands?

Trying to improve his party's standing in Quebec, beat down the Bloc and strengthen federalism as he saw it, Mr. Harper yielded to a list of Quebec demands, and invented one of his own, that the Québécois would be described as a "nation" in a united Canada. He did so without consulting many caucus members or premiers, some of whom were aghast, others of whom were unhappy.

This approach defied everything the Reform Party, and, indeed, governments of Alberta, had stood for: a Canada of 10 equal provinces with no special status for any. And yet the Preston Mannings of Alberta remained mute, presuming that the "nation" business and other sweeteners for Quebec were all in aid of the greater cause of a majority Conservative government.

The election results put paid to that calculation. The sweeteners failed. The Conservatives went nowhere in Quebec. The Bloc triumphed again, with leader Gilles Duceppe at the helm, winning 38 per centÖ of the popular vote and the largest number of seats. Everything the Conservatives had done for Quebec was forgotten in the rush back to the Bloc.

Nor did the resolution of the so-called "fiscal imbalance" work. This multibillion-dollar transfer of funds to the provinces was supposed to address a serious irritant in Quebec, where it was alleged that the province had onerous spending obligations but Ottawa had the money, or at least too much of it.

Mr. Harper duly transferred billions of dollars, as demanded, and proclaimed the "fiscal imbalance" resolved. Instead, on the eve of the campaign and therefore the time for maximum political damage, Quebec Premier Jean Charest pronounced the "fiscal imbalance" unresolved after all. More money was required, along with action on a shopping list of 13 other demands.

Harper's Rude (Re)introduction

Mr. Harper was thus rudely (re)introduced to the Quebec political culture, of which the Bloc is now an integral part. Quebeckers have a Premier who, although a federalist of a certain variety, is always demanding, never happy and seeking by all avenues to expand Quebec's powers, prestige and transfers. They have a Prime Minister in Ottawa, of whatever political stripe, who pays enormous attention to the province, owing to its 75 seats and the always-possible threat of national dismemberment. And in the Bloc Québécois, they have their very own, homegrown opposition party, always demanding, never satisfied, and seeking, like the Premier, to expand Quebec's powers, prestige and transfers.

The triangulation is perfect: three sides all trying to impress Quebeckers by defending their interests more resolutely than the other. The Bloc's role as part of this triangulation is another reason for its continuing success that goes much deeper than the suggestions that cuts to an arts program turned the course of the election.

In this culture, nothing is ever enough. Mr. Harper got Parliament to declare the Québécois as a "nation." Put it in the Constitution, demanded the Bloc. Mr. Harper declared the "fiscal imbalance" resolved. No, it's not at all, demanded Mr. Charest. Give Quebec another $880-million, demanded the Bloc. Mr. Harper said he would change the way the television and telecommunications regulatory agency operates to ensure greater francophone presence. Give us the entire power of culture and communications, demanded Mr. Charest.

In recent days, Mr. Charest has been playing host to the French President, signing agreements with him, taking Quebec's seat at la Francophonie, and taking credit for having pressed for a free-trade deal between the European Union and Canada. Mr. Harper has also been present, but a somewhat diminished figure, given his setbacks in Quebec.

Mr. Harper has already promised to acquiesce in other Quebec demands, including fettering the federal spending power. But nothing suggests, based on the Bloc's ongoing success and the comportment of a "federalist" Premier, that Mr. Harper's offerings will do more for him or Canadian federalism than what he has been trying.

The obvious question that will necessarily be asked in the wake of the Bloc's sixth consecutive success is why Ottawa should continue to play the losing game it has been playing, in which demands are met but never suffice, and in which a majority of francophones in Quebec send MPs to Ottawa who want no part of governing Canada while continuing to demand much from it.

Here is the very political and national essence of Simpson’s Québec:

”They want, through the Bloc Québécois, a variation of an old and enduring ambition: to be part of Canada, but only sort of, and on their terms, which means some sort of associate status, égal à égal, separate but not fully separate, sovereignty but with association, autonomous but still tied, somewhat in but somewhat out, or, in the metaphor of the brilliant Quebec journalist Jean Paré, parishioners in a church called Canada they seldom attend except for important occasions like Christmas, Easter and maybe marriages. They want to take but not to give.”

I’ll bet a substantial number of Canadians agree with him.

According to Elections Canada it is not quite so clear. Only 38% of Québecers voted for the BQ. 60% of Québecers do want to participate, but the minority rules.

Proportional representation would produce about these results, in Québec: BQ - 30 seats, Liberals – 18 seats, Conservatives – 16 seats, NDP – 9 seats and Greens 2 seats. That’s, probably, a fair reflection of how Québecers’ commitment to the job of governing Canada.

