MINTZ … Awful election promises.
Our leaders are farcical to express concern over income inequality while defending supply management policies
Some election promises should go to the waste bin The 2015 election shows divergence in views among parties with respect to balanced budgets, taxation, defence, foreign policy and child support. It gives voters something to choose from, which makes this a worthwhile election.
In some cases, the parties have reached consensus even if details differ. Some of this consensus is welcome, like greater emphasis on infrastructure and support for senior seniors. In other cases, the consensus might be good politics but dreadful policy.
In my view, the worst moment during the French debate was listening to five political leaders grovelling over supply-management policies in agriculture. Supply management was one of the worst policies brought in during Pierre Elliot Trudeau’s era to support dairy, eggs and poultry farmers by restricting supply. Quotas limit production, leading to higher prices for consumers, especially hitting hardest low income Canadians.
With higher prices for raw milk and other supply-restricted products, it became difficult for manufacturers like cheese producers to compete in international markets. Unlike Australia and New Zealand, which wisely abandoned supply management and are now successful dairy product exporters, Canada is virtually shut out of international markets.
Supply management has also been an irritant in trade negotiations for many years, including the recently concluded Canada European Trade Agreement and the current Trans-Pacific Partnership discussions. We may rightfully object to some agriculture subsidies elsewhere but we are not willing to give up one trade barrier for another. Besides, subsidies are at least paid through the progressive tax system while high consumer prices under supply management are akin to a regressive excise tax on dairy, egg and poultry products.
Our leaders are farcical to express deep concern over income inequality and job creation while defending supply-management policies. I was especially disappointed by the leader of the Green Party, who seemed more worried about cow flatulence and GHG emissions than the possibility that dairy restrictions end up hurting the poor. With only one seat, she has little to politically gain from defending this policy and much to win by looking venturesome. No leader, in fact, gave a single reason why supply-management policies should be maintained other than to protect 13,000 dairy farmers from competition. It was simply shameful.
Of course, dairy, egg and poultry farmers aren’t the only businesses that seek protection in the TPP negotiations. The parties also fawn over the auto industry, which has recently gained a notable reputation with poor safety and regulatory compliance. Canada helped save GM and Chrysler from bankruptcy in 2009 to protect jobs in the sectors. The federal and Ontario governments have then thrown billions of dollars at these companies to keep some uncompetitive jobs in Canada at a cost to taxpayers. The major political leaders in this election promise to continue throwing money at this industry. Thank goodness they are leaving the beleaguered oil and gas and mining industries alone, at least for now, except for climate-change policies.
We heard more platitudes than policy during the debates as each leader professed action to curb GHG emissions (Canada at least reduced emissions since 2006, although a global recession helped). None are willing to say what their policies would actually do to consumer prices or government budgets, as if regulations to eliminate coal-fired electricity, subsidies to renewables and cap-and-trade systems are some magical way of not affecting investment, jobs or incomes in the economy.
Our leaders also had some consensus over tax policy as well, typically in the direction of making the tax system less fair, more complex and economic harmful. All of them support cutting small business tax rates to nine per cent, even though it is well known that this only builds a steeper tax wall to impede growth, with most of the benefit accruing to high-income households (although NDP and Liberals might curb personal tax avoidance). All of them enjoy their boutique tax credits, some of them plainly nonsensical.
Looking at the Liberal platform, I was shocked by the proposal to bring back the much-criticized Labour-Sponsored Venture Corporations Credit. Pulleeez. Several studies have shown that the policy has been an abject failure. The credit led to too many poor projects being funded, squeezing out better projects that had to resort to higher risk costs. The economic return on LSVCC projects in the past was barely more than the GIC rate and one-sixth of U.S. venture capital returns. Why any party would want this boutique tax credit back into action mystifies me. Doesn’t sound like change to me.
The Liberals also propose a teachers tax credit for school supplies. Last time I looked we already have the employment tax credit and the ability to claim a deduction from employment income for not just teachers but all workers to help offset costs. Other boutique policy preferences are proposed, including an enhanced RRSP rollover for housing, rebate of GST for rental housing and clean-technology support.
I don’t want to slam the Liberals only. What they are suggesting is no better than various Conservative and NDP tax proposals that create complexity or economic distortions. While the Conservatives have made an art of boutique tax credits or subsidies since 2006, don’t think that the other parties don’t dabble with similar policies. They all do.
In some areas, there is some pretty good consensus among all the parties. I just wish the rest of this consensus would be thrown into the trash bin of history so these policies will not harm Canada’s well-being.