What’s changed since January, Mr. Flaherty?

Liberal Finance Critic John McCallum today demanded federal Finance Minister Jim Flaherty explain his about-face on one of his party’s central campaign promises - to address the so-called fiscal imbalance.

“The Prime Minister toured Canada raising the expectations of every Premier, alluding that big cheques were on their way,” said McCallum, as the federal-provincial Finance Ministers’ meeting wrapped up in Niagara-on-the-Lake. “But now that the time has come to write those cheques, his Finance Minister is saying that the whole situation has resolved itself when in fact nothing has changed."

For the past few weeks, Flaherty has repeatedly pointed to three specific areas as evidence that that there is no longer a problem to be solved:
1. The $42 billion increase in health transfers.
2. That the majority of provinces are running surpluses.
3. A promise that the federal government will no longer run large surpluses.

This sharp change in tune had Mr. McCallum wondering just what exactly has changed since January.

“The increase in health transfers was already scheduled under the previous Liberal Government’s 2004 Health Accord, there will be one fewer province in surplus this year than last, and the large federal surplus is gone because the government dramatically increased spending, not transfers to the provinces,” said Mr. McCallum.

Flaherty went even further to suggest that if the Premieres’ don’t have enough money to fund their programs, they can raise their sales taxes to occupy the room being vacated by the Conservatives’ one per cent cut in the Goods and Services Tax (GST).

“I find it insulting that when the Finance Minister is speaking to average Canadians he talks about the savings the GST cut will offer, but when he is talking to the Premiers he refers to that same one per cent cut as ‘vacating tax room’” said McCallum.
“The GST reduction can’t be all things to all people, it was either intended to save consumers some money or its intent was to offer the Premiers a chance to raise their own sales taxes. It can’t do both.”

McCallum went on to point out that, in fact, since January what has changed is that the Conservative government has taken money away from all 10 provinces by canceling the Early Learning and Child Agreements.

“I am quite confident that when the Conservatives made solving the fiscal imbalance a central plank in their election platform, none of the Premiers imagined they would be getting less money from Ottawa,” said McCallum. “I think it was very disingenuous on their part and it is further proof that they think Canadians are naive.”