Oh yeah, there’s also that little matter of a $50 billion deficit, calls for Jim Flaherty’s resignation, and according to Ekos and Angus Reid the Liberals are polling slightly ahead of the Conservatives.

And, you can’t miss the fact that Ignatieff’s threats to bring down the government have been ratcheted up lately. Yesterday, the Liberal leader said, “I’m trying to make Parliament work with a government that every day is displaying more flagrant examples of incompetence,” pointing to the medical isotope shortage and the growing deficit as proof.

All of this adds up to one thing — there’s a good chance we’ll see a vote of no confidence sometime next week or the week after.

And it’s about time. Harper’s argument for not bringing down the government has been made over and over again, including yesterday when he said to reports in Quebec, “why when we are just beginning to see emergence from this recession in Canada in a relatively strong position, [would we] want to throw this country into another round of political instability?”

That reasoning makes no sense. Not only does no business get done on the Hill in the summer, thanks to long vacations for MPs, but some political instability is exactly what Canada needs right now.

Since the recession became the most talked about event on Parliament Hill, I haven’t seen one concrete plan to fix the economy, and even less chatter about how Canada will look once the financial turmoil officially ends. Sure, there’s talk of changes to EI and Harper’s announced plenty of infrastructure projects over the last little while, but it still feels like no one in Ottawa is doing anything, or paying much attention, to the economic crisis.

An election would finally force the Liberals and Conservatives to put forward solid ideas about this country’s future. Questions like how will the deficit be paid down, what’s the plan to revive Ontario and Alberta’s economy, how will the government help spur job growth, all need to be answered.

And they need to be answered now.  It appears that markets are stabilizing somewhat, consumer confidence is up, and some economists think, albeit cautiously, that the worst may be behind us. So, now that the panic from both the public and politicians has largely subsided, it’s time for Canada’s leaders to come up with level headed, non-reactionary ideas about our economy.

Harper should embrace an election too. Right now many people think his government has failed Canada in the economics department, but in truth, a lot of what’s happened over the last few months has been beyond his, or anyone’s, control. If the Liberals were in power they too would have a sky high deficit and GM still would have filed for bankruptcy.  Harper has an opportunity to reinvent his economic platform, but he needs to do it before public opinion turns on him for good.

Enough of the petty back and forth, let’s debate the issues already. Let’s see what Iggy’s platform, which is supposed to be completed, but not presented (to the public at least), this month is all about. And let’s find out how Harper would get the country back into the black. The only way to do this though is to have an election. So cross your fingers and hope the opposition parties pull the trigger and send us all back to the voting booth as soon as possible.

On Friday he pushed back against criticism that the party wasn’t being transparent enough saying the government’s spending needs have to remain flexible and the opposition parties can’t have it both ways.

“There is no excuse for an opposition that has been saying ‘we need to deliver money more quickly’ to now say ‘we need to delay that money’ or say things like ‘we need to have parliamentary sign-off on every individual project,’” Harper told a crowd in Berwick, N.S.

Now the Liberals have accused Harper for calling a “phony war” and creating a fight where there isn’t one.

“I think some of the comments by some of the people out of the Prime Minister’s Office has left the impression either deliberately or inadvertently of some enormous confrontation shaping up here,” said Liberal House Leader Ralph Goodale on Friday. “We’ll cross bridges when we come to them. What I’m saying now is that there’s no need for this phony war. Surely to goodness the opposition wants, Canadians want, and the government wants to deal with the recession effectively and to make sure that all the rules about public spending are properly respected. The two objectives are not in conflict. Let’s find a way to have common sense prevail here.”

Whether you like it or not, expect this back and forth, complete with election threats, to continue as the economy worsens.

]]> http://blog.canadianbusiness.com/harper-pushes-back/feed/ 0 http://blog.canadianbusiness.com/federal-2008-election/ http://blog.canadianbusiness.com/federal-2008-election/#comments Wed, 15 Oct 2008 04:25:33 +0000 Larry MacDonald http://blog.canadianbusiness.com/?p=359 No majority government again. CBC is projecting the following seat distribution for the House of Commons:

Conservatives 143
Liberals 71
BLQ 47
NDP 30
Other 2

I think the Conservatives needed to get a majority if they were to have any chance of becoming a dynasty like the Liberals were in previous decades. The Liberals are now likely to replace Mr. Dion with someone who might be more of a vote getter. And as the economy sinks, the Conservatives will decline in popularity, opening the door to a Liberal government within two years or so.

