Canada can do better

A little creative thinking could work miracles

The recent Finance Canada report projecting Canadian federal budgetary deficits into the 2050s must stand as one of the most inane Canadian public documents of recent memory. The deficit could be eliminated any year on a few months’ notice, so the document is just an alarmist warning from somewhere in the bowels of the finance ministry of what will happen if nothing is done to change course and economic circumstances don’t vary.

Never in the 150-year history of Canada as an autonomous country have 30 years passed without any flexibility of circumstances. This is in the category of policy options where past finance ministers were offered the following sort of range of choice by their deputy ministers: 1. The impending bankruptcy of the country and the beginning of discussions on the consequences of default on public debt and auctions of government assets; 2. The cessation of all non-contractual expenses, disbandment of the armed forces and all Crown corporations while taxes are raised in all categories, and special arrangements are made to accommodate the immense surplus that would accrue amidst the grinding stagnation of the economy; and 3. The alternative preferred by the author of the memo.

The last federal election was in part a head-butting contest between two sacred cows — the bipartisan commitment (in which the NDP also joined) of no federal deficit; and the Harper commitment not to raise HST, which it had reduced.

These are both commendable impulses but they assumed an ironclad quality that became an inconvenience to fiscal planning. Canada was scandalously plagued by deficits through most of the Trudeau and Mulroney years, and at one point in the mid-1980s the Canadian dollar sank to 65 U.S. cents. Brian Mulroney provided the answer to the problem with the Goods and Services Tax (GST).

It avoided the irritating misnomer of VAT, the Europeans’ preferred Value Added Tax, which is routinely assessed on services where not even a delusionist could imagine there is any value added, such as a legal bill.

Legal bills are incurred and must be paid, and are taxed in the hands of the recipients as income, but what excuse is there to tax also the person who pays the bill, on the spurious inference that he has a hidden gain in additional value due to having paid his lawyer?

So far, as with many Euro-absurdities, such nonsense has been repelled at the water’s edge with the continental spirit of President Roosevelt’s assurance at Kingston in 1938 that he would not “stand idly by” if Canada were attacked from another continent. (The Then-Prime Minister Stephen Harper uses a sign to show a pending cut to the Goods and Services Tax in 2006. phrase caught on, as even Mackenzie King shortly announced that Canada would not “stand idly by” If Hitler attacked Czechoslovakia. Dozens of countries would decline to “stand idly by” as years passed, especially after Mao Zedong appended the elaboration that China would “not stand idly by with folded arms” as various bad things occurred. In most cases, of course, there was a lot of idle standing, with a wide range of accompanying manual activity.)

The Finance department’s internal document is an exhortation to the next two generations of federal Canadian leaders not to be inactive while deficits endlessly accumulate.

It raises a host of related issues about spending priorities, cost and revenue sharing between the federal and provincial governments, and what direction we want Canada to take. Canadians are justly proud of having a relatively peaceable and livable society.

But most foreigners would conclude that given that we are not severely harassed by our one adjacent neighbour and have a vast country with immense resources in almost all forms of base and precious metals, forest products, energy and agriculture except tropical fruit, a relatively comfortable and serene country is not such an astounding triumph as it would be in less well-favoured places.

While it is apparently a terrible source of comparison, prisoners at Auschwitz referred to the storage area for the food and comforts of the guards as “Canada” as indicative of something comfortable, peaceful, clean and abundant, and as such almost beyond the imagination of the desperate inmates.

Canada is one of the 10 most prosperous countries that have integrated economies (i.e. excluding small tax havens like Liechtenstein, Luxembourg, and Monaco, and petro-states like Kuwait and Qatar). But what excuse is there for us not having as high a standard of living as Germany, the Netherlands, Denmark, or Australia?

The excuses, such as they are, include uncompetitive confusion of government structure and unimaginative public policy.

Netherlands and Denmark are not rich countries and the Netherlands has challenges assimilating a large number of Muslim immigrants, a climate not greatly gentler than ours, and few resources, but they have a commercial and exploratory tradition of 500 years.

Germany is, of course, Europe’s most powerful country and has suffered terribly, and caused its neighbours to suffer, from in concept, but we have won that battle and it is time to enlist Quebec and all Canadians in the uplifting project of making this country as prosperous, exceptional and progressive (which is not here used as a euphemism as it usually is, for socialistic) as it can be.

Brian Mulroney’s GST gave Canada the means to eliminate its deficit, when coupled with the MartinChrétien policy of laying off spending in shared areas of federal-provincial responsibility, on provinces without corresponding concessions of tax-collecting not confined circumstances. We have to stop rationing medical care, as we are, by over-restricting access to many forms of treatment.

We have to permit and encourage private medicine, and focus the entire publicsector contribution on those who cannot afford their own health care.

Those who can afford to pay their medical bills and insurance can get a tax credit for necessary health expenses.

This sacred cow should be quietly allowed to metamorphose into better health care for those who can afford it and for those who cannot, by allowing wealthier groups to use their wealth to assume more of the health-care cost voluntarily and unclog the public health system for everyone. For decades, we have been pushing the Sisyphean burden of obsolete truisms about universality while the federal government has been imposing its shrinking contribution to public health costs to force all provinces into a one sizefits all model of declining efficiency.

By all means let us have public broadcasting, but put the money into creative people and not just the incompetent management feathering their nests while the personalities the public wants to see or hear are persecuted. Bring back the acquitted Jian Ghomeshi and the unoffending Evan Solomon and Amanda Lang and get rid of the idiots who persecuted them. Moving Chrystia Freeland to Foreign Affairs may finally enable us to help reform all the crumbling international institutions, including the UN, NATO, Commonwealth and the IMF, which have been allowed to decay for decades.

She and Boris Johnson could be the first wave of some originality in what were once called the chancelleries of the world. A little creative thinking would achieve miracles. Canada could be an exciting country in public policy terms; only our own inertia is stopping us.