Monday, January 12, 2009

Public consultation takes back seat to Finance Minister Jim Flaherty’s closed-door pre-budget roundtable discussions with Canadian business leaders

Finance Minister Jim Flaherty with Economic Advisory Council

Budget 2009 Consultation Presentation - Slide #2

Budget 2009 Consultation Presentation - Slide #6

Budget 2009 Consultation Presentation - Slide #12

Budget 2009 Consultation Presentation - Slide #16

Stephen Harper’s Conservative government is selling its pre-budget consultation as the widest in recent memory.

On Dec. 11, 2008 Finance Minister Jim Flaherty announced the launch of the government’s national consultation leading into its fourth budget, to be tabled on January 27, 2009.

“The Government is open to innovative new ideas that would help shape the plan for economic recovery in the 2009 budget,” said Flaherty in a news release.

As part of its consultation the government created a Web page where Canadians can fill out a questionnaire and submit to federal Finance Department officials. The online consultations ended midnight Jan. 9, 2009.

In addition to the online consultations, Flaherty is meeting with individuals and groups. He is hosting roundtable discussions with invited stakeholders in five cities across Canada:

Saint John, New Brunswick (Dec. 12, 2008)
Saskatoon, Saskatchewan (Dec. 18, 2008)
Montréal, Quebec (Jan. 6, 2009)
Thornhill, Ontario (Jan. 9, 2009)
Victoria, British Columbia (Jan. 12, 2009)

“It is important that we hear the views of all Canadians on how to build on the actions our Government has already taken to help Canada weather the economic storm,” said Flaherty.

The question is though, how many ordinary Canadians are actually getting the chance to talk to Flaherty or government officials directly in any meaningful way? So far it doesn’t appear to be many. The focus of the government’s attention seems to be on the business community and what it has to say.

On Dec. 12 Flaherty was the guest speaker at a breakfast hosted by the Saint John Board of Trade.

According to the Saint John Telegraph-Journal, Flaherty was encouraged to come to Saint John by the city’s new Conservative MP, Rodney Weston. Flaherty’s communications director Chisholm Pothier and Weston worked together in former premier Bernard Lord’s office and are close friends. [PM visits to talk economy (Telegraph-Journal, Dec. 15, 2008)]

Flaherty talked about the state of the Canadian economy. He said that Canada should brace for a federal budget deficit this month and that the government will use both fiscal and monetary measures to counter the worst economic crisis since the Great Depression of the 1930s.

After the address Flaherty headed into his first of five closed-door pre-budget consultation meetings across Canada.

The Telegraph-Journal reported that according to one of the participants, J.D. Irving, Limited president Jim Irving, the closed-door session went well.

They talked about speeding up infrastructure projects including water and sewer projects in Saint John, as well as stimulating the housing industry and developing green energy.

Irving said they also discussed issues facing the forest-based industries, including upgrading skills, reducing energy costs, and value-added products.

“We’re encouraging him to make the decisions very rapidly,” he said.

The article notes that about 16 people attended the closed-door consultation with the minister.

The government did not release the guest list, but it is reported to have included Atlantic Provinces Economic Council president Elizabeth Beale, David Ganong with Ganong Bros., New Brunswick Forest Products Association president Mark Arsenault, Canadian Manufacturers & Exporters New Brunswick Division vice- president David Plante, lawyer Nathalie Godbout representing Enterprise Saint John and a representative of the Canadian Banking Association, along with Irving. [Brace for deficit, federal finance minister says (Telegraph-Journal, Dec. 13, 2008)]

Later in the day Flaherty joined Irving for a photo opportunity and a tour of the Irving Paper Mill on Bay Side Drive in Saint John. [Finance Canada media notice, Dec. 11, 2008]

Irving belongs to one of Canada’s richest families. Canadian Business magazine’s annual list of the country’s wealthiest people placed the family second in its 2008-09 edition with a net worth of $7.11 billion. The family’s business interests include oil, forestry products, gas stations, media and transportation.