“You know what I’m doing? I’m investing in companies outside of Canada, and I don’t feel good about that either. I’m investing in the U.K. and the U.S., because their environments are better. Out of the four technology companies I start every year, three of them are outside of Canada. Now, isn’t that sad? I talk to many people of like mind, within government and business, and they agree with my observations.”

Coming from Canada’s eminent technology entrepreneur, with some 40 startups to his name (and some very big exits), that’s a damning indictment.

And he’s not alone. I heard a fair number of similar observations last night at Deloitte’s Technology Fast 50 gala in Toronto. There was much talk about the economy and the ramifications of Wall Street’s financial crisis, but mostly, these leaders from high-growth tech firms were just trying to keep their chin up. Deloitte’s press release tells a grim tale, and it was reflected in the conversations I had. Several award winners acknowledged that the cumulative 5-year revenue growth numbers (by which they are ranked) are likely to be smaller next year. Venture capitalists told me that money is tight already (see my colleague Joe Castaldo’s story on the subject), and that the growing financial crisis in the U.S. will only further shrink the pool. Some entrepreneurs said that it’s hard to attract U.S. VC money with onerous Canadian tax rules. Other people said that software companies, which once boasted about the low Canadian dollar being a boon to developing in this country, are scrambling to outsource development.

And one founder of two successful companies made it clear that within two years, his company will move to the U.S. Why? Canada offers no reward for wealthy entrepreneurs, and the U.S. does. And it will be easier to get the attention of big tech firms in the Valley to buy them up. He also said that most of the engineers he’s interviewing and hiring in Canada were born in India, China or Eastern European countries.

What stuns me is that we’re in the middle of a federal election campaign. Are any candidates talking about this? Cultural funding is somehow the topic of the week. But these are the companies that are forming the foundation for the future of the economy. And it’s not all just whiz-band Web 2.0 stuff with flimsy business models.

I know my local candidate claims to support “A strong economy with investment in innovation”. But when I e-mailed to find out what she meant by that, I got no response.

The fact that initiatives to build an strong, innovative economy have completely fallen off the radar does not bode well.

Normally, betting on an election would be illegal in Canada, but it’s allowed in this instance because this non-profit “stock market” is part of a research project carried out by two UBC professors. They are exploring market and trader behaviour – and particularly whether or not people betting on the outcome of events, like elections, are better predictors than opinion polls or panels of experts.

Some academic studies have already concluded as much, so even if you aren’t the betting type it may be interesting to check in on the site to see who is projected to win, and whether or not it’ll be another minority government. Already, on the first day of trading, over 90 “investors” have laid down average bets of $264. The minimum trade allowed is $25 and the maximum is $1,000.

Last checked, the UBC stock market was forecasting the following seat distribution: Conservatives — 139, Liberals — 93, NDP — 36, BLQ — 38 and Others –- 2. A majority government requires 155 seats.

The GDP figures released by Statistics Canada last week were widely presented as a good news/bad news proposition in the media. On the one hand, the numbers stunk — the economy grew at an annualized rate of just 0.3% in the second quarter. But, on the other hand, 0.3% is still growth, and suggest that Canada has so far eluded a technical recession (broadly though inaccurately defined, by everyone in general but no one in particular, as two quarters of economic contraction).

So should business-watchers fret, or breathe a sigh of relief? Well, as David Wolf, occasional columnist for Canadian Business, head of Canadian economics and chief strategist for Merrill Lynch Canada, recently pointed out, the situation for business might be more bleak than even the bleak GDP numbers suggest.

Government spending in Q2 accounted for a 1.0% increase in GDP — which means that nongovernment spending (by you, me, the corner store, the factory in the next county) shrank in the second quarter. Same situation in the previous quarter. Consider that such private sector activity accounts for about 80% of the economy, and you get the picture. It’s not pretty.

How long can Canadian governments delay a full-blown recession? That’s one question.

The other is, what would have happened if our governments, rather than sitting on surpluses for the past few years, had had the foresight to initiate meaningful, swift and smart tax cuts (ie, not the GST reduction) back when they had the chance?

Government is keeping the good times going by spending more (and spending, by the way, has at the federal level been outpacing economic growth for years). Will this be an election issue? One can only hope…