Saturday, September 13, 2008

CANADA: ELECTION SET FOR OCTOBER 14, 2008

This article appeared in the Wall Street Journal and is an excellent short summary of the choices in our upcoming election:

Canada's Change Agent

September 13, 2008; Page A12

One candidate believes in low taxes, gun rights and a strong national defense. The other has a dog named Kyoto and promises to levy a new carbon tax on industry. Any guess who is favored to win the Canadian federal election set for October 14?

The answer is Prime Minister Stephen Harper of the Conservative Party, who was elected in January 2006 on a platform to strengthen the military and cut taxes. He has done both. And though he once pledged not to call an early election, he did so on Sunday, explaining that the current parliament has become so "dysfunctional" he can't govern without a new one.

Mr. Harper's main opponent is the Liberal Party's St├ęphane Dion, a former environment minister who chaired the U.N. climate change summit in Montreal in 2005. The Conservative minority government would have to add 28 seats to its present 127 to seize a majority, and Mr. Harper is on record saying he doesn't expect that. But he clearly believes that, despite a slowing economy and the loss of the 97th Canadian soldier in Afghanistan last Sunday, he can beat Mr. Dion. The reasons are instructive.

Mr. Harper has restored the country's international prestige by demonstrating political courage on Afghanistan. The Liberals had sent Canadian troops there in 2001 but began agitating for withdrawal when things got difficult. Mr. Harper has refused to cut and run, and he has chastised those NATO partners in Europe who have shrunk from the fight. He has also boosted defense spending so Canadian troops are properly armed.

By contrast, Mr. Dion had sought to withdraw Canada's Afghan contingent "with honor" before 2009. His effort failed, even within his own party, and earlier this year Mr. Harper won an agreement with the Liberals to stick it out in Afghanistan until 2011.

Like Americans, Canadians are also worried about the economy and aren't eager for a tax increase. Mr. Harper has cut the corporate tax rate to 19.5% and has a plan to reduce it to 15% by 2012. (The U.S. rate is still 35%.) He has also reduced the national sales tax by one percentage point to 5%. That boost to consumer purchasing power may have helped Canada avoid recession in the first half of this year. GDP shrank in the first quarter by 0.8%, grew a meager 0.3% in the second and may not do better than 1.1% for the year, according to Finance Minister Jim Flaherty. Mr. Harper argues that now is not the time to raise taxes.

Mr. Dion has a different view, proposing what he calls "the Green Shift." It would impose C$15.4 billion (US$14.4 billion) of new taxes on Canadian industry for their carbon emissions while cutting income taxes. Mr. Harper calls Mr. Dion's plan "the Green Shaft" and likens it to Pierre Trudeau's 1980 "national energy policy" which, the Prime Minister said last week, "was designed to screw the West and really damage the energy sector." Though he added that there is a difference: "This will actually screw everybody across the country." The fellow can be blunt.

The larger question is what Mr. Harper would do with a real majority. In 2005 his Liberal opponents portrayed him as a far-right extremist. Yet like his countrymen, he has shown little appetite for extreme positions, and if anything he has proven to be a steady leader who until recently has worked effectively across party lines. Even the separatist movement in Quebec seems to have lost its mojo during his tenure. That may be why Canadians are likely to ask him to stay on.