Flaherty's miscues give us reason to worry

Flaherty's miscues give us reason to worry
May 12, 2009
GERRY BARKER
GUELPH MERCURY


One might describe Finance Minister Jim Flaherty as the Alfred E. Neuman of Canadian politics.

Neuman, the Mad Magazine icon with the jug ears and stupid wide grin, was famous for the expression: "What me worry?"

For starters, the ebullient Flaherty who breezed through the country saying the recession is mild and we'll come out of it better than any other country, has now changed his tune saying it is more serious and deeper than first presumed.

"Relatively speaking," he recently told the Canada-UK Chamber of Commerce in London with a straight face, "this is a mild economic recession."

He'd better say a ton of Hail Marys for that big one.

The member from Whitby-Oshawa announced spending $9.3 million to clean up Oshawa harbour. He was met with a blistering protest from members of the Ontario auto industry who are facing either not having a job, huge reductions in pay or pensions, or job "furloughs" at no pay.

But Flaherty's biggest lie is about the issue that won't go away.

He ripped $35 billion from Canadian investors when he announced Oct. 31, 2006, that income trusts, the income of which millions of Canadians relied on for support, were to lose tax status in 2011.

He acted without a shred of evidence that there was "tax leakage" as he proclaimed. His senior department officials argued that the government was losing up to $500 million a year in revenue because of the legal tax treatment of income trusts. The rationale ignored the 38 per cent of income trusts held in RRSPs and RIFs that would eventually be totally taxable.

It was an artful dodge. Even the Bank of Montreal and Royal Bank of Canada concurred with a major independent study, instituted by former finance minister Ralph Goodale, that there was no income trust "tax leakage." The minister stuck stubbornly by his decision.

Already there has been fatal fallout as the Tories, stigmatized with the fiscal rape of investors, failed to win a majority last October. Conservative investors defected in the thousands. It cost Stephen Harper control of Parliament.

How did this happen? The furious arguments of insurance and corporate lobbyists were determined to destroy the tax status of competing income trusts. Chief focus among these were the annuity products sold by insurance companies whose sales had taken a beating in the past 10 years because of soaring public investment in income trusts.

Without any public input or debate in Parliament, Alfred E. Flaherty met the enemy and, guess what? They is us!

It was the greatest government theft of private wealth in history. And the Tories wonder why their bunker mentality has resulted in their job approval polls slipping behind the Liberals.

The Tories cut the GST, costing Canada $10 billion in lost revenue in an effort to seek a majority. Yet they knowingly bray that this specious income trust $500-million "tax leakage" has a basis of fact and evidence. But they refuse to reveal the underlying "evidence" for the public to evaluate and comment.

Canada's recession has two faces: The monetary one in which the economy has fallen off the cliff; and the political one, where government wanders aimlessly, like Diogenes, hopelessly searching the world for an honest issue.

You cannot surround yourself with fawning "yes" men and expect to meet the most serious economic crisis the country is experiencing since the Great Depression. You don't prorogue Parliament for two months in the face of shattering economic collapse just to save your government.

Aux barricades, mes amis!

Gerry Barker's column appears regularly in The Mercury.