Really, there’s still no clear answer, but I’ve tried to at least lay out the relevant points and explain the differences (and similarities) between the two men. You can read the whole story here, but what struck me was just how troubled many of the people I spoke to were about the rising deficit. It seems as if that’s erased much of the pro-business moves Harper has done before the recession. It make sense — how can the PM cut taxes and make business friendly policies when he has a mounting debt to pay down — but it’s unlikely he’ll abandon his Conservative convictions all together if he stays in power. He also had to go into a deficit — all the G20 countries committed to spending 2% of their GDP on stimulus initiatives and right now Canada’s deficit is about 3% of the GDP. Does this mean Harper has abandoned his Reformist ideals? Maybe. His old self would likely be shocked at how much his new self is spending on buying car companies and propping up other failing industries.

Anyway, check out the story and please comment if you have anything to add.

I’m not sure what Ignatieff will say — maybe he’ll slam the Tories’ EI reforms, talk about trade with China — but he’ll likely largely stay away from anything controversial. With support for his party falling — the most recent Ekos poll has the Conservatives with 35.1% of the vote to the Liberals’ 29.9%  — he can’t afford to make any remarks that will raise the ire of Canadians. There will be no big Green Shift-like pronouncements and there’s no way he’ll explain how exactly he’s going to get this country out of a deficit.

But, considering Iggy has barely said anything when it comes to the economy, even a small morsel of policy-related news is welcomed. Whatever he says might give some insight into his future plans, which is a must for him, as more people seem to be regaining their confidence in Harper’s economic management.

Harper, Layton need a Doer
Catchy title to be sure, and as a former Winnipegger who lived through a few of the Gary Doer years before I moved east, I’m watching this ambassador appointment with great interest. The article mostly discusses how Harper and Jack Layton could get along, saying at the end, that Doer could bring them together.

It’s an interesting read, and I don’t usually feel like pontificating on these weekend reading posts, but there’s a bit of a misconception out there that Doer is as NDP as Layton. The NDP party in Manitoba is a lot more like the federal Liberals than Jack’s party. I can explain why at another point in time, but the fact is it’s been reported that Doer and Layton don’t get a long that well, and the province’s premier would never have been able to come to power if he ran on as out-of-touch a platform as the federal NDP do. (Federally, the province has been mostly Liberal or Conservative with some NDP spots in rural areas. But Doer has a huge following in Winnipeg, so take what you will from that.)

Can Harper play three chess games at once?
The Toronto Star’s Chantal Hébert says Harper has a lot on his plate. “But how many chess games can he actually play at the same time?” she asks. “As of now, there are three simultaneous ones underway, each involving the ruling Conservatives and one of the opposition parties in the House of Commons.”

Ignatieff’s Double Dare
Paul Wells says the biggest challenge for Ignatieff now is to win an election. He also explains that the Liberal leader had to call an election or risk looking like a pushover.

Ignatieff, however, must have calculated he had no choice. He has been delivering a succession of I-Really-Mean-It-Now ultimatums to Harper ever since he fell into the Liberal leadership from which the party had unceremoniously ejected Stéphane Dion in, approximately, January. The moment was fast approaching when his constant warnings to Harper would be revealed to mean either (a) nothing or (b) something.

You’ll recall that the PM has said, on more than one occasion, that Canada would recover faster than any other developed nation. Well, the report, which came out today, claims that the country’s GDP will contract by 2% in Q3, and will only grow by 0.4% in Q4. That means we’re going to see slower short-term growth than the U.S, Japan, the “euro area”, Germany, France, Italy and the U.K. Oh wait, that’s everyone. (See all of their numbers on page 17 of the report.)

Now, as my fact-filled colleague Phil Froats points out, there’s plenty wrong with how the OECD’s numbers are being interpreted. But, that’s besides the point for the opposition, who will tout this survey as proof that Harper has no idea what he’s talking about.

As I’ve said before, Canada’s economic performance has very little to do with Harper — a stuffed bear could have been in office and the recession would still have come and gone — but when our top politician makes a statement regarding our GDP growth, he better make sure he’s right.

Despite what the OECD says (or what other people are saying about their findings), it’s still too early to know whether or not we’ll come out of this stronger and faster than our G7 cohorts, but, hopefully for Harper, good news will come before it’s too late.

Ignatieff revealed his decision to “not support this government any further” in Sudbury today. You can read the full text of his speech below.

Bienvenue à Sudbury! Welcome to Sudbury!

Hier soir, nous étions 600.

Vous sentez l’énergie qu’il y a ici. Cette énergie, c’est celle du retour du Parti libéral du Canada à Sudbury!

Everywhere I’ve been this summer, I’ve seen the same enthusiasm—all while apparently remaining completely invisible.

Hundreds of people didn’t notice me out in Victoria back in June. Or in West Vancouver.  Or in Cape Breton.

I was perfectly invisible in front of nearly a thousand people at the Calgary Stampede. Ralph (Goodale) is still wondering how I pulled that off.

Same story at National Aboriginal Day at Crawford Lake.