Irving seems to also enjoy considerable access to politicians and their staff. Records with the Office of the Commissioner of Lobbying of Canada show that from Sept. 5, 2008 to Nov. 28, 2008 Irving met with various federal government officials ten times. These included visits to Fisheries and Oceans Minister Gail Shea, Defence Minister Peter MacKay twice, Industry Minister Tony Clement twice and his predecessor Jim Prentice twice.

David Ganong is a director of the powerful business lobby group the Canadian Council of Chief Executives (CCCE).

In an interview with the Telegraph-Journal Ganong said he wants the federal government to pay companies cash for purchases now instead of giving tax credits later. He said Flaherty should consider giving companies that have made big expenditures the money upfront, instead of capital cost allowances and investment tax credits on revenue that get applied over a number of years.

His proposal is based on a ‘pay me now instead of later’ way of thinking.

Ganong pitched the idea to Flaherty when he met with the minister and a number of other business representatives and industry groups in the pre-budget consultation meeting.

Flaherty and his staff did not respond to ideas at the meeting but took notes, Ganong said.

He conceded his plan would need some massaging; companies could be required to spend the money on further investment, he said, and only companies with solid business plans should be afforded the deal.

Other groups have requested the government make changes to tax credits. The Canadian Manufacturers and Exporters, an industry lobby group, want Flaherty to make scientific research and experimental development credits refundable, since companies facing a downturn in profits now may have made investments ahead of their earnings performance. [Pay up front: Ganong (Telegraph-Journal, Dec 18, 2008)]

The next stop on Flaherty’s road show of private meetings with business leaders and lobby groups was in Saskatoon from Dec. 16-18, 2008.

As part of his national consultation Flaherty’s trip to Saskatoon included a meeting with provincial and territorial ministers of finance and treasurers on Dec. 17. The gabfest was hosted by Saskatchewan Finance Minister Rod Gantefoer. The politicians convened the night before for a private dinner at the upscale John’s Prime Rib restaurant near the Delta Bessborough Hotel where the meetings were scheduled.

Gantefoer said accelerated and expanded infrastructure investment by the federal government was the No. 1 priority for the province. [Economy top job for gov’t (StarPhoenix, Dec. 17, 2008)]

On Dec. 18 Flaherty held a closed-door pre-budget consultation meeting with business and academic leaders. He told reporters later that the government was listening to the advice of ordinary Canadians as well and would hold town hall meetings. [Flaherty turns to private sector for advice (StarPhoenix, Dec 19, 2008)]

According to The StarPhoenix Saskatchewan Urban Municipalities Association (SUMA) president Allan Earle was upset that his organization wasn’t included in the private meeting.

While the association had a representative attend a meeting of infrastructure ministers in Vancouver earlier in the week, Earle said it’s important municipalities also have their say with the finance minister on what might be in the federal stimulus package.

“Certainly there are infrastructure projects from our smallest villages to our largest cities in the province that really do need some addressing, and we would have liked to be able to speak to that face-to-face,” Earle said.

A spokesperson for Flaherty said the budget consultations are national, not focused on the region they are held in, and are about hearing from individuals from various sectors. In Saskatoon, six of 20 participants were from the province.

Flaherty said the comments he heard at the meeting were similar to the input from provincial and territorial finance ministers he met with the day before, including the importance of infrastructure spending. [Projects may be fast-tracked (StarPhoenix, Dec. 19, 2008)]

So out of Saskatchewan’s current population of 1,015,985 people only six had the pleasure of meeting Flaherty in person. And just who were the 20 participants at the meeting the government won’t say. On Jan. 5, 2009 a request was made to Flaherty’s press secretary, Chisholm Pothier, for a list of those that were invited and those that attended. The request was denied.

“There’s an expectation of privacy around those meetings so we don’t release lists. But in general these meetings include various combinations of academics, businesspeople, special interest type stakeholders such as environmentalists or aboriginals, labour reps, NGOs, that kind of thing,” Pothier said in an emailed response.

