Postmedia News, October 24, 2011 8:06 PM

Q. You've been talking about the economy for a long time. I remember during the election campaign you were delivering warnings to people that we live in a fragile global economy, troubles are lapping at our shores, and sure enough, now, Europe doesn't seem to be resolving itself. We had a meeting of European leaders (Sunday), another one on Wednesday. What's your message to them?

A. Our message to them is, I guess, the following: Europe may not be the only storm cloud on the horizon. But it is clearly the one that is most pressing and the most threatening. And I think we have been clear to say that that issue really has to be dealt with. I know that's easy to say, and I know that our European friends have taken great efforts over the past two or three years to avoid any kind of catastrophic event. But I think we're at the stage where simply patchwork solutions are not going to keep us avoiding that kind of event. There's a very serious threat in the Euro zone. I think all of the leaders are aware of that. And I think they're all aware they're going to have to take the very big actions necessary to create a sustainable situation. So our message is to encourage them to do that. I think the very fact the G20 is happening will be a significant pressure for them to try to resolve that situation.

Q. How important is the meeting of European leaders leading up to the G20? One would think that you have to fix that before you can get to the next meeting.

A. Well, it's important. As I say, it's the thing immediately threatening the global recovery. There are other threats to the global recovery. But this is the one threatening it today. European leaders have promised the solution Wednesday. They promised the solution this week. And I know there's a lot of moving parts, and a lot of complexity and a lot of disputes as to how that ought to be resolved. But I think they all understand that it needs to be resolved. And the actions taken to resolve it need to be very substantial.

Q. If a resolution doesn't come, you have talked in the past about the effect on confidence. Consumer confidence and market confidence. And the solution that might come from them might be more onerous than the one we give ourselves. Tell me about that.

A. Well, look, I'll just say, you have already seen over the past few weeks, there is significant lack of confidence in global markets — not just stock markets, but bond markets, financial markets. And they are seeking a solution. And as I have said before, I anticipate a solution will involve some pain to some actors but I think at the moment the markets are looking for not a pain-free solution. They're looking for a solution that provides some certainty and some clarity as to what that pain will be. As opposed to some kind of an event like a Lehman Brothers, where things just spin out of control. And that's what we've absolutely got to avoid, and that's what European leaders, to this point, have been committed to avoiding.

Q. You're a politician. How difficult is it for politicians to convince their populace that these decisions have to be made, and that they involve pain?

A. Well, look, these are not easy times for leaders. Many leaders are taking very difficult decisions. We've had to take a couple here. But look, what I always say is individual difficult decisions are less painful than global recession. And so, let's take what is clearly the better solution. And that is to have something that at least moves us forward. In the end, I think electorates judge you on overall performance, as opposed to individual decisions. So if the decisions are right, even if they are painful, I think they will pay dividends down the road. But if you don't take decisions and you end up with a bad result, voters will never forgive you for that.

Q. Without getting too far into the details, are you hearing enough of what you like in terms of the various things coming together in Europe on this? For example, the facility fund? Is it big enough?

A. I'm not going to get into analyzing their solution. Certainly through our officials — the minister of finance and others — we have given significant input on the kind of things we think would work and not work. I think in the end, they have to make the decision on the particulars, and I'm not going to comment on the particulars. As I say, we're all just looking for a solution that will end the immediate market uncertainty and allow us to move to some of the other issues we have to move to.

Q. Before I move from this, are they squabbling? Is it taking too long?

A. It's a difficult situation and the solutions are complicated. And they have many variants. I think everybody is frustrated with how long it is taking, but we also, as decision-makers, understand the complexity, expense and difficulty of these decisions.

Q. As we head toward Cannes, you headed a significant G20 in Toronto where a decision was made to make commitments on debt reduction and deficit reduction. Is the political will on that easing? Is it still there to the extent that it should be?

A. Well, there's several things we have to make progress on. Ongoing progress. The European situation is the one that we have to make immediate progress on, because it is the immediate threat. But there are a number of other significant issues on which we have to make progress. You have named one. The specific commitments were made around fiscal targets. Countries, all countries, including our friends south of the border, should be putting in place plans to have medium term deficit reduction and debt stabilization. Canada will make the Toronto targets substantially ahead of time. We may conceivably make them this year. But we'll certainly make them next year. Others, if they aren't going to make them immediately — and I understand that — but markets are really looking for some sense notwithstanding the need of many countries to run deficits under the current environment. They're looking for some sense that as the economy recovers, deficits will be eliminated and fiscal positions will improve. And that's really what countries have to do. Obviously, the Europeans are being forced to do those things. The Americans obviously, have a process underway in Congress right now, but they also do need a medium-term fiscal plan.