Et pendant que nous y sommes, je ne suis jamais allé non plus fêter la Saint-Jean-Baptiste à Québec, je n’étais pas au Grand Tintamarre à Miramichi ni à Caraquet; et ne parlons pas d’Edmonton, de la Beauce ou de la Gaspésie.

Everywhere I went, across 8 provinces and the Northwest Territories, I found Liberals energized and set to work hard to put Stephen Harper out of a job.

We should be proud of the work we’ve done this year.

Nous avons fait grandir notre parti : avec de nouveaux membres, avec de nouvelles idées… et avec la meilleure campagne de financement des dernières années.

Nous sommes plus unis que nous l’avons été depuis une génération.

Nous sommes prêts à livrer bataille dans chaque comté du pays.

Et nous sommes prêts à ramener à Ottawa un gouvernement compétent, un gouvernement de compassion, un gouvernement de prospérité pour le bien de tout le Canada.

I know it can be frustrating at times.

We’re working against opponents who make politics personal—who distort and deny the truth and put partisan gain ahead of the national interest.

We’re working against a government that’s ready to sacrifice national unity to stay in power.

But we have a secret weapon on our side: Stephen Harper’s record.

The worst unemployment record in two decades

The worst deficit in our history

And last quarter, the worst performing economy in the G7.

Stephen Harper didn’t see a recession coming last fall.

Now he’s missing something bigger: what we’re going through is more than a recession—it’s a fundamental restructuring of the global economy.

Stephen Harper doesn’t get that.

He doesn’t get that Canada’s in a race—that we’ve got to position our country to compete in the twenty-first century. We’ve got to make Canada a world leader again, and we’ve got to do it now.

Il ne comprend pas ce que les travailleurs de la forêt du nord de l’Ontario, du Québec et de la Colombie-Britannique ont compris. C’est pourtant simple : on ne peut pas rester les bras croisés et attendre que la construction reprenne aux États-Unis. Il faut agir. Atteindre de nouveaux marchés et développer de nouveaux produits pour prendre notre place dans un monde nouveau.

He doesn’t get what autoworkers in Windsor and Oshawa know—that we’re not just going to have to win back customers; we’re going to have to re-invent the car, with brand new technologies and brand new environmental standards.

He doesn’t get what the people of Sudbury know—that when our workers and our industries are under threat—when the choice is between defending Canadian jobs and Canadian technology—we need a government that will defend our interests.

Stephen Harper doesn’t get it. We do.

For more than a century, we’ve built our prosperity on our natural resources. But if we’re to prosper in the next century, we have to turn our resources into products and technologies the whole world wants to buy.

We can’t get there unless we have the vision and ambition to build a competitive, compassionate future for Canada.

We can’t get there unless we open up new markets for Canadian exports in countries like China and India.

We can’t get there with Stephen Harper.

Stephen Harper has been prime minister for four years, and he’s never visited China. We’ll be there next week. After that, we’ll plan a trip to India.

That’s where we need to be as a country—if we want to secure markets for the next generation of our exports—if we want to compete with the best in the world—if we want to get out of the trade deficit the Conservatives have created, the first in thirty years.

We can do better.

Nous pouvons faire mieux.

L’été prochain, le Canada accueillera le Sommet du G8 à Huntsville.

Ce sera une occasion de démontrer le leadership canadien et de contribuer à définir les priorités mondiales. Paul Martin et Jean Chrétien représentaient ce leadership canadien capable d’influencer le monde.

Stephen Harper n’a même pas encore de liste d’invités.

A Liberal government would invite new members to that meeting.

We’d use Canada’s G8 Summit to begin the process of evolving the G8 to a G20, as the world’s steering committee.

We cannot make progress on global challenges without China or India at the table.

Le G8 a bien fait ce qu’il avait à faire. Mais le monde change.

Plutôt que de résister au changement, le Canada devrait inspirer le changement.

Nous pouvons convaincre nos partenaires d’avoir une gouvernance mondiale plus efficace, avec un forum plus représentatif du monde d’aujourd’hui. Nous devons reprendre ce leadership mondial qui a fait la réputation du Canada depuis Lester B. Pearson.

Nous devons être prêts à renforcer le G20 en finançant et en accueillant chez nous le Secrétariat permanent du G20.

A Huntsville, le Canada pourrait proposer des mesures concrètes pour créer un nouvel encadrement de la réglementation financière. Comme ça, le Canada pourrait assurer que l’effondrement de l’an passé ne se reproduise pas.

Canada can lead in a changing world, but only if we dare to act. Stephen Harper wants to keep us on the sidelines.

We can do better.

Stephen Harper hasn’t just failed to stand up for Canada—he’s also failed to stand up for Canadians.

Suaad Mohamud. Omar Khadr. Makhtal. Bahari. Mohamed. Abdelrazik.

Being a Canadian must mean the Canadian government will stand up for you—no matter where, no matter when. This is at the heart of what every Liberal believes: a Canadian is a Canadian is a Canadian.