SUMA weren’t the only ones shut-out of the minister’s Saskatoon roundtable discussion. Contrary to Pothier’s claim that labour reps are included in the meetings, it appears that several major labour organizations weren’t invited to the one in Saskatoon. The Saskatchewan Federation of Labour, the Canadian Union of Public Employees (CUPE), CUPE Saskatchewan and the Canadian Labour Congress (CLC) have indicated they weren’t asked to attend. So who was there to represent workers? This is incredible given that Statistics Canada has reported that the Canadian economy lost 71,000 jobs in November and a further 34,000 in December. You’d think that labour would be at these meetings.

In Saskatoon on Dec. 18 Flaherty announced the establishment of an Economic Advisory Council. The Council includes 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 is comprised mainly of wealthy business executives. Five of them: Geoff Beattie (Thomson Reuters), Paul Desmarais Jr. (Power Corporation), George Gosbee (Tristone Capital), Mike Lazaridis (Research In Motion) and Annette Verschuren (Home Depot Canada) work for member companies of the aforementioned Canadian Council of Chief Executives whose president and CEO Thomas d’Aquino seems to enjoy unparalleled access to the corridors of power.

A search of the federal lobbyists’ registry shows that from July 10, 2008 to Nov. 29, 2008 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 to the Privy Council Office, three to Finance Canada, two to the Bank of Canada, three to Industry Canada, and a whopping 22 to meet with officials at the Department of Foreign Affairs and International Trade Canada.

Other members of the new Council include multi-billionaires Jim Pattison (Jim Pattison Group) and Jim Irving (J.D. Irving Ltd.).

Apparently it isn’t enough that Irving got the opportunity to meet with Flaherty in the closed-door pre-budget consultation in Saint John, and then show the minister around his family’s paper mill, but now he gets sit on the Council and provide further input.

The Council is not a representative group. No labour representation, no Aboriginal reps, no one from the social or non-profit sector whatsoever. Thus, the groups most likely to be affected by the recession have no voice on this panel. Instead, it’s stacked with individuals whose companies could potentially benefit from the advice they give and the access to power they will get.

In an interview with CBC News on Dec. 19 the Council’s chairperson, former B.C. finance minister Carole Taylor, confirmed what was already obvious – that the group was there to provide Flaherty with a business perspective.

Taylor said one of her group’s responsibilities is to ensure that economic policies that sound good in theory would work in practice.

When asked why there were no bank economists or civil servants in the advisory group, Taylor said, “We are just one piece of this — I hope a valuable piece, an important piece — but we are the business piece.”

Sometimes government policy runs into obstacles upon implementation, she said.

“So my impression is that Minister Flaherty wants to jump-start this by going immediately to those who have been successful business people for years and years and say — ‘This is what I’m thinking about.’

“What do experienced business leaders think needs to happen right now? Are some of these ideas just theoretical and … won’t work on the ground?” [Economic council to offer Flaherty business perspective, chair says (CBC News, Dec. 19, 2008)]

Flaherty 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 told reporters.

“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)]

The Council held its first meeting on Dec. 23, a closed-door session, with Flaherty at his regional office in Toronto.

Clearly one of the goals is to try and do an end run around government policy (i.e. administrative red tape) and Flaherty is looking to the country’s business elite to tell him how to do it.

On Dec. 23 a number of newspapers in smaller communities across Canada published an op-ed by the finance minister. One of those was The Golden Star in Golden, B.C. a town of about 5,000 people.

In the article Flaherty said the government was taking steps “to ensure we consult with as many Canadians as possible:

“I’m holding a series of roundtable discussions with business leaders, economists, academics, industry leaders, community and labour organizations in cities across Canada from Saint John to Victoria.

“We’re also organizing town hall meetings in other locations across Canada where I look forward to hearing from Canadians personally.”