Q. It's debt. You want a framework for growth. You want exchange rate flexibility. You want financial-sector reform. And you want us all to resist trade protectionism.

A. You've summarized it. You've got all of the issues. I was going to go through those one at a time.

Q. Why is all of that important? Why is it collectively important?

A. Well, in terms of the European crisis, in terms of fiscal targets and in terms of exchange rate flexibility and current account balances, in fact, all of them if you put them all together, financial-sector reform and avoiding protectionism. These are all things that are essential to avoiding another global recession. Some are of immediate import, but all of these things, if not handled properly, could lead us back to global recession. In the case of financial-sector reform, as you know, substantial progress has already been made. Obviously, there are some in the financial sector who don't necessarily like the proposals, and there are some legitimate complaints, and in Canada, we pay attention to what the financial sector says. But that said, one of the things we know is the financial sector can't just write its own rules. The crash of 2008 made very clear that there must be credible regulatory systems on the financial sector or it can lead us in a position where we don't want to be. That is being done, that has to be done. On protectionism, everybody recognizes the threat of protectionism and by and large, protectionist threats have been resisted around the world. At least in any major nature. But we'd obviously also like to see multilateral trade progress. Rather than just resisting threats, we'd actually like to see us move forward. And the final issue you mentioned, look, in a global system that depends on the functioning of global marketplace, our view is that policies, such as fixed exchange rates, policies that create situations where some countries are in permanent surplus and others are in permanent deficit, are going to lead to imbalances that are going to have effects all through the system. Whether they are on fiscal positions or ultimately on trade protection positions. This is just an unhealthy situation.

Q. This was an issue last year in Seoul, wasn't it?

A. And it does have to be addressed and there's resistance on the part of China in addressing that. But our view is very clear that an economy as large as China, and other large economies, can't practise policies that are not systematically sound. The policy has to be sound in terms of the global economy as a whole, not just in terms of one economy's interests.

Q. And finally, prime minister, if this doesn't get resolved, if we head into a recession, Canadians are going to ask themselves, what is it going to mean to me? And I'm wondering what does it mean for your government? Does it inhibit your government's ability to make good on some of the election commitments — spending commitments, and frankly, deficit reduction?

A. Well, Mark, first of all, let me be very clear that I don't think we're going to have a second global recession. I think that's important to say. At the same time, the government has been clear that if we faced markedly different economic circumstances, the government would make appropriate changes to its policies. The scenario we anticipate right now is that this economy — the global economy and the Canadian economy along with it — will experience continued gradual economic recovery, albeit a slow one. We believe that under those circumstances, the policies we are pursuing right now are appropriate. First of all, I think it's appropriate to note we are running a substantial deficit, we are stimulating our economy significantly, even now. Much less than we were two years ago, but we are still doing that. That is an appropriate policy as long as there is a medium-term plan to continue to return to balance. And we have that and obviously we're putting a little more in place to ensure that will happen. We think that all that is doable. While we continue to make investments in the Canadian economy that will aid us in long-term growth. So we think this is the appropriate mix. Deficit now, balanced budget within a three-year time frame and obviously, some paring back of government expenditure growth but in a way that does not inhibit our ability to make investments that will actually create economic growth in the future. That's what we're doing. I know the opposition's position is we should significantly increase the deficit today and abandon fiscal targets. That position is not backed by any credible institution anywhere in the world. That would not be an appropriate policy under today's economic circumstances. And as I say, I remain relatively optimistic. Obviously, if I was really optimistic I'd be seeing great growth in the future. But look, I remain relatively optimistic that the global economy will grow and that Canada will continue on the same trajectory as the global economy but out in front of most, if not all, advanced developed economies.

Q. But as for the view that your government's policies are built on a house of cards, with a certain assumption of growth, and if we head into a recession you simply can't do many of the things you'd want to do?

