Sunday, December 21, 2008

Economic Advisory Council: Finance Minister Jim Flaherty’s new group dominated by members of business lobby group Canadian Council of Chief Executives


“We appreciate the strong leadership being provided at home and abroad by federal Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney.”
– Canadian Council of Chief Executives, Oct. 31, 2008, a few weeks before Flaherty’s disastrous economic statement.
After months of dithering and an economic statement that triggered a Parliamentary meltdown, Conservative Finance Minister Jim Flaherty says he now needs help in deciding on how to stimulate Canada’s economy amidst a global financial crisis that will lead to a deficit of up to $30-billion for the 2009-10 fiscal year. Who better to turn to for advice than the country’s wealthy business elite? Surely they will know where the public’s money should be spent.

In a finance department news release on Dec. 18, Flaherty announced the establishment of an Economic Advisory Council. The council will include Canadian business and academic leaders who will provide advice to the government as part of the minister’s national consultation on the 2009 budget, and on an ongoing basis afterward.

The group of 11 members from across Canada will meet with the minister in advance of the January 27 budget, with an expected first meeting prior to Christmas. The group will also continue to provide advice periodically on economic matters after the budget, the news release said.

The Council members are:

– Carole Taylor (chair), former BC Minister of Finance.

– W. Geoffrey Beattie, President, The Woodbridge Company Limited and Deputy Chairman, The Thomson Reuters Corporation.

– Paul Desmarais, Jr., Chairman and CEO, Power Corporation of Canada.

– George F.J. Gosbee, Chairman, President and CEO, Tristone Capital Inc.

– Isabelle Hudon, President, Marketel.

– James D. Irving, President, J.D. Irving, Limited.

– Mike Lazaridis, President and Co-CEO, Research In Motion Limited (RIM).

– Jack Mintz, former President and CEO of the C. D. Howe Institute.

– James A. Pattison, Chairman, President and CEO, Jim Pattison Group.

– Ajit Someshwar, CEO, CSI Consulting Inc.

– Annette Verschuren, Division President, The Home Depot Canada.

Flaherty said the council members have agreed to a salary of $1, with their expenses being reimbursed by the Government.

The news release, however, provided no information on how these millionaires and billionaires were selected, whose idea it was to create the council or who was involved in discussions to establish it.

The council is pro-business. Absent are representation from municipalities, labour, environmental, social justice and community organizations.

At a news conference in Saskatoon on Dec. 18, Flaherty told reporters the government was listening to the advice of ordinary Canadians as well and would hold town hall meetings.

But the minister said he wants the new council to give him advice on areas such as taxation, spending, economic stimulus and credit in preparation of the budget.

The Conservative government is considering further tax cuts in that document to help boost an economy in recession, Flaherty said.

“It is an option,” he said. “There are two basic ways of stimulating the economy further. One is tax reductions; the other is additional spending in areas like infrastructure. They’re both on the table.” [Flaherty turns to private sector for advice (StarPhoenix, Dec. 19, 2008)]

As part of his national consultation in advance of the upcoming budget, Flaherty met with provincial and territorial ministers of finance and treasurers in Saskatoon on Dec. 17 at the Delta Bessborough Hotel.

The meeting focused on infrastructure spending and provided ministers an opportunity to discuss the current economic situation and budget priorities.

Having said there are only two ways to stimulate the economy it’s unclear what additional advice Flaherty could receive that he and his officials haven’t already heard from the lobby groups that parade through government offices each week – including his.

Four of Flaherty’s new council members belong to the powerful Canadian Council of Chief Executives (CCCE): Beattie, Desmarais, Gosbee and Verschuren, with Desmarais and Vershuren serving on the organization’s executive committee.

A fifth, Mike Lazaridis, is not a member of the CCCE but his business partner, RIM’s Chairman and Co-CEO, James L. Balsillie, is.

The CCCE includes the chief executive officers of some 150 leading Canadian corporations and Canada’s pre-eminent entrepreneurs. These companies administer $3.5 trillion in assets, have annual revenues in excess of $800 billion and account for a significant majority of Canada’s private sector investment, exports, research and development, and training.

The CCCE, according to its website, is “Strongly committed to effecting economic, social and political change, the Council has repeatedly broken new ground with its ideas and has played an influential role in most of the major policy developments in Canada over the past three decades.”

Canada needs a comprehensive economic strategy that will restore confidence and position our country for sustainable growth in the years ahead,” the organization said in an Oct. 31 statement on the global crisis.

But what it doesn’t include say the CCCE is “borrowing money to meet the increased demands for public spending that arise during any economic downturn. Deficits are simply a recipe for higher taxes and lower growth in future. Governments therefore should do their utmost to maintain fiscal discipline. This requires in particular that they keep a lid on overall spending growth. There will be a need for new spending initiatives, but now more than ever it is vital to make careful choices about spending priorities. Spending should be concentrated on those areas which will have maximum impact on improving the potential of our economy: in infrastructure, in education, and to support research and development and innovation. As Prime Minister Stephen Harper said yesterday, Canadians deserve “the highest standards of competence, prudence and accountability.”

