Sizing Up The Provincial & Federal Scene

Premier Danny Williams announced his new provincial cabinet this week. There were no major surprises but there were a few smaller ones.

The ouster of two ministers, Jack Byrne and Tom Osborne, from Municipal Affairs and Justice respectively, raised a few eyebrows. While Byrne’s ouster was unexpected, the replacement of Tom Osborne in the Justice portfolio had been rumored for some time.

Osborne’s replacement, Jerome Kennedy is a respected defense lawyer and there is speculation that the former minister may be planning to run for the federal conservatives in the next election, something that would not sit well with the Premier in light of his anti-Harper campaign.

The provincial cabinet grew by two new members flying in the face of Williams promises to shrink cabinet when he took office in the previous election. This move was not overly surprising however in light of the additional provincial revenues at his disposal and after the Premier essentially offered Labrador newcomer, Pattie Pottle, a post during the recent election campaign.

During that campaign there were many indications that Williams might lose all four Labrador ridings. In an effort to shore up support he all but promised the voters that if Ms. Pottle was elected she would receive a cabinet position. After she and two other PC candidates won in the area it was difficult if not impossible for the Premier to walk away from his promise. As a result we come to the biggest highlight of the new provincial cabinet…

…Labrador now has two cabinet ministers around the table, Pottle at Aboriginal Affairs and Hickey in Labrador Affairs. In the past these portfolios were combined and often managed in conjunction with other cabinet duties. Now, both are separate and each has the complete attention of a full time minister, both of whom are from Labrador.

For far too long many people in Labrador have felt forgotten by the provincial government and with good reason. Resource revenues from the region have helped fill provincial coffers for decades yet the area has often had to stand at the back of the line for infrastructure funding and government services.

It remains to be seen if a louder voice in cabinet will actually ease Labrador concerns but it’s certainly a start. Time will tell if the big land will finally receive the same kind of treatment from St. John’s as the province itself has been unsuccessfully seeking from Ottawa for years.

Speaking of Ottawa, on the federal scene Finance Minister, Jim Flaherty, announced his fall financial update this week. In reality it was more of a mini-budget but the conservatives aren’t admitting as much.

The “update” will see a further 1% cut in the GST, personal and corporate income tax cuts and a small reduction in EI premiums for business and individuals. The most interesting part of the announcement is that the personal tax cuts are retroactive to January of 2007 meaning that they affect this year’s tax returns and the GST cut takes effect on January 1.

It seems Stephen Harper has made up his mind to force an election in the spring or early summer. Most likely they’ll accomplish this by structuring the March budget in a way that it offers a few more tax breaks they can run on yet includes something that even the Liberals, as desperate as they are to avoid an election, will not be able to sit by and take a pass on.

All the signs are there.

A week ago the Finance Minister was all over the news presenting himself as a champion for consumers after Canadians vented frustration because a high Canadian dollar was not being reflected in prices at the checkout.

The truth is that Flaherty did nothing to change this reality but by spring many prices will be in the process of falling naturally as old inventories work their way through the system and as retailers, hit by low Christmas sales, begin to force prices down. Whether a natural process or not, thanks to Flaherty’s antics, the conservative party is likely hoping for a bump when prices begin to fall in a few months.

In addition, the retroactive tax cuts announced this week will mean that spring is also the time when many taxpayers will receive a bigger tax refund than they would have otherwise. Spring is also the traditional time of year when large numbers of people consider two of the biggest purchases any of us ever make, automobiles and homes. Though the GST cut introduced this week will save the average buyer very little, anyone buying big ticket items will see substantial savings at a very opportune time for the Harper government.

The conservatives appear to be strategically aligning their stars in order to best position themselves for a spring majority election win.

As one opposition MP recently put it recently, “Don’t be fooled and make no mistake, the conservatives claim to be governing but they aren’t. In reality they’ve been campaigning ever since the last election.”

I guess it’s nothing new under the sun for a government to buy votes with the taxpayer’s own money, but the conservatives are clearly more strategic, calculating and subtle about it than governments have been before them.