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Former Harper CoS: GST cut 'worked' because it helped elect CPC

afransen

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From Macleans. A bit shocking, to me at least.

Ian Brodie offers a candid case study in politics and policy

Ian Brodie offers a candid case study in politics and policyIan Brodie, Prime Minister Stephen Harper’s former chief of staff, delivered an astonishingly frank explanation today for why the Conservative government cut the Goods and Services Tax, and why he’s glad they did, even though just about every economist and tax expert said it was a terrible bit of public policy.

“Despite economic evidence to the contrary, in my view the GST cut worked,†Brodie said in Montreal at the annual conference of the McGill Institute for the Study of Canada. “It worked in the sense that by the end of the ’05-’06 campaign, voters identified the Conservative party as the party of lower taxes. It worked in the sense that it helped us to win.â€

It’s not really surprising, of course, that campaign calculations lay behind the GST cuts, which have cost the federal government about $12 billion a year at the worst possible time. That’s been obvious all along.

What’s noteworthy is that Brodie, who is now a visiting fellow at the McGill institute, doesn’t shrink from publicly asserting that such a major public policy decision can still be deemed a success—even in the face of “evidence to the contraryâ€â€”if that move paid the desired political dividends.

It’s important to note that Brodie expanded his justification beyond simply saying that the policy was a success because it helped get Tories elected. He went on to argue that making good on their promise to cut the GST was, somehow, the move that allowed the Harper government to proceed later with the sorts of corporate and personal income tax cuts that most economists and tax-policy specialists believe make much more sense.

In other words, he sees a trade-off. Cutting the GST was in itself dubious policy, since taxing consumption is better for the economy than the taxing income that turns into investment that generates prosperity. But that bad tax cut was, in fact, good because it allowed a government willing to embark on more sensible tax cuts to stay in power.

But that only makes sense if you ignore the recent history of tax reductions. The argument that only a government that had cut the hated GST could politically afford to do the other sorts of tax reform doesn’t hold up. After all, the Liberal government, in then finance-minister Paul Martin’s fall 2000 mini-budget and the 2001 budget the followed, brought in sweeping, across-the-board tax cuts, all without worrying about the GST.

Beyond the narrow debate about the history of the GST cuts, there was something unsettling about Brodie’s candid presentation.

He made it in a panel discussion meant to try to address the question “Does Evidence Matter in Policy-Making?†To some of the other panelists, and I would guess to most of those in the roomful of academics and bureaucrats listening, the assumed premise was that evidence—facts, objective analysis, expertise—should matter a great deal more in policy than it does now.

But Brodie painted a picture of politics where that would appear to be a hopeless aspiration.

He ruefully recounted how the Conservatives tried to run in the 2004 election on a comprehensive tax-reduction platform based on solid policy thinking. But that meant they had to explain, he joked, “multi-year this, multi-year that.†Canadian voters tuned out the details and defeated Harper’s Tories.

Brodie said the party’s campaign researchers then explored public opinion. They discovered that Canadians tend to forget or discount past income tax cuts. Ontario voters don’t remember that Mike Harris reduced them, Alberta voters don’t think Ralph Klein cut theirs. “We found no one,†he said, “who believed they had ever had a tax cut from Jean Chretien or Paul Martin.â€

Lesson learned. Deliver a tax cut so simple nobody could misunderstand it or forget it. And so the Tories promised, and delivered, their GST cuts, a point off in the spring of 2006, and another in the fall of 2007. That second reduction came just in time for the beginning of the subprime meltdown, which would soon usher in an era when the Canadian government, like governments everywhere, would need every dime they could get.

Brodie talked mostly about the GST, but he suggested the same sort of clash between policy expertise and political necessity is common. He mentioned the way “sociologists, criminologists, and defence lawyers†attack just about every aspect of the Harper government’s tough-on-crime policy package.

Rather than actually rebut any of the arguments those opponents raise, however, Brodie noted that such experts are “all held in lower repute than Conservative politicians.â€

“Politically it helped us tremendously to be attacked by this coalition,†he said. “So we never really had to engage in the question of what the evidence actually shows about various approaches to crime.â€

Needless to say, there were voices in the room that tried to defend the uses of evidence in policy making. I found Wendy Thomson, now a McGill social policy professor, but previously in the political thick of things as former British prime minister Tony Blair’s chief adviser on public service reform, especially engaging.

Thomson spoke of the need for “brave politicians†to rise above the exigencies of party politics, and when a policy direction was clearly misguided, stand up and say, “It can’t go on like this.â€

One intriguing possibility raised in the discussion was that this sort of political bravery, married to sound policy, might happen more often in times of crisis than in easier days. So the Tories cut the GST when they were swimming in surpluses, but would they do something so obviously unsupportable, at least in pure policy terms, in these more challenging days?

But that raises yet another question. In truly testing times, are governments actually capable of gathering evidence and developing policy based on it? Kevin Lynch, Ottawa’s top mandarin as Clerk of the Privy Council, also spoke at McGill today, and he left me worried on this score.

“There’s always an urgent search for knowledge to better understand the nature of the crisis, so as to better shape the policy response to the crisis. And this takes time and it takes expertise,†he said. “This is always in tension, and fairly great tension at times, with the understandable desire for action, to do something, and to be seen to do something.â€

He means, of course, desire on the part of politicians to be seen to be busily solving problems. In the current economic mess there is ample evidence of a rush to seem to be shoveling stimulus billions out the door, against urging, from among others David Dodge, for a more measured response.