A Liberal government would stand by the Charter of Rights and Freedoms.

We would stand by our citizens.

And we would bring forward legislation to protect Canadians abroad—to make it illegal for the government to pick and choose which citizens it protects—to make sure these abuses never happen again.

Stephen Harper leads a government that doesn’t care. A government that doesn’t believe in government. A government that refuses to govern—even in a crisis.

Let’s remember how we got here.

A year ago this month, Stephen Harper told Canadians there wouldn’t be a recession in this country. He said a slumping stock market meant “good buying opportunities,” but no cause for alarm.

Last November, he presented a partisan economic statement that triggered a political crisis.

And Stephen Harper escaped defeat only by shutting down Parliament.

In January, we put Stephen Harper on probation – and we’ve kept him on life support ever since.

We forced his government to accept the toughest accountability standards in the G8—with full budget reports to Parliament each quarter.

After a disappointing June report, we set out four simple benchmarks Stephen Harper would have to meet.

Premièrement, nous avons dit que nous étions prêts à travailler avec Stephen Harper pour rendre l’assurance-emploi équitable pour tous les Canadiens, où qu’ils vivent, et aussi longtemps que durerait la crise.

Pas une proposition n’est venue. Rien que des manigances politiques.

Second, we demanded straight answers about job creation and infrastructure stimulus.

Plutôt que de répondre, Stephen Harper a passé l’été à tenter de cacher son incompétence ; il a annoncé, annoncé et annoncé encore des projets qui auraient dû être en chantier depuis des mois.

In fact, only two hundred of the twelve hundred infrastructure projects that the Conservatives announced in Ontario have actually received the funding they were promised. Only Stephen Harper could count that as 80% underway.

Third, we demanded a credible plan to get Canada out of deficit.

Stephen Harper’s response has been: “Don’t worry, give it a few years, and the books will balance themselves.”

You can put that next to his promise not to run deficits in the first place.

Or his promise not to tax income trusts.

Or his promise not to appoint Senators.

Pendant une décennie, sous des gouvernements libéraux, le Canada menait le monde dans la réduction de sa dette nationale. Nous avions le meilleur bilan financier du G8.

Les Conservateurs nous ont fait replonger dans le rouge… avant même que la récession commence.

Maintenant, ils ne peuvent même pas nous dire la profondeur du trou dans lequel ils nous ont mis. Et encore moins comment ils vont nous en sortir.

Ça ne suffit pas.

We’ve had four years of this—four years of a government that mismanages our public finances, and a prime minister who divides the country to score political points.

You can’t count on a government that can’t count—and a prime minister who’s only good at division.

Finally, we demanded a plan to deal with the health care crisis.

Twice on Stephen Harper’s watch there’s been a breakdown in the supply of medical isotopes.

Instead of acting, what did Stephen Harper do? He fired the whistle-blower on isotopes. Then he cancelled the MAPLE reactors that would have guaranteed Canadian leadership in isotope supply.

Two years later, he finally revealed his plan: To get out of nuclear medicine and let the provinces pick up the difference.

That’s not good enough for the tens of thousands of Canadian families waiting for cardiac and cancer care for their loved ones.

And that’s not good enough for the millions around the world, who have relied on Canadian leadership for half a century.

It’s simply unacceptable to have the world ask: “Where’s Canada?”

We can do better and we will do better.

A Liberal government will restore Canadian leadership. We’ll stand up for Canadian research and Canadian families. We’ll stand up for Canadian know-how and ensure the world never asks again “Where’s Canada?”

À l’heure où les Américains veulent un système de soins de santé public, Stephen Harper ne lève pas le petit doigt pour protéger le nôtre.

Les libéraux sont fiers du système canadien de soins de santé et, contrairement aux conservateurs, nous allons le défendre et le protéger.

Liberals proudly support public health care in this country—and, unlike the Conservatives, we’re not afraid to defend it.

In June, we set out four tests for Stephen Harper.

Mr. Harper, you have failed all four.

You’ve failed to protect the most vulnerable. You’ve failed to create jobs. Failed to defend our health care. Failed to restore our public finances.

After four years of drift, four years of denial, four years of division and discord—

Mr. Harper, your time is up. Vous avez raté votre chance.

The Liberal Party cannot support this government any further.

We will hold it to account. We will oppose it in Parliament.

En juin, nous avons fixé quatre conditions pour que Stephen Harper conserve notre confiance.

Il n’en a respecté aucune. Son échec est complet.

Il n’a pas réussi à protéger les plus vulnérables. Il n’a pas réussi à créer des emplois. Il n’a pas réussi à défendre notre système de santé. Il n’a pas réussi à rétablir nos finances publiques.

Après quatre ans de dérapage, de déni, de division et de discorde… le temps de Stephen Harper est terminé.

Le Parti libéral du Canada ne peut plus soutenir ce gouvernement incompétent.

Stephen Harper doit rendre des comptes. Désormais, nous nous opposerons à lui.

Et si des élections ont lieu, nous serons prêts à offrir à notre pays un avenir meilleur.