I do not favour proportional representation, rather I think Prime Minister Harper should follow up on one of  Thucydides’ many good ideas: Harper should try to form a national government by poaching a couple of Liberal members from Montréal. He should not offer the Liberals a coalition nor need he ask those Liberals to abandon their old party completely. Rather he should say:

“Look, Liberals, we are in a financial crisis and I need all the good advice I can get – advice from every region. I need one Newfoundlander and one or two Montréalers and another member from each of Toronto and Vancouver. I’m not going to appoint senators any more and I’m not looking to fabricate a majority – I just need some help with this national crisis. Each of you will be inside: one or two will be ministers, others will be parliamentary secretaries – you will all be sworn in as privy councillors and you will be bound by all the normal rules of cabinet confidentiality and solidarity. I will not ask you to tear up your Liberal Party cards nor will you be invited to join out various partisan caucus committees but you will be required to participate in some caucus briefings so that, like all other insiders, you can hear the back benchers’ concerns and tell them what’s going on in your departments. If, when or even before the crisis is addressed, you want to return to the Liberal caucus then you will always be welcome to leave – subject only to your oath as a privy councillor. If you decide that you want to join our party we’ll consider that, too.”

If we are going to be stuck with successive minority governments then this ‘system’ may become popular and one could imagine that circa 2016 a few Conservatives might, temporarily, cross the floor to give a Liberal government some representation from Calgary, Edmonton and Québec City.

With specific regard to Québec:

• There is nothing wrong with the federal government withdrawing from areas of provincial jurisdiction – provided only that it does so for all provinces. Some, perhaps even all of the other provinces and territories may want a national agency to deal with this, that or the other issue, and they can create them – without federal control;

• Enough is enough – the fiscal imbalance issue is behind us, for a generation; and

• This government should actually enunciate Simpson’s idea – that it understands that Québec  wants results without participating, but that the government cannot and will not play along.

I think, faced with the reality that the government in Ottawa cannot be bribed, many, many Québecers will reconsider their political loyalties.

 

GAP

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Quebec should get no more, nor any less than it is due, in comparison to the other provinces.
No special deals/donations/funds/recognition, just another province.

The Bloc supposedly represent the majority of Quebec, fine....if Harper can work out enough  of a deal with the Liberals (the Dippers are too caught up in themselves) to avoid a new election, then he should play it straight down the line....not punish Quebec, just treat them like one of the 10 unruly children they are...
 

Edward Campbell

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It appears that there is a certain animus towards Québec inside the Conservative Party, too, according to this article which is reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail:

http://www.theglobeandmail.com/servlet/story/RTGAM.20081017.wcharest18/BNStory/Front
Charest's disapproval leaves ‘scars' on Tories

CAMPBELL CLARK AND RHÉAL SÉGUIN

From Saturday's Globe and Mail
October 17, 2008 at 9:26 PM EDT

OTTAWA, QUEBEC — Jean Charest's campaign criticisms of Conservative policies have left “scars” in Stephen Harper's entourage, according to Tory insiders. Still, taking a whack at the Prime Minister mid-campaign might be one of the best political moves Mr. Charest has made.

As finger-pointing over the Tories' weak Quebec campaign continues inside the party, unnamed aides to Mr. Harper complained to Montreal newspaper Le Devoir that the Quebec Premier had betrayed them.

At a time when the Conservatives' cuts to cultural programs were brewing a storm in Quebec, Mr. Charest spoke against them. And Mr. Charest's Justice Minister, Jacques Dupuis, also criticized the Tories' proposed stiff sentences for young offenders.

Some Quebec Conservatives fear the moves could damage the relationship between Mr. Charest and Mr. Harper.

And after the Tories' poor showing in the province in Tuesday's election, many Quebec Conservatives believe Mr. Harper needs the Premier more than Mr. Charest – who is running high in the polls before a possible spring election – needs him.

The criticism has allowed Mr. Charest to position himself as a defender of Quebec's interests who doesn't owe anything to the regime in Ottawa.

On Wednesday, Mr. Charest insisted it was nothing personal.

“From now on, no matter what happens at the federal level, everyone knows what to expect from Quebec … And I have never personalized my relations at the federal level,” he said.

For years after the former federal Progressive Conservative leader moved to Quebec provincial politics, there was a widespread feeling that Mr. Charest's real political dream was to become prime minister of Canada. But his political plays now are all about re-election in Quebec.

“I can tell you from working closely with him each day that he has no ambitions about going to Ottawa,” said Hugo D'Amours, the Premier's press secretary.

One political strategist close to Mr. Charest said that the Premier has never told him whether he still hopes to return to federal politics, but that the positions he has taken as Premier – demands for more autonomy, powers and funding – have likely burned that bridge.