Flaherty also said, “I have written every Member of Parliament asking them to consult with the people in their communities in the coming weeks on their local priorities and report what they hear back to me directly. I encourage all Canadians to contact their MP for further information.

“I want to hear from all Canadians directly as well. This is your federal government, and each and every Canadian should have the opportunity to contribute their ideas. That’s why we launched an on-line consultation, and I’m asking everyone for their input. If you can, please take the time to get involved by visiting and click on ‘Budget 2009 Consultations.’”

Upon closer examination it appears that some of what Flaherty promised would happen either hasn’t or is falling short of expectations.

It’s already been established that some of the country’s largest national and provincial labour organizations weren’t invited to Flaherty’s closed-door roundtable discussions. By all accounts these meetings have been limited to mainly corporate executives or business and industry lobby groups. Flaherty’s office refuses to release the names of the participants at the meetings.

With respect to town hall meetings the minister’s office has thus far announced only two: one in the safe confines of Flaherty’s home riding of Whitby-Oshawa on Jan. 8 and the other on Jan. 12 in the riding held by Conservative MP John Weston (West VancouverSunshine Coast – Sea to Sky Country).

If Saskatchewan is any indication MPs are doing little if anything to canvass the views of their constituents.

A search through the websites of Saskatchewan’s Conservative MPs showed no evidence of any news releases, announcements or events for pre-budget consultations with residents in their ridings. In fact, it appears that a number of MPs haven’t bothered to update their websites for weeks and, in some cases, even months.

A search through back issues of the Saskatoon StarPhoenix and Regina Leader-Post for the Dec. 12, 2008 to Jan. 10, 2009 time period turned up no public notices or announcements of pre-budget consultation from MPs in Saskatchewan’s two most populous cities.

An advertisement for Blackstrap MP Lynne Yelich did appear in the Jan. 9 StarPhoenix but was promoting her 8th Annual Blackstrap Winter Tour Open Houses scheduled for Jan. 10. When contacted on Jan. 9 her office confirmed that the event was basically a come and go social and that the MP would have little time for any lengthy meetings.

According to a letter to editor by Flaherty’s director of communications, Mike Storeshaw, published in the Toronto Star on Dec. 23, “the Minister personally wrote the more than 300 MPs from all political parties asking them to canvass the views of citizens, businesses and non-profit groups in their respective ridings. He has also further asked for a written submission of each MP’s findings by Jan. 10, so all can be given proper consideration.”

If Saskatchewan MPs didn’t conduct any meaningful pre-budget consultation in their ridings what on earth could they possibly report? It should be noted that the author of this blog lives in the federal riding of Saskatoon – Rosetown – Biggar held by Conservative MP Kelly Block. No mail outs of any kind were received by residents at this location a 48-unit apartment complex in downtown Saskatoon.

As for the on-line consultation at the Finance Canada website it was pathetic and seemed to be designed to provide government officials with a pre-determined outcome. It was also susceptible to abuse and manipulation. There appeared to be no problem completing and submitting more than one questionnaire. The author of this blog successfully submitted two using the same computer on separate days.

The questionnaire for the general public was limited to a multiple-choice survey. Participants were asked to rank six carefully worded pre-determined priorities:

– Expedite Infrastructure Spending

– Invest in Housing

– Build strong sustainable labour markets and training incentives

– Support traditional and emerging industrial sectors

– Improve Access to Credit

– Your Idea: If you believe Budget 2009 should have a different stimulus priority, assign a ranking to this box. You will be able to explain this priority on the next screen.

Participants were allowed to make a 50-word comment on one or more of these options. Anyone with an innovative idea had one lousy paragraph to explain it.

The questionnaire asked only for the respondent’s age range, income level, education and province of residence. It also required them to pick a description from the following list: business person, disabled, employee, farmer, homemaker, interest group representative, professional, public servant, retired, self-employed. (Without this information, the questionnaire cannot be submitted.)

