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The Conservatives in Government?

By Scott Proudfoot,
Principal Hillwatch Inc.
January 2006
(Originally released before the Jan.23/06 election)

Download Full PDF Version

Based on the results of a well-executed campaign, the Conservatives have moved up the polls in the New Year. Unless the last minute barrage of negative Liberal ads rolls that progress back, after 13 years in power the Liberals are out of office and the Conservatives in.

Like the Liberals, we agree that a Conservative Government represents a dramatic change in how Ottawa will be governed but we base our conclusion on a different set of reasons.

Part of that has to do with the Conservative Agenda, which we will discuss in detail below.  The other part has to do with how Ottawa is likely to work under the Conservatives and we expect major changes.

Key Implications:

  • Shift of decision-making power back to Cabinet and away from Public Service;
  • Some initial confusion about how decisions are being taken;
  • Corporate Canada lacks history with the party and will need to establish channels with the new players;
  • Expenditure review will be key initial driver of  government agenda;
  • Retrenchment into federal areas of jurisdiction;
  • Repair mode on Canada-US relations; and
  • Substantive agenda but business impact is limited with defence being the main area of new spending.

How Ottawa Will Change?

Paralysis

People operating outside of Ottawa likely have trouble appreciating how stalled the decision-making processes within Government have become as the Liberal Regime has wound down.

As governments age, typically there is a dilution of talent around the Cabinet table. Ministers with strong personalities and/or a sense of mission that helped put the party in power fall by the wayside and are replaced by people who are just happy to have risen that far. The result is that Ministers become figureheads and extensions of the public service- risk adverse and process driven.

This tendency was encouraged by Mr. Chrétien’s managerial style of government, which insisted on close cooperation between the Minister and the senior public servants. With good ministers, this leads to fruitful partnerships; with weaker ministers, it leads to absorption in the machinery. As Mr. Chrétien’s time ran down, decision processes noticeably bogged down.

None of these problems were resolved by Mr. Martin coming to power. For a number of reasons, they were only exacerbated and decision processes slowed further.

Ministers have been unwilling to engage on issues and have pushed everything down into the machinery. Meanwhile, senior public servants have been given every incentive to keep their heads down and count down their days until full pension.

The end result has been a tortuous, decision-making environment in which it is very hard to get anything done.

Breaking the Cycle

Cabinet Government is supposed to be a team sport.  The system is most dynamic with a cadre of strong ministers operating in the context of a strong caucus - who are given ‘room’ by the Prime Minister.  Conservative Governments have traditionally had more independent Cabinets and caucuses.

It should also be noted that Mr. Harper has a strong crop of relatively young, smart and now experienced MPs.  He will elect additional talent including former provincial cabinet ministers who have already run departments and taken the heat of a legislature.  Harper will have a crop of Ministers expecting to make the policy and take the decisions.  They will be engaged.

Having Ministers wanting to make changes and willing to engage opens the door to the review of some existing policies and creates a more fertile environment in which to introduce new policies.

Getting To Know You

When the Mulroney Government assumed power they brought with them suspicions of "official Ottawa". Because of that, senior public servants were often cut out of the decision-making process. There was a period of re-education for both the politicians and the public servants and that took a couple of years. That experience may be repeated.

Business and other organized Interests, trained to work through certain channels and dependent on their relationships with senior officials under the Liberals, may find that these contacts are now 'out of the loop' on key issues.

Bay Street

The Conservatives will not be anti-business but this government will be the least dependent on large corporations than any government we have ever elected federally in Canada. This is not Bay Street’s party anymore. The Party’s roots are elsewhere. Only a few MPs will have a strong ‘Big Business’ background. Harper, and the people around Harper, mostly does not come from a business background.

Relative to the Liberals, the Conservative Party is far less dependent on corporate donations and Mr. Harper’s Accountability package will make them even less dependent.

Corporate Canada had strong, long established connections with the Liberal Party and it simply does not have that history with the new players.

The Next Tax Cuts

The evidence suggests that Harper can fund his existing promises ($60+ billion) within the current fiscal framework. But as a good fiscally conservative economist, he will have noticed the acceleration in program spending over the last five years and the 15% jump in the last year alone. He will also want to offer Canadians more tax cuts at the next election. 

That leads towards a hard look at how Ottawa spends money. This always sets hares running as program heads in Ottawa play ‘duck and cover’. Expenditure review and a minority government can be a volatile mix.

Playing in Your Own Back Yard

Half of the Martin Agenda seemed to have the Federal Government playing in provincial or municipal areas of jurisdictions. It is hard to manage something that you do not directly control even if you throw lots of money at it - because, in the world of politics, it is not easy to withdraw your money if things do not work out. 

Harper will be more focused on federal affairs and letting the provinces run their own shops.

Mending Fences

Paul Martin came to office promising to repair the damage Prime Minister Chrétien inflicted on the Canada-US relationship. He has had the opposite result. His anti-American posturing during the campaign has taken the relationship to a new low.

Harper will not be as ‘chummy’ with Bush Jr. as former Conservative Prime Minister Mulroney was with his father but he will see it in Canada’s national interest to have a good working relationship with whoever is in the White House.

Inexperience

All new governments make rookie mistakes.  These usually come down to two types: throwing too many balls in the air at the same time and pushing ahead with initiatives without laying the ground work. This leads to the usual results: Big headlines! Outraged interest groups! Pillorying in Parliament!  In a minority Parliament, even small mistakes matter and the government’s agenda is always at risk of being high jacked by the issue of the day.

The Conservative Platform

Having a substantive platform is another reason why a Conservative Government will have a major impact on how Ottawa operates.

Hillwatch takes governing parties political platforms seriously because, in our experience, 80% or more of the proposals in party platforms are implemented.

This platform represents a busy small C-Conservative Agenda. Where the Liberals want to spent money on programs, Conservatives prefer tax credits or tax cuts to achieve their objectives. Despite all the election charges of social conservatism, this is not a radical program.

Beyond wanting to appeal to voters, this platform has been designed to be workable in the context of a minority parliament.  The Conservative may have to put some water in their wine but they should have a reasonable chance of passing most of these measures.

This platform is populist with highly targeted measures.  There is not a lot said on the economy or directly reflecting business priorities.

For more infomation, download a PDF version of the complete article with a table that outlines the details of the Conservative Platform





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