In Quebec, however, he has probably strengthened his hand. One Quebec Conservative said the Premier's criticisms hurt Mr. Harper's campaign, but won't hurt Mr. Charest.

“Quite the opposite,” he said. “Now he can sort of play the role of the Bloc [Québécois] in Quebec City. Provincial premiers in Quebec have traditionally tried to create some distance with Ottawa.”

The same Quebec Tory worries that bitterness will hamper relations between Mr. Harper's team and Mr. Charest's when the Conservatives have to work on broadening their support in Quebec.

On Friday, as Mr. Harper and Mr. Charest welcomed leaders to the Francophone summit, Mr. Charest's aides reacted angrily to accusations from Mr. Harper's camp that the Quebec Premier broke a promise to stay quiet during the federal election campaign.

“It is completely false to say that we had a deal,” said one angry official in Mr. Charest's office. “We told them that if they attacked us we would reply and that is exactly what we did.”

The official, who spoke on the condition he not be named, said the province could not remain silent on key planks of the Conservative election platform, such as life sentences for young offenders and cuts to arts programs.

Transport Minister Lawrence Cannon, Mr. Harper's Quebec lieutenant and a former provincial Liberal cabinet minister, was quick to play down the wounds of the campaign.

“We're all adults here, and we're all grown up and vaccinated. And we'll move forward as we should,” he told CTV Newsnet.

But Mr. Harper's team have not forgotten. One Conservative noted they counted 15 occasions during the campaign when Mr. Charest or his ministers criticized the Tories. “Sure, it leaves some scars,” he said.

The Premier of Québec is, of course, one of that triumvirate Simpson mentioned (just above) that keeps relentless pressure on the centre. I agree with GAP that Québec should not be punished but, equally, should be treated as une province comme les autres. Of course, Québec is anything but une province comme les autres  - as all the hand wringing demonstrates; it is special, Harper has proved that Lord Dufferin was right: we do have “two nations warring in the bosom of a single state.”

But: I think Harper should make a few exemplary moves:

• No special treatment for Québec, signalling his disapproval of the province's entry into a federal campaign; and

• Selective punishment for Bloc ridings – when there is something to be given out it should be done on a highly partisan basis: ’goodies’, such as they might be when money is very tight, should go, first, to Conservative ridings, then to Liberal ones and, finally Independent and NDP ridings. To the greatest degree possible nothing should go to BQ ridings, and that fact should be communicated to Québec through the media – and then it must promptly be denied by the Conservative Party of Canada. The aim is to remind voters that votes have consequences.



 

Rifleman62

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As I stated before, the politics of Quebec had consequences on the battlefields of Europe in WW I and II. Service personnel died as a result of these politics. Don't believe me, read some history and personal accounts of the war. If the government did not have the personal fortitude to do it during a war like WW II, they will not do it during peacetime/Afghanistan. Remmember all the controversy leading up to the deployment of  5 CBG units?
I for one have been for years sick to the death of the constant whining of Quebec. With all the money poured into Quebec over the century, it is still is a have not province. Something like Dept of Indian Affairs or whatever it's called.
Harper do something.
P.S. Sell the CBC. Maybe the Bloc will buy Radio-Canada.
 

George Wallace

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On that note, and having just read the Jeffery Simpson article, and being put in a pissy mood again about the Quebec follies in politics, I began to wonder.  What if the plan to send troops to Goose Bay involved the gradual reintroduction of Air Force assets there.  Gradually move the Sqns up from Baggotville and leave Baggotville in the state that Goose Bay currently finds itself.  Sort of the move the Liberals pulled when they moved 1 CMBG from Calgary to Edmonton.
 

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Reference the Simpson article on Quebec, I wonder if there isn't a case to be made that in modern secular Quebec "Canada" hasn't replaced The Seigneurie and God while the BQ has replaced the Church.

Under the Seigneurie everything came from on high - both reward and pain.  The Seigneurs, and even God from whom they drew their ultimate authority via "le Roi", were capricious and unreachable entities that controlled the lives of "les habitants". 

In that environment the Church promised intercession.  They had a direct impact on the secular.  They could control the Seigneurie.  They also claimed an impact on the spiritual and an ability to influence God.  Whether or not God was influenced was entirely immaterial.  People believed that they could.  Successes were the result of the Church.  Failures were the result of your personal failure or a capricious Seigneur.

I don't think the psychology is much different today.

Nor do I necessarily believe that that psychology is limited to Quebec - I think analogues can be found amongst the Anglo "Left".    It is just that in Quebec it is aligned with both the magnetic, cohesive force of Nationalism and the insulating and isolating force of language which contains Quebec the way that surface tension contains a bubble or a drop of water.

 
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