Canadians deserve better.

Over the past days and weeks, I’ve heard from our caucus, and we’ve all heard from Canadians:  Our job as Liberals is to give them a choice.

A choice between two parties. Two sets of values. Two visions for Canada.

Un choix entre deux partis. Entre deux ensembles de valeurs. Deux visions du Canada.

We can choose a small Canada—a diminished, mean, and petty country. A Canada that lets down its citizens at home and fails them abroad. A Canada that’s absent on the world stage.

That’s Stephen Harper’s Canada.

Or we can choose a big Canada. A Canada that is generous and open. A Canada that inspires. That leads the world by example. That makes us all proud.

2017 will be our 150th birthday. We can be the smartest, healthiest, greenest, most open-minded country there is—but only if we choose to be.

We can build a Knowledge Society, from pre-school to post-secondary, with quality early learning and childcare for every Canadian child.

We can ensure that every Aboriginal Canadian gets a world-class, not a second-class education—with the opportunities to match.

Nous pouvons créer les emplois de demain en investissant plus, pas moins, dans la science et l’innovation.

Nous pouvons investir dans l’environnement et inventer les technologies vertes qui vont changer le monde.

We can invest in our environment—and invent the clean energy technologies that will have the world beat a path to our door.

That’s our Canada. A liberal Canada.

Le Canada dans lequel nous croyons. Le Canada qui nous attend. Mais seulement si nous osons. Seulement si nous faisons les bons choix.

Avec l’intelligence, la compassion et le leadership du Parti libéral du Canada, nous pouvons y arriver.

So let’s get started.

Allons-y. Notre pays nous attend.

It wasn’t long ago that Iggy was making some major waves about EI reform. He said, very vocally, that if Stephen Harper didn’t change the employment insurance program he could very well bring down the government. Well, in Friday’s Globe and Mail Liberal senator David Smith said this:

I don’t see an election being fought over unemployment insurance. It’s an important issue and it’s an issue that we want to address … but I don’t see that as the defining issue that would trigger an election.

And with that comment goes any significant EI reform and a fall election.

It’s not the first time Iggy’s talked big only to balk when it really mattered. In the summer, when he was raising a fuss over EI, he nearly called an election. Or at least he wanted us to think that he was minutes away from sending Canadians to the polls. Instead of pulling the trigger, he decided the Liberals and the Conservatives would talk about reforming EI together, like one big happy family. If things didn’t go Ignatieff’s way, he’d consider forcing an election in the fall.

Well, now that the fall is around the corner, and the EI joint panel continues to discuss changes (or are they? No one really knows), Ignatieff once again backs down.

Whether or not the Liberal leader should call an election or not is up for endless debate. But what Canadians don’t like is a leader who waffles (Paul Martin anyone?).

The economy remains fragile and people continue to lose jobs, so Ignatieff has a very small window where economic conditions may still be used against Harper. But, if he really wants to be the next PM he needs to make a plan already and stick to it.

Harper stresses social welfare, economy in northern spending

While many people think Stephen Harper’s interest in the north is purely military, he wants it known that he’s got the territories’ economic interests in mind too. To that end, the government announced a $36.5 million deal to help with skills training in the North.

Globe scribe Billy Curry writes:

To that end, he and the three territorial premiers announced a new $36.5-million labour agreement yesterday in Yellowknife. The deal will finance skills training for workers in the North, regardless of whether they qualify for employment insurance.

Mr. Harper said skills training will help in moving toward an environment in the North where aboriginals and northern residents are the first people hired when jobs become available.

Economic policy advice for the NDP

Stephen Gordon, a professor of economics at l’Université Laval in Quebec City, runs the Worthwhile Canadian Initiative blog. It deals mostly with Canadian-related economic issues, but recently he wrote a four part series titled “economic policy advice for the NDP.”

He says if the NDP wants to win more seats they’ll have to deal with issues such as inequality, “defending big government,” and taxes. Here are links to each post:

Economic policy advice for the NDP, Part I: Inequality
Economic policy advice for the NDP, Part II: Defending big government
Economic policy advice for the NDP, Part III: The GST
Economic policy advice for the NDP, Part IV: Corporate income taxes

The readable Ignatieff

It’s not economic or business related per say, but Maclean’s blogger Aaron Wherry compiled a list of Michael Ignatieff’s journal and newspaper articles. These pieces should keep you busy for the rest of the summer.

You could have just chalked this up to downplaying, which is smart considering much trouble Stephen Harper has previously gotten into for being optimistic on the economy. But then International Trade Minister  Stockwell Day wrote in the Penticton Western News, “I’m not kidding. The recession is over.”

Clearly, the Conservatives need to get on message, but this also points to just how confusing things are right now. As I wrote in an earlier post, while the recession may technically be over, to declare it dead really depends on how you look at it. Expect plenty more contradictory messages from all sides of our government, at least until people stop losing their jobs. (If you missed it more people were receiving EI benefits in May then at any point in the last 12 years.)

