Hey there, time traveller!
This article was published 30/3/2014 (1118 days ago), so information in it may no longer be current.
No normal person pays close attention to who is "in" or "out" as finance minister, and that's a good thing. It means the politician in question has avoided messing up the lives of ordinary Canadians. Still, their actions can and do matter, for better or worse.
Consider what a Liberal finance minister by the name of Marc Lalonde did in the early 1980s to Canada's energy sector. (He kneecapped it with bad policy). Alternatively and more positively, in the 1990s, consider how another Liberal finance minister, Paul Martin, wrestled Canada away from massive deficits and put Canada's financial house in order. Later, he also offered tax relief to Canadians who had seen only ever-rising rates for several decades.
Every politician wants to leave a positive legacy, so I offer some advice to the new federal Conservative finance minister, Joe Oliver.
First, do no harm. This is not as easy as it sounds. Governments are often tempted to interfere and re-interfere. Fact is, for a country to thrive, boring predictability is needed. Businesses and taxpayers can and do put up with much from governments but they will still invest in a country as long as the rules are clear and rarely change.
Second, try practising neutrality in the tax system. Your predecessor, Jim Flaherty, kept mucking up the tax code with ever-more gimmicky "boutique" tax credits.
It is much better to have fewer credits and deductions and lower overall tax rates, be it for individual taxpayers or businesses. When it comes to the tax system, "lower, flatter, and simpler" is preferable to "higher, ratcheted-up rates, and complicated."
Third, please stop running all those "economic action plan" ads that brag about how spending $64 billion in taxpayer dollars saved Canada from the recession. For one thing, it's not true. The recession ended in June 2009, and most of our tax dollars were spent after that month and in subsequent years. And anyway, the recession ended almost five years ago. Isn't it time to pull the plug on all this expensive advertising?
Fourth, stop beating up our foreign friends. When the Conservative government quashed the potential takeover of Saskatchewan Potash by an Australian company, it set a terrible precedent. The government of Canada acted more like a banana republic regime (i.e. Venezuela) rather than following the Canadian tradition of peace, order and good government.
It is one thing to deny the export of sensitive military technology bound for Iran, or to forbid state-owned Chinese companies from majority ownership in Canada. (There's a reason Canada's government sold off many of its own state-owned companies in the 1980s.) But it is quite another to forbid routine takeovers from companies located in friendly jurisdictions. After all, Canada is a friendly country, most days. It is neither in our interest or indicative of a free-trading nation to deny takeovers on spurious grounds.
Fifth, favour the general interest of taxpayers and consumers over the narrow interests of producers.
The federal government has, at times, made consumers and taxpayers the policy priority, as when it dropped some tariffs on imports, most recently in the Canada-South Korea free-trade agreement.
But much more can be done here to favour the general interest.
Government could end the "supply management" system for dairy and poultry products that benefits producers but harms consumers; it could end subsidies to business, an action that favours specific companies at the expense of competitors and taxpayers; it could reform compensation and pension in the government sector that produces pay, perks and pensions 12 per cent over the broad private sector.
Sixth, be more transparent. The former finance minister spent $13.7 billion in taxpayer cash to bail out General Motors and Chrysler. He then falsely claimed Chrysler had paid back all the money (not true), and was never terribly open about the money flows.
In contrast, the U.S. Treasury Department reports monthly and on the web about their troubled asset relief program (TARP). Ordinary taxpayers could see how much money was lent out to banks, automotive companies and others, and how much had been paid back. In Canada, the finance department under your predecessor produced no such clarity; quite the opposite. It is long overdue to produce a clearer accounting of all that stimulus money, as well as transparency in other government spending.
Neutrality, smarter spending, broad-based tax relief instead of gimmicks, favouring consumers over producers, and transparency; that's a legacy for which any new finance minister should aim.
Mark Milke is a senior fellow at the Fraser Institute. Follow him on Twitter: @Milke.Mark