So I’m left with two unsatisfactory impressions of the link between evidence and policy. In good times, politicians might feel they have the luxury of ignoring evidence, and so design and implement expedient policy; in bad times, politicians might feel they don’t have the luxury of gathering evidence, and so design and implement expedient policy.

-----------------------------

I'm sure others will brush this off, but there is something profoundly troubling to me when our government is operated in this way. For our government to knowingly implement bad policies because they play well politically is a complete abdication of leadership. This reminds me of that Stephen Colbert bit about 'truthiness' and acting on your gut.
 
So what are you more shocked by? That he admitted the action or that it contributed to the CPC win?

Cutting taxes to attract votes is as old as the hills - regardless of how sound that action is.
 
Unfortunately that's just part of politics... city councillors will vote against a development application to support their own re-election, even if they believe it's a good proposal, it's supported by staff, and denying the application will cost the city tens of thousands in legal fees and staff time.
 
The Tories sold the 407 to fund tax cuts.

However giving middle class suburbanites a tax cuts by taking away their highway, was political suicide.
 
So what are you more shocked by? That he admitted the action or that it contributed to the CPC win?

Cutting taxes to attract votes is as old as the hills - regardless of how sound that action is.

Not that he admitted that the GST helped the CPC win. That it was the sole objective of the policy, and that the policy was even detrimental to Canada.
 
Not shocking - I think we've all known for a long time that the current Conservative government will do or say anything to be elected, no matter how bad the long-term impacts are for the country - or how remotely unnconnected what they promise, compared to what they actually do once elected.

Just look at the last election campaign. They promised well into the economic crisis, that if Canada elected a Tory government, we wouldn't see a deficit. Look at where we are now. Clearly such a promise was complete and utter bullshit - and they knew quite well that they would end up with a deficit.
 
It's funny how evey conservative person would go on and say that we aren't in as deep shit as the Americans because the CPC cut the GST. :rolleyes:
 
Has any Conservative person said that?? I'd have thought that because the GST cut, dropped $12-billion of revenue a year - or $60-billion over 5 years, that they would have wanted to avoid much discussion of that now.
 
Well, Harper keeps on saying over and over again how it it was his government's policies that made us less vulnerable to the recession thatn Americans.
Now, let's see what economic policies did we have before November last year, hmmm?
Of course they wouldn't go out and literally say it!
 
Why is any of this surprising? When Jean Chretien promised and did cut the EH-101, it cost thousands of Canadian aerospace jobs (during a recession that too), dramatically harmed our nation's defence capabilities (particularly our maritime and northern sovereignty efforts) and was still applauded by taxpayers at the time. That cut was second only to Avro Arrow in the amount of harm it brought to our aerospace sector. And our military is still suck with helicopters that are older than every pilot and maintainer who operate and service the aircraft. However, the public seemed to think it was a great idea lead by Chretien's assault on the 'cadillac' of helicopters.

Ian Brodie is right. The GST cut contributed to the Tories being electable. And its not that far a cry from our premier paying out a bribe to Ontarians to swallow the PST-GST merger. It's good policy. But try explaining that to the average Ontarian who probably thinks its a massive tax grab. Politicians will always run on electable ideas. Ultimately, Kim Campbell's thesis that elections are not the time to discuss policy has been proven true time and time again by parties on both sides of the aisle.
 
Well, Harper keeps on saying over and over again how it it was his government's policies that made us less vulnerable to the recession thatn Americans.
Does he? I thought he kept saying it was Canadian policies and regulations, while trying to ignore that they were the same policies and regulations he had campaigned about softening while he was in opposition. I haven't actually seen him try and take credit for any particular regulation ... not that would surprise me - but I haven't seen it.
 
Well, of course Ian Brodie is now happily removed from the PMO after that unfortunate episode with the Canadian diplomat re: Obama. Of course, it is his ex-boss that will have the eat the humble pie that's the 30+B deficit. Perhaps he almost wish he'd lost the election if he knew what was coming!

AoD
 
Ian Brodie is right. The GST cut contributed to the Tories being electable. And its not that far a cry from our premier paying out a bribe to Ontarians to swallow the PST-GST merger. It's good policy. But try explaining that to the average Ontarian who probably thinks its a massive tax grab. Politicians will always run on electable ideas. Ultimately, Kim Campbell's thesis that elections are not the time to discuss policy has been proven true time and time again by parties on both sides of the aisle.

It is a 'far cry'. Harmonizing the PST is good policy, and the $1000 rebate is an inducement to taxpayers to accept the positive policy change. Cutting the GST was a terrible policy. Thus, the provincial Liberals are showing leadership by selling good policy to the public, and the CPC abdicated leadership and hurt Canada by selling bad policy.
 
Why is any of this surprising? When Jean Chretien promised and did cut the EH-101, it cost thousands of Canadian aerospace jobs (during a recession that too), dramatically harmed our nation's defence capabilities (particularly our maritime and northern sovereignty efforts) and was still applauded by taxpayers at the time. That cut was second only to Avro Arrow in the amount of harm it brought to our aerospace sector. And our military is still suck with helicopters that are older than every pilot and maintainer who operate and service the aircraft. However, the public seemed to think it was a great idea lead by Chretien's assault on the 'cadillac' of helicopters.
What does this have to do with the topic? I don't remember Chretien's chief of staff admitting that not only was cancelling the EH-101 bad policy, but that they did it solely to win the election.
 

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