Posted June 26, 2015
Thomas Mulcair’s NDP has had encouraging showings in recent polls, at least in part because of who he is not. It is time for a closer look at what the party stands for.
A recent speech by Mulcair at the Economic Club of Canada in Toronto was tuned to its audience. Mulcair claimed that NDP provincial governments have a superior record in fiscal management. He invoked the names of Manitoba’s Gary Doer (1999-2009), Saskatchewan’s Roy Romanow (1991-2001), and, most especially, Tommy Douglas (1944-1961), who had 17 consecutive balanced budgets.
He did not mention Greg Selinger, who has undone much of Gary Doer’s good work and is currently Canada’s least popular premier, or the party’s four British Columbia premiers who posted ten consecutive deficits in the nineties, or Nova Scotia’s Darrell Dexter.
He did mention Bob Ray, but pointed out that he did not count because he turned out to be a Liberal. That was good for a giggle, but Ray did not exactly have to drag his NDP cabinet kicking and screaming into fiscal mismanagement.
This is not to argue that history contradicts Mulcair’s assertion. But, there is no history at all at the federal level, and the record of Tommy Douglas that every NDP leader likes to talk about is more than five decades old. The history tells us nothing.
Where voters should focus their attention is on the promises currently being made. In that same speech, Mulcair promised to reduce small business taxes by 2% and to create an innovation tax credit (no cost given for either). He added spending of $1.2 billion per year on infrastructure, a further $1.5 billion for transit, and $8 billion per year for subsidized day care. Elsewhere, the party has promised to spend more on the Guaranteed Income Supplement, Old Age Security, Unemployment benefits, and health care transfers to provinces. This is an incomplete list.
Mulcair says he believes “that it is fundamentally important that the federal government live within its means.” But he gives no indication of how all these promises are to be paid for. It does not sound like Tommy Douglas.
Mulcair has talked about an increase in large corporate income taxes. Such initiatives can be surprisingly unproductive. Corporations with operations in many countries can influence where their income is recorded and taxed. Low tax rate countries prove to be attractive.
Thus, Ireland chose in 1998 to dramatically reduce its corporate income tax rate, which resulted in increases in tax revenues and business investment, so much so that it led to bitter complaints from higher tax European Union countries such as France.
Canada’s corporate tax rate has fallen from 28% in 2000 to 15% today. Yet, revenue has grown since then by 31%, not far from the 46% growth in personal taxes. (Single year comparisons are volatile, so these growth rates were calculated comparing 2010-2014 to 2000-2004.) It is quite possible that an increase in corporate tax rates would drive business and income out of Canada, losing more revenue than it gains.
The NDP’s website includes a commendably detailed Policy Book.
Some parts of it will appeal to a broad group of voters. Other parts reflect the kind of interventionist policies that one might expect from a left of centre party. None of these were mentioned in the charm offensive with the Toronto business community:
- Implementation of “… social responsibility criteria for companies recognizing their responsibility to employees, the environment, community, consumers, and shareholders.”
- Interfering with the mandate of the Bank of Canada.
- “Taxing capital gains at the same rate as salaries or wages.”
- “Ensuring that large profitable corporations pay a fair (ie greater) share of taxes.”
- “Improving the public sector’s role as a wealth creator and a major provider of jobs.”
- “Halting public private partnerships (PPP) which are wasteful and inefficient models for delivering public services.”
- “Opposing all forms of privatization and in supporting the delivery of all public services by public sector workers.”
- “Enforcing a fair minimum wage for all employees under federal jurisdiction and banning scab labour in all disputes under federal jurisdiction.”
- “Creating industrial sector councils involving representatives of industry, workers, and governments.”
- “Restoring the Canadian Wheat Board as the single desk marketer for wheat and barley.”
All of this would be music to the ears of left-wing thinkers, but might be less attractive to those who do not cherish the prospect of a rapidly expanding public sector.
In the 2009 election campaign, Darrell Dexter called himself a “conservative progressive.” This was a clever campaign tactic, but many voters were disappointed with the reality. His government posted large deficits every year, in part because it frequently gave priority to the agendas of public sector unions.
Many NDP stalwarts viewed these choices as totally in keeping with their roots. Those who voted for the NDP for the first time ever in 2009 felt they had been duped.
If the federal NDP forms a government after this year’s election, voters will have no excuse for being surprised. The NDP philosophy is clearly set out in the Policy Book. It tells us more about what to expect than any history. Read it.
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