A. I say if economic circumstances were to change, the government's economic plans will have to change. Right now, we have somewhat slower growth than we anticipated but nothing that says we are significantly off target or that we have to fundamentally change our economic direction. And as you know, all the major institutions in the world — the World Economic Forum, the International Monetary Fund, Forbes Magazine, you name it — say that Canada is essentially on the right track. In fact, it's important to say, Mark, that when we go to these meetings, everybody on virtually every issue — whether it's trade, whether it's fiscal policy or monetary policy or financial-sector regulation — everybody points to Canada as the model to follow. And for emerging economies that are obviously growing much quicker than ours, Canada is still where they want to be, eventually. So, I think we're significantly on the right track, but as I have said repeatedly to Canadians, if things change considerably, we'll adapt. We'll have the appropriate policies. We're not going to be rigid. We'll make sure the policy matches the circumstances we find ourselves in.

Gord Elliott

Alberta Member Representative

National Council

Conservative Party of Canada

By Monte Solberg ,QMI Agency, First posted: Sunday, October 16, 2011 08:00 PM EDT

Great news, America’s Occupy Wall Street movement is about to open branch plants in Canada. Soon, large groups of people will be playing hacky sack and urinating in your favourite park as part of their protest against Wall Street.

The protesters are blaming bankers, and wealthy people in general, for things not going their way, and I totally get that. When things go well, it’s because I’m brilliant. When they go badly, it’s because rich people are out to screw the little guy. Obviously many people on Wall Street did their part to wreck the economy. Some were outright crooks and went to jail. Please, throw away the key.

Others bundled together shaky mortgages, bad car loans and overdue credit card balances into collateralized debt obligations. Then others, including big banks, right down to small retail investors, bought those CDOs because the returns on them were unbelievable. No, I mean they were literally unbelievable, which should have been their first clue. But people get dollar signs in their eyes and they make dumb decisions. I’ve been there too, but the point is we reap what we sow

Of course, this also raises uncomfortable questions like, where did all that bad debt come from? Did those bad bankers force people to buy houses they couldn’t afford? Did the bankers make them run up their credit card bills? Maybe the Occupy Wall Street protesters should take their signs to the lawns of the houses they used to own and protest their own bad decisions. The same thing applies to those who are carrying too much student debt and can’t get a job with that degree in cultural studies. Sorry, but you made the decision to spend four or six years studying something that was never going to lead to gainful employment.

See, Dad was right: The world doesn’t owe you a living. In fact, it’s the other way around. Give the world what it’s willing to pay for and you’ll be just fine.

Then there’s the role of congressmen, senators, Fannie Mae, Freddie Mac, regulators and the Federal Reserve Bank. They encouraged more and bigger homes with artificially low interest rates, low credit standards and mortgage deductibility while failing in their duties to oversee the financial system.

House Minority Leader Nancy Pelosi has declared her support for the protesters. If she really wanted to be helpful she should actually picket Congress with a sign saying, “Down with Pelosi.” Except for maybe Ron Paul, the Republicans should also take to the streets to protest themselves. The problem isn’t just that returns diminish as more and more government support goes into trying to “help.” The problem is, at some point government support goes from helping to hurting faster than you can say “welfare dependency.”

The Wall Street protesters like to claim their movement is leaderless, which I won’t dispute. What they have yet to acknowledge is their movement is also pointless, at least until they acknowledge they are responsible for their own fate, as much as anyone else. If their movement had some leadership, they would already know that.

Gord Elliott

Alberta Member Representative

National Council

Conservative Party of Canada

 

Neil Reynolds, From Wednesday's Globe and Mail, Last updated Tuesday, Sep. 06, 2011 7:14PM EDT
The IMF called on the weekend for the United States and Europe to abandon austerity – even before they had begun to practise it. Interesting.

Used to describe fiscal restraint, austerity – you would think – means austere: A word (from Latin and Greek) that expresses sacrifice. Indeed austerity means an almost puritanical self-discipline. (One definition: “stringently moral.”) Used to denote government restraint, however, austerity is a euphemism. It doesn’t mean making do with less. It means making do with smaller degrees of more. Few countries ever reduce spending in real terms. Even in hard times, few even try.

Britain proclaims austerity, for example, but flagrantly practises inflation-plus spending. Britain hasn’t experienced a single year of government austerity in more than 60 years – the market meltdown years of 2008 and 2009 included. In the past year, Britain’s Conservative-Liberal coalition government has increased spending in real-dollar terms by 5.3 per cent: An act of public sector restraint so apparently harsh in its consequences that demonstrators have filled the streets of London to express their collective rage. By the government’s projection, public sector spending in 2014 will exceed public sector spending in 2010 by £93.7-billion ($148-billion); new government borrowing in this same period will exceed £485.5-billion.