Well, the time has come for the Liberals and the Conservatives to finally discuss those changes. This week the two sides will meet to figure out how the EI program can be improved. Unfortunately, it’s unlikely much will change, and it’s unclear if Canadians will even find out much about the meeting.

According to a Canadian Press article, “no one is saying much about the EI panel, even off the record.”

Liberals received a departmental briefing on the Employment Insurance system last week and the full group is supposed to sit down sometime this week. No word when or where.

“The contents of the EI working group are confidential,” Ryan Sparrow, the newly installed spokesman for Human Resources Minister Diane Finley, said in a brief interview.

“We hope the Liberal party maintains that confidentiality as well.”

There are, however, subterranean Tory rumblings that the Liberals appear to be offering no ideas on how the panel process should work or what they want out of it. Liberal observers, meanwhile, grumble that the choice of MP Pierre Poilievre – one of Harper’s most loyal and partisan hit men – and the secondment of Sparrow from party HQ does not inspire confidence in a collegial negotiation.

“You try to make it work and, who knows, it might, right?” shrugged one Liberal.

That’s a very low bar to clear for a panel that was portrayed as the deal-breaker on a national election call barely three weeks ago.

We haven’t heard much from Ignatieff this summer on EI reform (or on anything else for that matter), so if this report is correct you have to question what exactly the Liberals are trying to do.  Harper has made it clear that he doesn’t want to make changes to the EI program, so it’s up to the Liberals to press this issue and keep it on the agenda. (They pushed this hard after Ignatieff became the official leader of the opposition, but they’ve been pretty much silent on the issue since the threat to bring down the government was averted.)

I still don’t think EI reform will be the catalyst for an Iggy win, whenever an election does happen, but abandoning their only policy idea (whether you agree with it or not), can’t be good for the party, which is now looking far less powerful than it did a month ago.

In a recent interview with the Globe and Mail’s Eric Reguly, who asked if Stephen Harper regretted cutting the GST, the PM said: “No, it’s … First of all, I believe cutting all taxes is good policy, okay? I… I’m of the school that… You know, there are two schools in economics on this; one is that there are some good taxes and the other is that no taxes are good taxes. I’m in the latter category. I don’t believe any taxes are good taxes.”

Believe it or not, this caused a knee-jerk volcano to erupt—and not just in Liberal land.

Bryan Borzykowski, a fellow blogger with CB Online (who does not speak for the editorial board of Canadian Business magazine, which also dislikes taxes a lot) called Harper’s anti-taxes remark a remarkable and ridiculous statement for a conservative politician to make.

Borzykowski then pointed readers to what he calls a great post by Globe writer Adam Radwanski, who outs the PM as an anarchist. “If taken to its logical conclusion,” Radwanski insists Harper’s comment means all government spending, along with everything it supports, is bad. “Not just equalization and grants and other things that Harper would have taken offence to back in his National Citizens Coalition days. We’re also talking about defence, and law enforcement, and any public infrastructure whatsoever – stuff that even the most libertarian members of Harper’s party would concede that we need.”

Despite the massive run up in federal government expenditures, Borzykowski and Radwanski both conclude Harper actually thinks it is a good idea to abolish all public spending. But with all due respect to the logic used, it is possible to consider something bad and still accept it.

Taxes. Deficits. Credit cards. Lawyers. Dentists. Editors. Small talk with the hairdresser. Lots of things are necessary evils. And Harper clearly knows a thing or two about them. After all, he is a politician, and they also typically fall into that camp.

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DOUBLE TAKE: Aside from trying to promote myself while generating Web traffic that helps put bread and butter on my table, this blog aims to stir debate by taking a harder look at current news and events. I obviously enjoy voicing my own opinions, but I am a big boy and I welcome all comments that don’t require R ratings. So let me have it via this blog or send me an email at tom.watson@canadianbusiness.rogers.com. I reserve the right to post email comments without disclosing the sender’s name. If you don’t think I am a total twit, follow my DOUBLE TAKE posts via my NotSOCRATES Twitter site.

THOMAS WATSON is a senior writer, market columnist and editorial board member at Canadian Business magazine. Since winning a community journalism award as a cub reporter with the Hamilton Spectator in the early ’90s, he has covered business, finance, politics and technology for various news outlets. Prior to joining CB in 2001, he reported on the steel and automotive sectors for the Financial Post. Watson received two National Magazine Award nominations for business feature writing in 2008, winning a silver award for his coverage of Canada’s ABCP fiasco. He landed his first NatMag nomination for exposing a stock manipulation plot aimed at Waterloo, Ont.-based Open Text during the dot-com boom, when he headed investor relations for an international venture capital outfit in the City of London. Watson holds graduate degrees in journalism, international relations and public finance and undergraduate degrees in history and politics.

It’s a remarkable statement from Canada’s leader — he doesn’t think any taxes are good taxes??

No matter how much you hate handing over a portion of your paycheque to Ottawa,  thinking zero taxes is a good thing is a ridiculous comment to make, especially coming from a leader who gets paid by Canadians and runs programs built on the dollars we make. But instead of getting into this myself, I’ll direct you to a blog post by Globe writer Adam Radwanski, who takes the PM to task in a great piece titled Stephen Harper: anarchist?

