The recession's silver lining
Written by Link Byfield   
Monday, 19 January 2009
Link Byfield

It appears that recessions, like executions, at least serve to focus the mind.

As the economic screws tighten, a broad political shift toward sanity appears to be happening.

Prime Minister Harper met with the provincial premiers in Ottawa on Thursday, and – unlike usual – they emerged with a general agreement about how to handle the recession.

Harper told them that in order to devote more spending to local infrastructure (i.e. roads, sewers and the like) he will have to scale back the rate of increase in the equalization transfer to the “have-less” provinces.

Realize what he is saying. Infrastructure spending goes mostly to the private sector, because private enterprise does the building. Such spending is one-time, and the public benefits are lasting. Equalization goes entirely to provincial governments and their client entitlement groups. The spending is permanent, the public benefits debatable.

This slight de-escalation of equalization was first announced back in October. The premiers accepted it at the time, none too happily but no doubt relieved that Harper was not proposing to chainsaw transfers the way Chretien did ten years ago to balance the budget. Even Quebec’s finance minister said capping equalization was reasonable in the circumstances.

Not for long. On Thursday, with no warning, Premier Jean Charest let fly that Harper is breaking a promise and owes it to Quebec to stick with an enrichment formula agreed to in 2006.

Significantly, the other equalization premiers did not support Charest. Even the newest of the low-income fraternity, Dalton McGuinty of Ontario, pointedly disagreed.

I think the premiers are reflecting a changing public attitude.

According to the most recent poll (Strategic Counsel, Jan. 12 to 14), most Canadians (54%) consider infrastructure development the best way for governments to support the economy, followed by income tax cuts (39%) and job-training (34%). Only half as many support increasing employment insurance benefits. You can read the entire poll by clicking here.

In a similar question, only 10% of Canadians rated “social programs” as the greatest present source of concern, and only 7% cited “the environment.” “Unemployment/economy” was cited by 62%.


The Liberals will probably not join the other two opposition parties to defeat the Harper government next week and ask the Governor General to let them form a coalition government. Public opinion outside Quebec is against it. The Liberal premiers of the three biggest provinces – McGuinty, Charest and B.C.’s Gordon Campbell – told reporters last week it would be bad for the country.

Quebec will grow increasingly irrelevant. Until it stops electing mostly separatists, neither the Liberals nor the Conservatives can or will accommodate Quebec’s particular demands. Although Quebeckers are at the moment tipping slowly back towards voting Liberal, new leader Michael Ignatieff isn’t a fool and surely knows he can’t rely on Quebec support any more than Harper could.
The Liberals face a conundrum. If they continue to tilt left as they did under Dion, they might take some of Quebec back from the Bloc, but in equal or greater measure will continue losing Ontario. And if they tip slightly right, they will sound too much like Harper for Quebec, and not enough like Harper to convince Ontarians (let alone westerners).

The recession offers a perfect opportunity to reform equalization. There would be nothing objectionable about equalization if the transfer could be made contingent on small, measurable gains in productivity in the receiving provinces rather than blindly rewarding economic failure. There are politically palatable ways of doing this. (See “invitation” below.)

The sleeper issue for the Conservatives is the Senate. Even as they battle through the budget and the recession, the Conservatives must continue to reframe the national unity issue away from “two founding nations” – a Liberal concept – and towards “10-province federalism in Parliament.” Reforming the Senate is the only way of doing it. True, Quebec opposes this, but then Quebec always opposes everything – yet somehow life goes on. The key lies in convincing Ontarians, especially the Ontario government, that Senate reform matters.

Canada will emerge from the recession politically different.  Due to the recession, Ontario will develop ever-stronger economic and political ties with the West. Quebec will matter less and less, unless or until it can find a better source of leverage than endlessly threatening to separate but never doing it.
Link Byfield is an Alberta senator-elect and chairman of the Citizens Centre. The Centre promotes the principles of personal freedom and responsible government.