The Web page contained a link to a related document, an 18-slide presentation called Fiscal Stimulus: Budget 2009 Consultations. It would be interesting to know how many people actually clicked on the link and read the report because it basically set the ground rules of what the government considered to be acceptable forms of economic stimulus.

The document states after slide #6:

“The Government and the Bank of Canada have a number of tools at their disposal to support economic growth.

“These include monetary policy, measures to support Canadian credit markets, and fiscal policy actions through lower taxes or higher targeted spending, such as infrastructure investment.

“The Government and the Bank of Canada have been actively using all of these tools. In the current environment, fiscal policy should continue to complement monetary policy and measures to support credit markets in order to promote an economic recovery.”

Following slide #17 the document lays out four criteria the government says “are important considerations in designing effective stimulus policies:

– Timely – stimulus when it’s needed.

– Maximum impact – stimulus that delivers.

– Flexible in size and duration -- smart stimulus.

– Consistent with Canada’s long-term economic goals – stimulus that fits the plan.”

The “plan” in question is the Conservative government’s Advantage Canada: Building a Strong Economy for Canadians, a long-term, national economic plan released by Finance Minister Jim Flaherty on Nov. 23, 2006.

The news release called it “a new national objective to eliminate Canada’s total government net debt in less than a generation and further reduce taxes for all Canadians.”

The bottom line seems to be that unless you support Advantage Canada the pre-budget questionnaire might prove pointless because any suggestions that don’t fit the Harper government’s objectives will likely be dismissed.

This would also seem to explain why the public was limited to ranking a handful of pre-determined options in the survey.

The finance minister’s third closed-door pre-budget roundtable discussion took place on Jan. 6 in Montreal at the McGill Faculty Club and Conference Centre.

The Gazette reported little about the meeting only to say that Flaherty was in Montreal “to consult with Quebec business leaders and politicians about what actions they’d like to see taken by Ottawa in the budget to cope with the slowdown.”

Flaherty’s speaking points remained unchanged telling reporters that increased infrastructure spending, tax cuts for individuals and companies and access to credit are among the options being considered, with the latter being “the No. 1 concern.” [Ottawa pledges return to surplus The Gazette, Jan. 7, 2009)]

It should be noted that The Gazette endorsed the Harper Conservatives for re-election in the Oct. 14, 2008 national election.

The Canadian Press, meanwhile, confirmed that one participant at the meeting was the Canadian Taxpayers Federation.

The federation’s Ontario director Kevin Gaudet said the group urged Flaherty at the meeting to balance the budget and cut financial aid to troubled industries.

“We’d like to see the federal government do everything it can to balance the budget,” Gaudet said in an interview with Businss News Network, a Toronto-based cable TV channel.

“We’d like to see the government, in order to help balance the budget, avoid the type of corporate welfare payments that it’s been looking at doing . . . for organizations like the Detroit Two auto companies (GM and Chrysler), forestry and an alphabet soup of others.”

There was no word on whether any labour organizations were invited to attend the meeting to speak on behalf of workers.

The same article reported that Flaherty met privately on Jan. 5 with Bank of Canada governor Mark Carney, Canadian Bankers Association president Nancy Hughes Anthony, regulators and senior bankers regarding access to credit for consumers.[Flaherty says government, banks working to ensure people get loans (The Canadian Press, Jan. 6, 2009)]

The fourth roundtable meeting was held in Thornhill, north of Toronto, on Jan. 9 at the Le Parc Conference and Banquet Centre.

At a press conference just before the meeting Flaherty told reporters that Canadians should expect more “substantial job losses” this year.

According to the Toronto Star the minister said he has been listening to Canadians about what the budget should include, naming infrastructure spending and tax cuts as the two most often-heard recommendations he has received. [Harper calls unemployment rate “troubling” Toronto Star, Jan. 9, 2009)]

This should come as no surprise given that these are among the only options Flaherty ever seems to talk about.