In the post Radwanski writes:

If taken to its logical conclusion, that would also mean that all government spending is bad. Not just equalization and grants and other things that Harper would have taken offence to back in his National Citizens Coalition days. We’re also talking about defence, and law enforcement, and any public infrastructure whatsoever – stuff that even the most libertarian members of Harper’s party would concede that we need.

Canadian Business: Yesterday, I wrote a post about how Stephen Harper wanted the nations to avoid a second stimulus, but in the end no promises were made.

The G8 nations are saying two things. The first is that they’re committed to seeing the first round of stimulus spending through to the end. And the second is that they’ll spend more money if they need to.

Globe and Mail: At the end of the summit Harper pressed his cohorts to follow through with their promises. (The article also points out how he slagged Ignatieff in the process.)

‘It’s not just a moral question,’ Mr. Harper said after referencing issues from climate change to African aid. ‘When we as the G8 make commitments and we don’t fulfill them, this undercuts the credibility of our process. And that is a serious problem.’

Canada.com: The economy wasn’t the only thing on the G8 agenda; climate change was a hot topic too. On Thursday the countries pledged to cut greenhouse gases over the next 40 years.

Developed countries will take the lead with cuts of “80% or more,” according to the G8 pledge that one environmental group said will put enormous pressure on Canada to develop more aggressive targets.

One non G8 story worth reading comes from the Toronto Star, about how Kevin Page, Canada’s parliamentary watchdog,  thinks Harper’s economic projections are wrong. He says the unemployment numbers will be much worse than the Conservatives think and the government will continue to run budget deficits for longer than they had hoped.

He says that in 2013-14, instead of balancing its books, Ottawa will still run a $16.7 billion deficit, according to those who have seen the independent budget officer’s latest findings.

Page’s report says unemployment, currently at 8.4 per cent, will average 8.7 per cent this year, compared with Flaherty’s estimate of 7.5 per cent for 2009. Page sees the jobless rate going as high as 9.4 per cent in 2010.

Thanks to Aaron Wherry at Maclean’s for blogging about this first.

While there was no explicit declaration that the G8 nations will, or should, spend more, there wasn’t anything close to a definitive statement that the countries will hold back additional stimulus.

Here’s what the declaration said, with the important parts bolded:

We note some signs of stabilisation in our economies and we believe that the turnaround will be reinforced as our measures reach their full effect on economic activity and contribute to improving confidence and expectations. However the economic situation remains uncertain and significant risks remain to economic and financial stability. We will take, individually and collectively, the necessary steps to return the global economy to a strong, stable and sustainable growth path, including continuing to provide macroeconomic stimulus consistent with price stability and medium-term fiscal sustainability, and addressing liquidity and capital needs of banks and taking all necessary actions to ensure the soundness of systemically important institutions.

The G8 nations are saying two things. The first is that they’re committed to seeing the first round of stimulus spending through to the end. And the second is that they’ll spend more money if they need to. Of course, it’s the U.S., Britain and Japan who will be the ones to spend more money, while Canada, Russia and Germany have said that their original rescue package will be the only bailout their countries will get.

Whether or not you think that more spending is the right way to go, we can all agree that the G8 countries need to start developing an exit strategy. Fortunately, the nations at the summit want to figure a way out of this mess too.

Point 13 of their deceleration states:

We agreed on the need to prepare appropriate strategies for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured. These “exit strategies” will vary from country to country depending on domestic economic conditions and public finances, and must ensure a sustainable recovery over the long term. We welcome the analytical work of the IMF which will assist us with this process.

Clearly, there’s still a long road ahead before the G8 nations can curb spending and pay down their deficits, but at least talking about turning on that light at the end of the tunnel.

Harper said this morning that he will urge his fellow diplomats to see their first round of stimulus spending through before they offer more rescue aid.

“Before there’s talk of additional stimulus, I would urge all leaders to focus first on making sure the stimulus that’s been announced actually gets delivered,” Harper told a reporters today. “That’s been our focus in Canada and I would encourage the same priority elsewhere.”

The PM is right — it’s best to let the billions in funds start working before countries cough up more cash — but what Harper’s not saying is that it’s still going to be a long time before Canada’s own stimulus package really gets going.

A couple weeks ago I spoke to Don Drummond, TD Financial’s vice-president and chief economist (check out the video), and he said Canada’s stimulus initiatives won’t kick in until after the economy has recovered, sometime in late 2010 or 2011.

In other words those billions of bailout funds the Conservatives have promised, and the other parties pushed for, are essentially useless in the short-term.

“We’ve had a collective memory failure,” says Drummond. “Fiscal policy always takes a long time before it hits the economy and that was why for a quite a long period of time it wasn’t believed to be an effective tool in the midst of a recession. I think we just overlooked that and what we really would have liked is for stimulus to come in 2009 and we don’t think much of it will.

