The “Leprechaun” of Canadian finance takes his walk in the snow

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When Jim Flaherty announced his retirement this week it prompted excessive horn blowing from his former boss.  Prime Minister Harper, a man generally acknowledged to be parsimonious in his praise even of his friends, tweeted this slightly ridiculous tribute that Flaherty was “the best finance minister in the world!”  More objective minds have mixed feeling about Jim Flaherty’s substantial legacy as one of the longest serving finance ministers in Canadian history.

To be sure, you would be hard pressed to find a more jolly finance minister.  Flaherty was always quite good at delivering his budgets with a quip or two, making for a fairly lighthearted approach to his relations with his colleagues in the House.  In fact, sometimes, given the seriousness of the matter, his smirks seemed to border on mockery of the opposition and of the institution he was meant to answer to.  Still give the self-described “leprechaun” of Canadian politics his due, he always tried to keep things amusing and sometimes even achieved this.

Although, I can remember one moment on the Hill I witnessed that was far from amusing.  I was a young naïf making coffee for the future leader of Her Majesty’s Opposition as an intern in 2008 when I heard the latest budget being read in the House of Commons by Flaherty.  A fateful event that would eventually lead to a failed attempt at replacing Harper with a coalition government consisting of the NDP, the Liberals and, in a supporting role, the Bloc Quebecois.  That day, Jim read aloud what was essentially an austerity budget (or ‘fiscal update”) that would have dealt with the effects of the global recession in Canada by introducing a package of spending cuts and a slashing of public service sector jobs, exactly the opposite of the kind of stimulus package being endorsed by all the major economist around the world.  Foolishly, the government had inserted a poison pill in the bill that meant it would never gain the support of the opposition parties which minority governments need to get their laws passed.  That is, the elimination of the public vote subsidy that the opposition parties relied on increasingly as a vital source of revenue.

Later, a shocked Tory staffer who had been part of the discussions on the disastrous budget explained to me that the strategists in the Conservative party had badly miscalculated the reaction of the NDP thinking that since they had generally done quite well at fundraising, whereas the Grits not nearly so much, the Dippers would be eager to stick it to the Liberals by voting with the government.  In the end, they discovered, much to their cost, that New Democrats actually believe in public funding for political parties as a matter of principle.

When the dust settled, prorogation had succeeded, and Flaherty would return with another budget, this time with enough stimulus and no elimination of the subsidy in order to satisfy the Liberals and keep Harper in power.  But the experience demonstrated to many, the extent to which Ministers like Flaherty were willing to pursue their ideological agenda to the detriment of the economy and even causing a constitutional crisis which nearly cost Harper his job.  This would be the pattern of behaviour that characterized the years in which Flaherty controlled the fiscal policy of the Canadian state.

He was sometimes the beneficiary of good fortune (many economists will tell you that Federal government policies have a minimal impact on the fluctuations of an economy and that is largely driven by private sector and global market forces now anyway) as when the global price of oil shot up making one of Canada’s major exports much more valuable.  At other times he had the good sense not to try and break a banking system that didn’t require much tinkering thanks to the regulations put in place by previous governments in the Bank Act and government regulation of the Canadian housing market.  This was no easy thing for a man who had cut his teeth as a Mike Harris Conservative in Ontario during the 90s and who viscerally loathed government interference in the economy and no doubt wanted to overhaul the Bank Act to give the banks in Canada much freer hand.

So what can we expect from our new Minister of Finance?  Well, at the least the budget speeches will be a lot less funny than they were under Flaherty.  Joe Oliver has demonstrated not a shred of humour in his brief time as Natural Resource Minister.  Au contraire, Oliver ( the first Jewish Finance Minister in Canadian history) was notoriously joyless when he infamously accused Canadian environmental activists opposing the government’s various pipeline projects, of being radicals and “foreign special interest groups.”

In all likelihood, Harper would have preferred his former Minister of State for Finance Ted Menzies, a low-profile, competent and well respected member of the cabinet, who had unexpectedly left politics last year shortly after his riding (Macleod) faced a natural disaster in the form of massive flooding.  Menzies had been groomed for the position for some time, but did have the disadvantage, it must be said, of being Albertan, whereas Oliver is one of the GTA MPs that will be crucial to Harper’s 2015 election plans.

He is also a former business executive with plenty of ties to Bay Street and a history of lobbying on behalf of the Securities Industry.  This may bode well for big finance in Canada, but it looks as though Harper has missed another opportunity to tap an economist rather than a businessman to a job that requires a much broader vision than simply supporting the financial sector of the economy.

Oliver certainly seemed to be setting the tone for his new ministry when he was secretly sworn in last week at Rideau Hall with virtually no warning and no words for the press on hand at the event.

One of the issues that many felt hurt Flaherty was his opaque style of management.  He once got into a public feud with the then Parliamentary Budget Officer (a Harper appointee, I hasten to add!) over the latter’s request in 2011 for more information on the government’s plans to eliminate jobs and cancel programs in the public service.

With Oliver in charge of the file, you can expect even more of the same, albeit, without the smiles.

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Other articles by David DesBaillets

Will Harper Turn his Back on Péladeau and Sun News?
Federal Politicians take vow of silence during Quebec election
Snowden leaks have shown Canadians how CSEC and their government
Was the Canadian Government involved in a TransCanada cover-up?
Confessions of a lefty Jewish Canadian on Harper’s visit to Israel

Follow David DesBaillets on twitter @DDesBaillets

 

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