Conservatives’ agenda bold – and fraught with political risk

This article was published by the Globe and Mail on January 30th 2012.  To see this article and other related articles on the Globe and Mail website, please click here.

Way back in 1996, a rising young Ontario backbencher explained why premier Mike Harris was moving so quickly to implement his conservative agenda.

“We can’t put things off, because we’ll get too close to an election and we’ll lose our nerve,” Tony Clement said. This is why Stephen Harper has chosen now to launch the most ambitious economic plan in two decades: cutting back on the Old Age Security program even as Mr. Clement, now Treasury Board President, slashes public spending.

Simply put, the Prime Minister, who has never had the luxury of a majority government before, has a year-and-a-half left to be bold before the ticking of the election clock drowns out everything else.

Here is what we are going to see in the coming weeks, after Parliament resumes Monday.

  • a budget that balances the books in two or three years;
  • departmental spending slashed by upward of 10 per cent in order to achieve that target;
  • major reforms to the immigration system, with a big push to bring in skilled workers who speak English or French, at the expense of reuniting families;
  • passage of the bill to create pooled retirement plans for workers who currently don’t have pensions.

Most contentious of all, the government plans to raise the age for receiving the Old Age Security pension supplement, probably from 65 to 67.

“The need for it is quite clear,” Government House Leader Peter Van Loan said in an interview. The cost of the plan will triple over the next two decades if nothing is done.

“It’s a question of having it sustainable over the medium and long term,” Mr. Van Loan maintained.

Both Brian Mulroney and Jean Chrétien vetoed their finance ministers’ proposals to reform the OAS, fearing the political cost of meddling with pensions. Susan Eng of the Canadian Association of Retired Persons is already at battle stations.

“Increasing the age for OAS right now is the wrong thing to do at the wrong time,” she said Sunday on Global TV’s The West Block. “They can find the money elsewhere.”

In hoping that any blowback from raising the OAS qualifying age will dissipate long before the next election, the Conservatives may want to bear in mind Brian Mulroney. He introduced the goods and services tax in 1989, soon after winning his second mandate. Voters still hadn’t forgiven the Tories four years later.

But Mr. Harper brings forward his proposals against a backdrop of a Europe riddled with profligate, bankrupt governments and economic decline. The Cameron coalition in debt-saddled Britain is slashing spending far more drastically than the Harper government is contemplating. The U.S. system is paralyzed even as federal finances spiral toward a crash. And Japan? Don’t go there.

Canadian voters are among the most economically literate in the world, thanks to decades of debate over spending and deficits. They may be prepared to sacrifice now to avoid becoming any of these countries later.

There is, of course, the political calculation, as well. The Tories hope that cutting spending and tightening pension requirements, however unpopular, will cement in voters’ minds the conviction that only Conservatives can be trusted to keep the books in the black.

And the government can further insulate itself by making sure the new rules apply only to those many years from retirement.

Nonetheless, this is the farthest the Conservatives have ever gone in the direction of reform. For a government relatively flush with cash to take such a politically risky step is “courageous,” as Sir Humphrey used to say on Yes Minister when he meant “suicidal.”

No government has tried anything this bold, and this risky, since Paul Martin vowed to slay the deficit “come hell or high water.”

© The Globe and Mail