“As the government said in its report card, a lot of money has been allocated, but that doesn’t mean its flowing,” he adds. “In many cases the infrastructure that was delivered in the budget has to be tri-partied funded — you have to get federal provincial and municipal governments together and that will take a long time.”

So, while Harper should caution his cohorts to hold off on more stimulus funding, he might also want to figure out how to get his own dollars working faster.

Naturally, most of this week’s reading suggestions are election related, but I also threw in a couple interesting articles from the good old U.S. of A.

Why Canada needed an election this summer: Toronto Star columnist Bob Hepburn lists six prescient points on why there should have been an election.

The Economy: Harper and Finance Minister Jim Flaherty have completely misunderstood and mismanaged the current recession. Last November they were predicting rosy times and a budget surplus this year of $800 million. Flaherty is now forecasting the deficit at $50 billion, the largest in Canadian history. The Conservatives only began to come to grips with the recession after the three opposition parties almost toppled them in December.

The EI conundrum: Maclean’s blogger Andrew Potter on EI reform. 

What’s the difference between using EI to support, say, the maritimes and not Ontario, and using it to prop up forestry but not finance? Even when they don’t overlap (the regions tend to be poor because they have sagging rural economies) the error is the same in both cases: an insurance program is being used for a perverse form of economic engineering that gives people an incentive to stay in dying industries.

Love-in on Hill will not last long: Don Martin reveals why Harper and Ignatieff won’t be BFFs for long.

Behind the scenes, you can almost hear the gunning of campaign jet engines as the leaders prepare for a summer of fundraising, photo-oping and candidate recruitment to be ready in case this recession creates the conditions for an opposition takedown.

It will be hard to avoid tripping over your nearest Conservative MP as the gang of 143 fans out across the land armed with shovels and ribbon-cutting scissors, hoping the construction frenzy stimulates better polling numbers for their party.

Obama plan catches corporate flak: The Big Money discusses why Barack Obama’s plan to overhaul the financial system has the private sector and politicians on the defensive.

The New York Times writes that senators “signaled an unwillingness to accept the White House recommendations intact, particularly the idea of expanding the powers of the Federal Reserve to enable it to regulate risk across the financial system.” Geithner tried to play down the new Fed powers as “quite modest,” but the senators weren’t buying it. His next stop is the House financial services committee, where another hostile audience awaits.

Oil check: New Yorker’s business guru James Surowiecki has a great piece about rising gas prices and its relationship to inflation.

Many worry that higher prices at the pump could end up choking off the economy’s putative green shoots before they’ve even had a chance to grow. This isn’t an idle concern, since recent history demonstrates how damaging skyrocketing oil prices can be.

“We’ve heard talk of Buy China retaliation; Buy Australia … basically, this legislation has sparked Buy Local movements around the globe,” says Braddock. (Buy China isn’t just talk. Check out this report from the FT on new Buy China rules announced yesterday, and what they might mean for foreign companies.) What the Chamber is after, is a solution that ensures free trade for all.

Only 6% to 7% of stimulus funds have been deployed to date. And according to Braddock, Buy American has actually slowed down the stimulus effort in a few key ways. First, it’s created mass confusion as to who can or cannot bid on a stimulus-related contract. Second, it’s meant that some U.S. companies, such as Duferco Steel in Pennsylvania, have found themselves shut out of participation on recovery projects because of foreign products in their supply chains, putting, in this case, 450 American jobs at risk. Third, some U.S. companies have been prevented from bidding on stimulus-related government contracts overseas. (See Canadian Business editor Joe Chidley’s post on General Electric chief executive Jeffrey Immelt’s experiences for context.)

In the past week, the U.S. Chamber has gone very public on this issue. On Thursday, June 11, they held a press conference in D.C. to ask Congress to exempt state and local governments from complying with Buy American riders. That way, federal rules around procurement would truly be in compliance to the United States’ international obligations to other nations under the terms of free trade treaties – as President Barack Obama promised way back in February.

This, in Braddock’s view, is preferable to the legal sleight of hand that’s currently obtaining. Right now, state and local governments in the United States are, for the most part, not covered by international trade treaties. However, conveniently, most procurement decisions are made at the state and local goverment level. In applying Buy American only to state and local governments, the Obama administration has been able to claim it is honouring free trade principles at the international level – while requiring lower levels of government to do an end run around them.

In Saskatchewan, where part of my family is from, we have a good phrase for that kind of thing. Unfortunately, it’s not printable.

The U.S. Chamber’s effort was timed to coincide with a joint Hill lobbying spree by the premiers of Canada’s provinces and Prime Minister Stephen Harper. The Harper government is calling for exemptions for Canadian companies only from Buy American riders. Both the feds and the provinces want the U.S. to sign on to open procurement policies at all levels of government.

Of course, what the Harper government is calling for isn’t entirely what Braddock and his colleagues want. That’s because it’s not just Canada that’s affected by the Buy American riders. And in retaliation, Buy Local movements are taking root around the globe.

