Archive for January, 2009

I am writing this column late on a Wednesday night before the federal budget comes down. By the time you read this column, the federal budget will have been presented in the House of Commons. You will be able to judge for yourself whether or not the Conservative government has presented a successful budget.

How does one judge if a government budget is successful?  Do you ask the professional economists? Should you listen to the talking heads on TV, since many of these talking heads are paid to represent various lobby groups? Well, before you put too much trust in expert consensus, think about the following story:

In 1981, 364 of Britain’s most prominent economists wrote to The London Times newspaper, criticizing Prime Minister Margaret Thatcher’s budget. They said her government’s policies were wrong and she knew nothing about economics. The only problem for this group of 364 was that the British economy starting growing with Thatcher’s budget. Consequently, Britain entered the longest period of economic growth in almost a century.

Margaret Thatcher had relied on common sense and not expert consensus (although there were a couple of economists who were her supporters). Those 364 economic experts and their consensus proved to be completely wrong.

So what do you think?  What principles should be used to judge a budget?  Well, let me give you a few pointers that I will use on budget day.

• First, does the budget help broad portions of the Canadian economy? (success) Or does it focus narrowly on special interest groups? (failure)
• Secondly, does the budget encourage people to create wealth on their own? (success) Or does it merely move money around? (failure).
• Third, does the budget think about the future? (success) Or does the budget focus only on the here and now? (failure).
• Finally, does the budget make common sense? In other words, is the government behaving in ways that individuals or a business would seem ludicrous? Or are there some basic principles being applied to the management of government finances?

I’m Brad Trost your Member of Parliament in Saskatoon-Humboldt.  You can call my office in Saskatoon at 975-6133 or drop by our two offices to visit: Saskatoon Monday-Friday or Humboldt, Tuesday and Wednesday.  I always appreciate your feedback.

The federal budget is being tabled at the end of January and Finance Minister Jim Flaherty has been asking for input from Members of Parliament.  Since I am the representative for Saskatoon-Humboldt, I think that it is appropriate that Saskatoon-Humboldt knows what I have been saying on your behalf.

1.  Tax Cuts:  There is never a bad time to cut taxes and I have been arguing for tax cuts that lower the cost of labour and capital in particular.

Payroll taxes (EI, CPP) are one group of taxes that make it more expensive for companies to retain and hire workers. Instead of going up in the New Year, I would prefer that payroll taxes be reduced in 2009.

I have also been calling for capital gains tax cuts. Historically, on a dollar for dollar basis, capital gains tax cuts have tended to boost economies more than any other tax cut.  While not the most popular politically, reductions in capital gains taxes boost business spending and increase employment faster than almost any other measure.

2.  Spending Reallocation:  I have told the Finance Minister that we, as a government, don’t need to spend more to help the Canadian economy.  In both opposition and in government, I have and will continue to say that there are many examples of government waste.

The government should look at cutting budget grants and programs that do not boost the economy. Subsidies to crown corporations should be cut. Better use of taxpayers’ dollars should be the priority. A deficit is not a good thing. A deficit created by spending that doesn’t create jobs or increase productivity is considerably worse.

However, government spending on useful infrastructure programs could be accelerated. These projects should be brought forward this year rather than in a year or two. Such priorities would increase economic activity during a slow year.

Cutting taxes and reallocating spending should help Saskatchewan miss the recession and will help Ontario recover.

I’m Brad Trost your Member of Parliament in Saskatoon-Humboldt. You can call my office in Saskatoon at 975-6133 or drop by our two offices to visit: Saskatoon Monday-Friday or Humboldt Tuesday and Wednesday. I always appreciate your feedback.