“Similarly, while Canada has taken advantage of strong growth to reduce both personal and corporate tax rates significantly, we do not favour using deficits to fund new tax cuts.”

Other priorities advocated by the CCCE include the usual list of business friendly demands: more public-private partnerships, slashing regulations, reducing internal trade barriers, open markets and free trade.

The CCCE is registered with the Office of the Commissioner of Lobbying of Canada and seems to have its fingers in every sector of the federal government’s operations.

A search of the website’s register of lobbyists shows that the CCCE communicates with nearly every major federal government institution on policies, programs, Bills and resolutions.

Records indicate that from July 10 to Nov. 29 CCCE president and CEO Thomas d’Aquino met with various government officials a total of 38 times.

Some of the visits include two to the Prime Minister’s Office, four with the Privy Council Office, three to Finance Canada, two with the Bank of Canada, three with Industry Canada, and a whopping 22 with officials at the Department of Foreign Affairs and International Trade Canada.

On Oct. 28, d’Aquino met with Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney to discuss issues surrounding taxation and finance, financial institutions, industry and international relations.

Flaherty and Carney attended the CCCE Autumn Members’ Meeting in Montreal on October 27-28 and joined members to discuss the impact of the global financial crisis on the Canadian economy, business strategies and public policy priorities. [Canadian Council of Chief Executives Statement, Oct. 31, 2008]

D’Aquino’s other trips to the finance department included one on Nov. 17 to see deputy minister Robert Wright, and another to meet with assistant deputy minister Graham Flack and associate deputy minister Tiff Macklem on Nov. 18.

Most interesting are two meetings that took place shortly after Flaherty’s botched economic statement on Nov. 27 that led to an embarrassing Parliamentary crisis.

On Nov. 28, d’Aquino met with Kevin Lynch, the Clerk of the Privy Council and Secretary to the Cabinet. The purpose of the meeting was to discuss industry and constitutional issues.

The Clerk of the Privy Council is the most senior non-political official in the Government of Canada, and supposedly provides professional, non-partisan support to the Prime Minister on all policy and operational issues that may affect the government.

Lynch is also the Prime Minister’s Deputy Minister. He provides advice and support to the Prime Minister in his or her role as head of government. This includes advice on appointing senior office holders in the public service and organizing the government, on the Cabinet decision-making system, overall policy directions, intergovernmental relations, and the management of specific issues.

As Secretary to the Cabinet, Lynch assists the Prime Minister in maintaining the cohesion of the Ministry and giving direction to it. In this role, the Clerk of the Privy Council provides support and advice to the Ministry as a whole to ensure that the Cabinet decision-making system operates according to the Prime Minister's design.

On Nov. 29, d’Aquino met with Mark Cameron, the prime minister’s director of priorities, planning and research. The subject of the meeting was taxation and finance, infrastructure, industry and constitutional issues.

During the 1997 federal election campaign, Cameron, a native of Vancouver, B.C., worked for the Liberal Party of Canada’s British Columbia headquarters where he handled media and communications. He switched to the Alliance Party when Stockwell Day sought the party’s leadership in 2000. He worked as a speech-writer and policy adviser during the campaign. [The Hill Times, Feb. 20, 2006]

Other business lobby groups trolling Parliament Hill are the Canadian Chamber of Commerce and Canadian Bankers Association (CBA).

Chamber president and CEO Perrin Beatty met with Industry Minister Jim Prentice on Oct. 4 to discuss election commitments to business.

On Dec. 11, Beatty sent a letter to Flaherty requesting the best of both worlds. It seems the Chamber would like an economic stimulus package that includes infrastructure projects, permanent personal income tax cuts, abolishing tariffs on imported machinery and equipment, tax credits, eliminating internal trade barriers (but, like the CCCE, failing to list them), a phase out of provincial/territorial capital taxes, harmonize the remaining provincial and territorial retail sales taxes with the GST, and, oh yes, the “previously-announced corporate tax reductions… must be allowed to proceed.”

Yet, incredibly, the Chamber insists that any stimulus package must ensure “that we do not return to the process of continuous deficit financing.”

Meanwhile, from July 3 to Nov. 21, CBA president and CEO Nancy Hughes Anthony met with federal finance officials 13 times to talk about things like taxation and finance, small business, constitutional and consumer issues.

On Oct. 28, Hughes-Anthony met with Finance Minister Jim Flaherty to discuss financial institutions and international trade. Coincidently, this happened to be the same day d’Aquino met with Flaherty and Bank of Canada Governor Mark Carney.

Prior to joining the CBA, Hughes-Anthony was the president and CEO of the Canadian Chamber of Commerce from 1998 to 2007.

It’s obvious that ordinary Canadians will never be able to compete with the kind of influence and access to power that the business lobby commands. The town hall meetings promised by Flaherty will likely be dominated by these groups and, for most people, may amount to little more than window dressing.

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