With Canadian municipalities voting in favour of retaliatory action last week, the United States has 120 days to roll back its Buy American riders on stimulus funds. If the riders aren’t rolled back, then Canadian municipalities will cut companies from countries with discriminatory procurement policies out of bidding on their contracts. And that, says Braddock, represents potentially billions and billions of dollars in lost business for U.S. companies – further hampering the American economy’s attempts at recovery. (Canadian cities buy roughly $15-billion worth of goods and services from U.S. suppliers every year.)

In a classic twist on the let’s-bash-up-on-Canada-regardless storyline, some north of the border seem to believe this is still (somehow) the result of lack of Canadian foresight and a missed opportunity. According to one analysis in a respected newspaper, the premiers of all Canadian provinces should have signed on to the World Trade Organization’s Agreement on Government Procurement years ago, thus securing reciprocal access to contracts in 37 American states.

Meanwhile, this thinking goes, competitor nations that did sign on to the WTO’s deal are blithely unconcerned about Buy American riders affecting their companies’ abilities to bid on stimulus contracts.

This reading misses two key points. It overplays Canadian agency in a situation that has been largely driven by U.S. domestic politics. Second, it overplays the reach of the WTO deal, which doesn’t apply at the municipal level – where much of the federal stimulus procurement effort is being made. Sure, Canadian business missed an important opportunity when the then-premiers decided not to sign on the WTO’s agreement way, way back. But doing that wouldn’t have solved much of the problem now facing Canadian companies operating down south.

Meanwhile, Buy American riders are popping up across the American legislative landscape. Two new bills that recently passed the House, the “Water Quality Investment Act of 2009” and the “21st Century Green High-Performing Public School Facilities Act,”  included “Buy American” mandates in their terms. These bills authorize billions of dollars in spending over periods of several years.

Right now, Buy American only matters for the two years stimulus funds are designated to flow. Once 2010 ends, Buy American is history. But if similar provisions become law in bills like these, then the U.S. is very much shutting its doors to free trade for the long haul. And that, for anyone who does business across the border, is a major problem.

And that was to be expected. Ignatieff has put Harper in a precarious position — he’s demanded that the PM make some changes to the economic update — while also warning the public to expect an election sooner than later, especially if the prime minister doesn’t capitulate to the Liberals’ plans. (He has repeatedly said that he doesn’t want to call an election, so he throws the ball in Harper’s court and can blame it on him when the Liberal leader will, ultimately, send Canadians to the polls.)

The main areas Ignatieff wants changes in won’t be surprising to anyone following his rhetoric since he officially took over as leader of the opposition. He wants significant EI reform, a plan outlining how he country will get out of deficit, more details on infrastructure spending and how Harper will deal with the isotope crisis.

Considering Harper has refused to make meaningful changes to EI, it’ll be interesting to see if he backs down from his previous statements or if he goes to the polls. To me it sounds as if Ignatieff is ready;  he’s just counting down the days until he can make a run a the PM.

The speech, which began with an introduction by former CTV host-turned-senator Mike Duffy, essentially championed all the work the government has done since the budget was passed and once again reiterated that Canada will come of of this recession faster and stronger than any other G7 nation.

Harper said that “a fully 80% of our plan’s funding has been committed and is being implemented across the country” and that “3,000 individual projects across the country are now getting underway — no small feat only 72 days into a new fiscal year.”

Then he listed off a bunch of initiatives that have been started,  or will get off the ground soon, like the Summerside Wind Farm in PEI and the rapid transit system in Toronto.

He also (naturally) chastised the opposition for wanting to call an election and “change this course.” Harper said: “We face demands from the opposition to spend literally tens of billions of dollars more and to make stimulus spending permanent.”

While there wasn’t anything surprising in the speech, and he didn’t announce anything new, there were some issues he didn’t address.

The big one was Ontario’s economy. While he talked about forestry, fishing, mining and tourism, or the “traditional industries” as he said, he didn’t mention the manufacturing sector at all. The only play the auto industry received was in this paragraph:

Ladies and gentlemen, I could go on for some time. I haven’t even talked about our efforts to expand the accessibility and affordability of credit, or the joint measures we are pursuing internationally, such as what we’ve had to do on the auto sector, for example.

The manufacturing industry’s slowdown is a big reason why this country is in a recession, so it was curious that he didn’t make a single reference to what’s being done to help that sector.

He did talk a lot about taxes, how the Conservatives have cut them to their lowest level in 50 years, and about the “affordable” deficit. However, there was no mention of Jim Flaherty’s prediction that we’d start seeing small surpluses in 2012-2013. Not sure if that’s still the game plan now that the deficit is projected to be $50.2 billion this year.

Overall, the speech was positive, rosy and optimistic. The Liberals will likely say Harper’s out of touch, as they always do when he gives an uplifting economic speech. In the past it’s been hard to buy, but now, as people are coming to terms with the state of economy and with consumer confidence on the rise, optimism might finally start working for the Conservatives.  But now attention is turned to Michael Ignatieff and whether or not this relatively non-controversial speech warrants toppling the government.

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.