November 25 2008
Marie-Rose Angers, left, and Kevin Larocque clean the the
Senate Chamber on Parliament Hill in Ottawa on
Monday, Nov. 17, 2008. (Sean Kilpatrick / THE CANADIAN PRESS)
As the economic storm clouds gather, Ottawa plans to curb the pay, bonuses and perks of politicians and top bureaucrats in Thursday’s fiscal update, CTV News has learned.
“In this time of belt-tightening, politicians have to be able to demonstrate to people that they are able to do that themselves,” Kory Teneycke, the prime minister’s communications director, told CTV News on Tuesday.
Sources told CTV News the measures will include:
- Cancellation of a planned three per cent or $4,600 pay hike for MPs who already earn $155,400
- Restricting the use of government challenger jets
- Ending all unnecessary travel and entertainment
- Cutting all business-class travel for cabinet ministers and top civil servants
It’s also believed that Finance Minister Jim Flaherty will order spending cuts at Crown corporations and other federal agencies. Insiders say the financial belt-tightening could save Canada tens of millions of dollars each year.
On Tuesday, debate in the House of Commons focused on the way the Conservative government has handled the country’s economy in recent months. Flaherty took much of the heat from opposition members on behalf of the absent prime minister.
Stephen Harper, who recently attended the APEC conference in Lima, Peru, this past weekend, was not present during question period.
Flaherty has said that there will be no fiscal stimulus included in the fiscal update, set to be delivered at 4 p.m. on Thursday.
On Tuesday, Flaherty was on the defensive, telling his fellow MPs that the Conservatives made prudent financial moves in recent years that left Canada in a better position than many of its peers.
“Canada is not an island, but fortunately, we are well prepared,” Flaherty said Tuesday, noting that the Conservatives had cut taxes and increased spending on infrastructure in the past two years.
But Liberal Leader Stephane Dion said it appeared to him that Prime Minister Stephen Harper had failed to predict the coming recession.
“The prime minister contradicts himself on deficits. He contradicts himself on recessions as well,” said Dion, pointing to the prime minister’s recent referrals to ‘structural’ deficits and ‘technical’ recessions.
“Recessions are not about semantics — they are about job losses, about Canadians who need help,” Dion said.
“Why doesn’t the prime minister get it?”
In response, Flaherty said Dion “ought to take the advice of the expert on deficits in his own caucus” — whom he named as Liberal MP Bob Rae.
Rae served as premier of Ontario during the recession of the early 1990s.
Flaherty quoted Rae as saying that it was “not a reasonable position or an intelligent position to take” that the prime minister was personally to blame for any recent deficit that may have occurred at the federal level.
A few minutes later, Bloc Quebecois Leader Gilles Duceppe returned to the issue of the prime minister not predicting the economic crisis.
“The prime minister said during the election that there would not be a recession, but today he admits that there will be a recession — and that the recession is right at our door,” Duceppe said in French.
“Can the minister explain what was so urgent to call an election because of the economic crisis, whereas now it’s not so urgent to take action to deal with the impacts of this crisis?”
Flaherty said “no one in the world was predicting the kind of economic downturn, and the severity and depth of the economic downturn that we’ve experienced in the last 12 weeks.’
Things also got a little heated during an exchange between the finance minister and Liberal backbencher Yasmin Ratansi, who asked Flaherty about the way he would use “non-core federal assets” to help raise funds for the government.
Flaherty said the government intended to review corporate assets under the expense management program, to determine if individual assets “still fulfill a need for the people of Canada.”
The finance minister bristled at a follow-up question from Ratansi, who suggested the finance minister had shown a “lack of fiscal discipline” in doing his job prior to the current economic crisis.
“Fiscal discipline is an oxy moron coming from a Liberal member,” Flaherty said, while house members both cheered and jeered.
Think-tank predicts big deficit numbers for Canada
Also on Tuesday, the Ottawa-based Canadian Centre for Policy Alternatives, a left-of-centre research institute, said Canada may see a $46.8 billion deficit in the coming years, if there is a major recession.
That’s much bigger than the high end of the parliamentary budget officer’s prediction, who said last week that Canada’s deficit could be as high as $14 billion as the economy slows in the next two years. Kevin Page put the low end of possible deficits at just below $4 billion.
According to the CCPA, those numbers may be too low.
“A major recession starting in the fourth quarter of 2008 and lasting through 2009 could produce deficits of $1.4 billion in 2008/09, rising to $27.9 billion in 2009/10, and $46.8 billion in 2010/11,” said a CCPA press release.
However, it also noted that a mild recession would create:
- a very small deficit in 2008/09, perhaps in the $1.4 billion range
- a $12.6 billion deficit in the following year that would go up to $20.5 billion in 2010 and 2011
The CCPA is calling on Ottawa to take decisive action to curtail the damage from a global economic slowdown.
“The real underlying question now is not whether the federal government should run a deficit but how large the planning deficit for 2009/10 should be,” Marc Lee, CCPA senior economist, said in a press release.
“The federal government has a lead role to play in cushioning the impact of a recession, both through federal programs and in partnership with the provinces.”