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Analysis

Harper spends big, but can he go back?

From Wednesday's Globe and Mail

OTTAWA — Stephen Harper did his best yesterday to convince Canadians he's still a small-c conservative, promising he would take just four years to eliminate every penny of the $34-billion deficit his government announced yesterday.

But now that the Prime Minister has admitted there's a place for big government, can he really expect to put the toothpaste back into the tube?

Mr. Harper, the former Reformer, used his first three years in office to cut taxes in major ways, leading most experts to conclude that the conservative revolution he had in mind was to shrink Canadian government permanently. He also pledged to stay out of the provinces' way, allowing them to run their own shops, while Ottawa removed itself.

But a number of initiatives in yesterday's budget suggest that his government has crossed the philosophical Rubicon – for even if the government can eliminate the deficit by 2014, the Tories have demonstrated that, when the circumstances warrant, they have an appetite for spending as large as past Liberal governments. How else to explain the decision to reach back to the Pierre Trudeau-inspired notion of regional development by announcing a $1-billion, five-year package to establish the Southern Ontario Development Agency?

“Canadians regret the need to run a deficit in order to invest in our economy,” Finance Minister Jim Flaherty explained in his budget address yesterday. “Our government shares that regret.”

Perhaps in an effort to assure Canadians the government is not a spendthrift, Mr. Flaherty pledged that future surpluses would help it eliminate the deficit in short order. He may or may not be right, but a bigger question is whether Canadians will allow the Conservatives to phase out the spending and entitlements to which the population will soon become accustomed.

Take, for example, the Tory plan to allow the jobless a two-year period in which they can collect five extra weeks of benefits under the employment insurance program.

Even if Mr. Flaherty's best intentions prove out – and the recession is a short one – would voters not punish a government that removes these benefits? The Conservatives would almost certainly find themselves up against Newfoundland and Labrador Premier Danny Williams, who argued long and loud for the enhancements to be included in yesterday's budget.

Consider, also, what might happen in a federal election. If the Liberals were to bring the Conservatives down next fall or a year from now, and then promised to extend the employment benefits package during a campaign, would the Conservatives hold to their line? Perhaps, but it might be tough in the mid-size cities of Ontario, where the Tories need to build their majority. Unemployed auto workers would be showing up all over Mr. Harper's campaign events, complaining of the government's heartlessness at such a difficult time.

Even ending the temporary spending program on infrastructure would be difficult in such a campaign. Liberals and New Democrats alike might be tempted to argue that the program should be lengthened by another year or two.

The last eight weeks of consultation have also set a precedent for the Prime Minister for listening and responding to various stakeholder groups. After having received a list of demands from the provinces for various forms of infrastructure help, Mr. Harper will face more demands in the future, and will have increased difficulty saying no. No longer will he be able to hold what one provincial bureaucrat called a “drive-by” first ministers meeting, lest he be accused of failing to consult.

Like previous budgets, the Prime Minister has also included some baubles targeted at those he believes can help build his base of support. To wit, first-time home buyers will get a tax credit to help defray the cost of legal fees and other closing costs, a move that might bring young couples to the Tory fold as they build their families.

Mr. Harper's political side also emerged, in the form of $12-million to promote cruise ship tourism on the St. Lawrence and Saguenay Rivers. It's a region where the Conservatives are trying to protect seats and perhaps even add one or two.

Perhaps the truest reflection of how Tory thinking has evolved came from Mr. Flaherty in a brief news conference before his speech, when he acknowledged that he had turned his back on dogma when crafting the budget.

“These are not ideological things,” he told reporters. “We heard from Canadians this is what we need to do. I'm a pragmatic person. We're doing what we need to do to ensure we respond to protect Canada during a global recession.”

The question now, of course, is whether the new co-operative pragmatism is permanent.

The answer to that one comes not this week, but months and maybe a year down the line, when the demands start all over again.

A plan for troubled times

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