The British media is holding up Canada’s Liberal Party as the deficit-slaying ideal to which the current coalition ruling the UK aspires. New Conservative Prime Minister David Cameron is warning that Great Britain is about to radically change the way public spending is administered. Cameron is calling for citizens to expect drastic cuts to bring the nation back to balanced budgets.
The “radical plan” will involve importing a “Canadian-style star chamber” in which members of the cabinet will be forced to justify their budgets in front of their colleagues. The government hopes to follow the example of former Liberal Prime Minister Jean Chrétien, who turned around a fiscal deficit of 9.1% of GDP in the mid-1990s and brought in staggering surpluses.
The star chamber originated as an old English court of law that sat at the royal Palace of Westminster until 1641. It consisted of privy counsellors and common-law judges and supplemented the activities of the common-law and equity courts in both civil and criminal matters. Over time it evolved into a political symbol of the misuse and abuse of power. Margaret Thatcher’s Conservative government revived the star chamber for private ministerial meetings to resolve disputes between the treasury and departments with out-of-control spending habits.
Before the Brits get too excited about copying the example set by the Chrétien-Paul Martin Liberal Party, however, they should be apprised of a few facts. It’s true that the Liberal Party used a majority mandate to push through reforms of the public service, including much needed spending cuts of 20% to some departments. There is little doubt that this helped reduce overall waste.
It should be noted that balancing the federal budget also involved downloading the costs onto the provinces, who in turn downloaded them onto municipalities. This led to the massive “fiscal imbalance” between the province of Ontario [primarily with taxes from the city of Toronto] and the federal services received in return.
Paul Martin violated the Canada Health Act—which commits the Federal government to sharing half of health care costs with the provinces—by changing that commitment to 25%. Since then, the provinces have struggled to balance the needs of their citizens with the burgeoning costs of health care. In British Columbia the costs of health care have risen so sharply that income from the ”revenue neutral” HST will be diverted into the medical sector for the first year of the tax.
Then there was the gutting of the Canadian military. As a member of the NATO alliance, it is recommended that Canada spend a minimum of 2% on defence. The Liberals reduced this to a mere 1.1%, down from 1.82% when they took power in 1993.
In 1999 the Liberal government “stole” a $30 billion surplus from the federal employee pension fund [including the military] and funneled it into general revenues. And if that weren’t bad enough, Employment Insurance reached a $57 billion surplus by the end of fiscal 2008. Too bad the Liberal Party used EI as a slush fund to pay down the public debt.
So if David Cameron truly wants to mimic Canada’s deficit slaying Liberals, he’ll have to cut the public sector, starve the military, “retire” the public sector surplus, and redirect all social security funding to paying down the debt. Simple, right?