The Toronto Star did not report who was at the meeting and the Globe and Mail only said that Flaherty was “meeting with business leaders.” [Prepare for ‘substantial’ job losses, Tories warn Globe and Mail, Jan. 10, 2009)]

At least one participant is known for sure: the Canadian Federation of Independent Business (CFIB), who issued a news release earlier in the day saying they’d be attending and would be bringing a list of priorities for Flaherty to act on.

The CFIB is calling on Flaherty to:

– Avoid deficits;

– Decrease spending;

– Avoid expensive bailout packages;

– Overhaul Employment Insurance (EI);

– Develop a long-term personal income tax cut plan, and;

– Focus on wide-ranging economic policy for small- and medium-sized businesses, such as finding ways of easing succession for small businesses and entrepreneurs.

The fifth and final pre-budget consultation took place on Jan. 12 in Victoria, B.C. at the University of Victoria Cadboro Commons Conference Centre.

The Canadian Press reported that Flaherty attended a closed-door meeting with business leaders. There were more than 20 people at the meeting, including B.C. business, tourism and forest industry official. Once again no names were provided. [Flaherty says ‘extraordinary’ action needed to overcome global recession (The Canadian Press, Jan. 12, 2009)]

Victoria Times-Colonist provincial affairs columnist Les Leyne noted that Flaherty spent three hours the night before huddled in a private meeting with Economic Advisory Council chair Carole Taylor and some members of her council. Leyne said Taylor has “spent the last month presiding over meetings with a selection of Canada’s business elite” to help draw up a “national game plan.” [B.C. influences 'extraordinary' budget (Times-Colonist, Jan. 13, 2009)]

The Council’s plan and the information given to Flaherty remain confidential and no one is saying who attended the meetings.

The finance minister is not the only one conducting private meetings. It seems that Prime Minister Stephen has held at least four since the pre-budget consultation process began on Dec. 11.

At the Delta Hotel in Winnipeg on Dec. 19 Harper “held a closed-door meeting with a select group of Manitoba business leaders. He did not allow for questions from the media.” [Museum goes from dream to reality (The Canadian Press, Dec. 20, 2008)]

On Jan. 9 Harper was at the Fairmont Queen Elizabeth Hotel in Montreal where he participated in “a closed-door meeting with a dozen business leaders.” Among the attendees were Power Corp., head Paul Desmarais Jr., and Bombardier Inc.’s Pierre Beaudoin. [Harper promises ‘comprehensive’ economic action (StarPhoenix, Jan. 9, 2009)]

Like billionaire James D. Irving, Desmarais Jr. seems to have the privilege of not only being a member of Flaherty’s Economic Advisory Council, but he also gets the added bonus of taking part in other high-level meetings.

Harper then attended a business roundtable meeting in Vancouver on Jan 12. This time he was accompanied by other members of the Conservative caucus. The event was held at the party’s regional office. A similar meeting was also conducted in Calgary on Jan. 13.

Calgary Herald’s Jason Fekete reported that George Gosbee, CEO of oilpatch brokerage and investment bank Tristone Capital, and a member of the Economic Advisory Council, is participating in the Calgary meetings with Harper. [Calgary to guide PM on budget (Calgary Herald, Jan. 13, 2009)]

Gosbee, who is also a member of the CCCE, joins a growing list of advisory council members that are attending private meetings with senior politicians that appear to be separate from the Council’s deliberations.

Lastly, farther down on the list of importance were are series of closed-door meetings held across Canada before Christmas by Transport and Infrastructure Minister John Baird with provincial, territorial and municipal representatives on accelerating infrastructure investments; and a 3-city tour by Human Resources and Skills Development Minister Diane Finley with key stakeholders and members of the community to discuss issues surrounding Canada’s response to the current economy.

The federal government’s public consultation lacks sincerity and is clearly taking a back seat to what’s going on behind closed doors. Flaherty’s economic stimulus message hasn’t changed since the process began over a month ago: increased infrastructure spending, tax cuts and access to credit. It almost makes you wonder why he bothered with consultations at all.


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