Wednesday, January 16, 2013

Cold Conservatism & Canada Without A Jacket

Most Canadian kids don't leave home without their mother telling them, "Don't forget your jacket." A reminder to prevent their children from catching a cold. Canada may not have a mother looking out for us, at least on this continent, but Stephen Harper should know better that in this cold global economic environment our country should be better insulated.

Protecting Canada from the worsening global economy would not mean staying home and reducing trade, it would mean the opposite, improving trade without being vulnerable to every cold breeze. In fact if Stephen Harper introduced simple measures to increase productivity and diversified our tax system to ensure stable government revenue, our country would be a far warmer place. Perhaps not judged by Canada's arch-nemesis, the thermostat but certainly hot to any foreign business.

Without impacting trade whatsoever Stephen Harper right now could provide a much needed layer of insulation to Canada's economy in three different ways: Strengthen our tax system to stabilize revenue, reduce spending on entitlements for people who don't need it, and invest to increase productivity.

The first is a return to the normal rate of GST. Though many Johnny and Jenny Canucks alike enjoyed the freedom of a lower consumption tax, with at least four deficits so far since the Conservatives took office, it's time we all remember what our mother told us and bundle up. If the Government Sales Tax was never lowered in the first place, Canada would not only have suffered just three deficits instead of the projected seven, but our debt would be much smaller. We would also have more revenue to invest in research and development, instead of what our current government is doing, and that's cutting it.

Secondly, reducing entitlement spending like Old Age Security for seniors making over $50,000 would save the government approximately $4 billion a year. Considering OAS is paid out of general revenue and an ageing population will only add further burden to government programs and services, it only stands to reason that public money should be saved for those who really need it.

Lastly Stephen Harper could generate a bit of internal heat in our economy by increasing investment in research and development. Not long ago Canada was spending more than 2% of our GDP on R&D, now it's spending less than 1.7%, a level 20% lower than the OECD average.

Now Stephen Harper could do all of this or even just some of this and Canada would be much better insulated from the deep freeze troubling most world markets. But then again, as Conservatives favour less help for the disadvantaged and more help for the rich, being cold is clearly something they don't worry about.

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