One of the few countries now practising austerity, however marginally, is – trumpets, please! – Canada. Finance Minister Jim Flaherty has completed one year of real-dollar, per-capita austerity. He envisages four more. If he meets this target, Mr. Flaherty will achieve a remarkable accomplishment: five consecutive years of austerity.

More remarkable still, however, is this astonishing fact: Hardly anyone will have noticed. Call it austerity on the quiet. By making small, incremental spending cuts, here and there, hither and yon, Mr. Flaherty has provided the world with a good example of responsible restraint – without inciting mobs.

Mr. Flaherty appears to have mastered his difficult assignment: Rubbing his tummy and rubbing the hair on his head in different directions at the same time. On the one hand, his budgets will show nominal increases in national expenditure every year (averaging 2 per cent a year). This means that no one will ever find a minus sign in a Flaherty budget. This is smart. Opposition parties go berserk when they spot minus signs.

On the other hand, plus signs notwithstanding, Mr. Flaherty’s budget will produce decreases in real-dollar, per-capita expenditure. You can calculate the decreases by taking last year’s expenditure and adjusting it for population increase and for inflation. This population-plus-inflation formula ensures a fair and objective comparison of year-over-year spending.

In 2010-11, for example, Mr. Flaherty budgeted spending of $276.5-billion, an increase of $2.4-billion from spending of $274.1-billion the previous year. From the base year, (1) allow a 0.9 per cent increase in spending ($2.4-billion) for population increase; and (2) allow a 1.7 per cent increase ($4.6-billion) for inflation. Thus, Mr. Flaherty’s austerity-compatible limit for the coming year would be: $274.1-billion plus $2.4-billion plus $4.6-billion: or $281.1-billion. In fact, Mr. Flaherty actually budgeted $276.5-billion – for an austerity saving of $4.6-billion.

Every bit of honest-to-God austerity helps. In 2010-11, Mr. Flaherty produced a (projected) austerity saving of $6.2-billion for a two-year austerity saving of more than $10-billion.

Mr. Flaherty’s austerity program is an exercise in adroit economic management – rendered more remarkable by its modesty. No one is waving his arms in the air. No one is bragging. But it is by small, repeated acts of restraint that the government can restore public sector consumption from 34 per cent of GDP to 29 per cent – in a single parliament – to its pre-crisis level in an orderly way.

A couple of years ago, during the market meltdown, Mr. Flaherty looked ahead (in a year-end interview) to now – to 2011. Among other things, he anticipated the killing off of government programs that no longer serve a productive purpose. “We have hundreds and hundreds of programs that just trundle along, growing at 3 per cent or 4 per cent a year – ahead of the rate of inflation,” he said. “It takes resolve to restrain this spending growth.” Further, he said, “some programs should end.”

It is in the nooks and crannies of government – in the “hundreds and hundreds” of them – that Mr. Flaherty will find targets for his program of austerity by stealth for years to come.



Gord Elliott

Alberta Member Representative
National Council
Conservative Party of Canada

A Message From Our EDA President

What a truly inspiring start to the year! Hundreds of conservatives from Edmonton-Centre worked tirelessly to prepare for and execute a successful election campaign, many more spent countless hours reviewing policy and constitutional amendments in advance of June’s Convention, and still others worked to keep our communications and fundraising activities moving forward. On behalf of the Board of Directors, thank you all so very much.

With such a flurry of activity it is often difficult to keep the big picture in focus, but now, with an opportunity to reflect, it’s time we talked about what the next few years will look like for our Party, our EDA, and the conservative movement in Alberta.

In my view, this relative calm is an opportunity to get back to our roots, or grassroots for those who are not sick of the term. It is an opportunity to build our membership, refresh our ideas, and build an even stronger team of volunteers. This foundation will propel through a potential shift in our boundaries and into the election of 2015.

Our ability to achieve these goals will depend on our ability to attract more people to our great team. If you want to get involved, there are many different ways to help out. You don’t need to have experience or specific knowledge of any kind, you just need to let us know you are interested and we will find a role that you are comfortable with and find enjoyable. To become part of our Conservative team, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 780-442-1800. With your help, we can build on our Party’s momentum.

Have a wonderful summer,

Steven Dollansky,

President, Edmonton Centre Conservative EDA