Setting a Course for the Future – The Speech from the Throne

Guidepost to 2015

Mid-term Speeches from the Throne serve as guideposts to a government’s re-election planning. The Throne Speech read by His Excellency the Right Honourable David Johnston in the Senate Chamber yesterday afternoon is no exception. The government’s target audience for the 2015 general election campaign is described clearly in the Speech preamble: “Canadian families who work hard, pay their taxes and play by the rules”. The primary object of the initiatives outlined in the Speech is to reassure this audience of the Government of Canada’s determination to lever the bountiful opportunities presented by our country’s natural gifts into a prosperous and secure future for families and children.

But, the Throne Speech cautions, time is not on our side; opportunities will be lost to the swift if we do not seize them quickly.

Focus on the Fundamentals

What will the federal government do to ensure Canada will, as it declares, “lead the world in security and prosperity”? While much of the media focus has been on the populist, pro-consumer measures affecting the telecom and financial services sectors, this is a side show to the core objective – get the fiscal and economic fundamentals right. Getting the fundamentals right creates jobs, secures economic growth and, the government believes, sets the course for re-election in two years.

For the Stephen Harper government, the most important fundamental is balancing the budget. Let there be no doubt: the federal budget books will be balanced by 2015. This goal lies at the very heart of the government’s program over the next two years. Decisions will be run through a balanced budget filter. Why? A balanced budget affirms the natural competitive advantage that conservative parties seem to have going into election campaigns, namely carrying the mantle of sound economic and financial managers. Prime Minister Harper has borne this mantle through three winning election campaigns.

Perhaps more importantly, a balanced budget in 2015 clears the way for the introduction of middle class-friendly measures the government promised once its books were balanced. Arguably the most important of these from the Conservative Party’s 2011 election platform is the Family Tax Cut: income sharing for couples with dependent children under 18 years of age, giving spouses the choice to share up to $50,000 of their household income for federal income-tax purposes. The government will cede no ground to the NDP and Liberals who also aim to appeal to middle-class Canadians in the upcoming federal election.

Balancing the books means the government will freeze its operating budget and make further targeted cuts to internal spending. The low hanging fruit has been plucked; tough decisions will now have to be made. We all await the details.

Aiming for a balanced budget means the measures already underway to reduce the public service workforce and to alter its pay and benefits will proceed full tilt, regardless of the furious blowback from union leadership and members. And a balanced budget means the back office efficiencies that Shared Services Canada is tasked to achieve will be in the front window.

Seizing the Opportunity of Canada’s Bountiful Resources

But a balanced budget in and of itself will not secure re-election. Apart from a handful of elites inside the Ottawa bubble, few Canadians, especially those who recall years of budget surpluses, will be excited by a government that has balanced its books. Accordingly, the Throne Speech signals continuity of the government’s agenda in two key areas of economic growth and development: natural resource extraction and export and international trade.

The Throne Speech sets an urgent tone when it comes to taking advantage of Canada’s natural resources. Gaining access to new markets for our resources (the unsaid message being that we must diversify from the United States) is time limited. Major pipeline developments – Gateway to the BC coast for export to Asia, Keystone through the U.S. to the Gulf, and west-to-east pipelines – have not proceeded as hoped. The Speech signals to all, including to the Obama Administration, that measures will be introduced to increase safety standards on pipelines and tankers and to enshrine the polluter-pay system into law. It also acknowledges the critical importance of Aboriginal Canadians to successful resource development and export. It remains to be seen if these changes can be made in time to secure necessary approvals to pipeline developments.

When it comes to international trade, the timing of the Speech from the Throne coincided perfectly with what appears to be the successful conclusion of the Comprehensive Economic and Trade Agreement (CETA) with the European Union. The Speech announced that the CETA negotiations will soon be completed. Indeed, the Prime Minister flew to Brussels today to preside over the conclusion of these negotiations, causing him to miss the first few days of the new session of Parliament.

It bears noting that numerous steps remain to be taken before the CETA with the EU is in force: (a) the agreement must be approved by the Canadian Cabinet, the EU Council of Ministers and EU leaders; (b) the legal text must be “scrubbed” by lawyers to ensure the language properly reflects the intent of the negotiators; (c) the text must be translated into all EU official languages; and (d) the agreement must be formally ratified in each country. Furthermore, although the federal government has exclusive treaty-making powers, the CETA has important implications for provincial governments. The federal government is, therefore, currently engaged in high-level political discussions with its provincial counterparts to arrive at an understanding on CETA; the exact nature of how that will be achieved and ultimately reflected remains to be seen.

In addition to CETA, the Throne Speech reaffirms the government’s commitment to increasing Canada’s trade with emerging markets in Asia and the Americas, as witnessed by participation in the Trans-Pacific Partnership and bi-lateral trade negotiations with Japan, South Korea and India. Successful conclusion of CETA and one or more of these other important trade initiatives will both form a key part of Prime Minister Harper’s legacy and be front and centre in a 2015 election campaign.

The Road Ahead

The Speech from the Throne outlines what the government aims to achieve over the last two years of its current mandate. Its primary objective is, of course, to secure a second majority mandate. Getting the fiscal and economic fundamentals right and successfully seizing the many opportunities presented by Canada’s natural resources represent the government’s chosen pathway to success in 2015.

Setting targets out to 2021, reminding Canadians of 75th and 150th anniversary celebrations coming up in the next several years, and putting programs in their 30-year contexts may be a `subtle` aide-mémoire that this Government has no plans to go anywhere.

But the Speech does not, nor can it, foresee every obstacle along the way or signal measures needed to overcome controversies that arise in the course of every government’s term in office. The government knows that obstacles and controversies will emerge. It is inevitable. How the government responds to “events” outside of its control will be the true test of its mettle and go no small way to influencing the outcome of the 2015 election campaign.