Tuesday, 20 October 2015

Who dares, wins

Astonishing! If you had asked anyone in Canada, when the election campaign began more than eleven weeks ago, what was the least likely outcome, the answer would have been "a Liberal majority government". Yet that's what we now have -- and indeed it's a solid majority that will easily last a full term. Stephen Harper has already announced his resignation as Tory leader, and will probably hand over power to incoming PM Justin Trudeau by the end of the week.

In the end it appears that the electorate's desire for change, after ten years of Harper's bludgeoning style of government,  easily outweighed the Tories "trust us and fear everyone else" message. This was always possible and even likely, but when the campaign began, it seemed that the once-socialist NDP would be the beneficiaries -- after all, the Liberals were all but wiped out in the 2011 election. It seemed inevitable that the NDP and the Liberals would split the ABC (anyone but Conservative) vote, possibly allowing Stephen Harper to cling to power as the leader of a minority government.

Where the NDP went wrong was in running the campaign as if the election was theirs to lose. By cautiously promising very little change -- balanced budgets, no major tax hikes -- the NDP effectively drove away much of the electorate for whom change was the main imperative. Trudeau's Liberals were far from bold, but the promise of tax hikes on high income earners and a three-year budget deficit to jump-start the economy at least held out the hope that things might be different.

It's interesting to speculate about whether the Liberal victory on a slightly old-fashioned tax-and-spend platform signifies a shift in Canadian attitudes. Harper's resolutely anti-tax, anti-deficit rhetoric has permeated all levels of government in the past decade, to such a degree that when Trudeau first unveiled his economic programme, it seemed to many like a suicide note. However, coupled with the success of the NDP in the Alberta provincial election earlier in the year, the Liberal win may be evidence that the Canadian electorate is no longer convinced of the benefits of never-ending austerity.

Whether that viewpoint persists will, of course, depend on how good a job the Liberals are able to do once they take office. After a decade out of power, the party is not in a position to call on many MPs with previous ministerial experience -- Trudeau himself is a Cabinet neophyte. Some of the party's elder statesmen -- Jean Chretien, Paul Martin -- may offer advice, but Trudeau will have to be careful about how much he listens to them if he wishes to maintain his image as a bringer of change.

The key post in the government, given the party's tax and deficit pledges, will be the Finance Minister. Setting a credible budget plan for the entire four-year term that resorts to modest deficits for three years but a return to surplus in the final year will be a difficult challenge, especially as it implies a return to a degree of austerity just as the government is gearing itself up for the next election.

Many months ago, Trudeau told a TV interviewer that the best approach to balancing the budget was to get the economy growing faster. That would boost revenues, and then "the budget will balance itself". The Tories tried to use that last phrase, minus the context, to damn Trudeau as too naive to run the economy. The fiscal plan that Trudeau and his new Finance Minister will be putting into place may show us who's right.  

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