Federal policy flip-flops kill politics

Bracket creep reversals latest nail in coffin of meaningful party politics

By: Richard Shillington

  These days, supporting a political party is like rooting for a hockey team. Come election time, you want your team to win because... well, because it's your team. It's all about the colour of the jerseys, not about policies.
  At least, this is what current events seem to teach us. The leaders may change, but the big policy issues - the GST, tax cuts, free trade - have remained political givens. So we cast our ballots to determine who governs us, but not how we are governed.
  The recent history of 'bracket creep' is one example of the federal parties' lack of conviction on policy issues.
 

Michael Wilson used inflation to cut the benefits of poor children, but not those of seniors. This was deficit fighting at the least political cost.

  'Bracket creep' began in 1986 with Michael Wilson's first budget. Before that time, both tax brackets and social supports were indexed to the Consumer Price Index (CPI), which measures the rate of inflation. Under this system, taxes were tied directly to the purchasing power of your income - with the amount of tax you paid being directly related to how much money you made in real, after-inflation terms.
  Mr. Wilson proposed replacing full indexation of the tax system, with partial indexation (to 3% less than the CPI). The same would happen to supports for seniors, (Old Age Security and the Guaranteed Income Support) and for children (Family Allowance and the Child Tax Credit).
  The outgrowth of a partial de-indexing is that taxes rise even though real incomes do not. People who could buy less with their pay-cheques, after inflation, would be taxed at a higher rate than they would be with indexation in place. Cleverly, Mr. Wilson had proposed a way of raising taxes without having to introduce legislation on the matter - a move that critics of both the left and right denounced as undemocratic.
  After stiff opposition, Mulroney backed down on de-indexing the OAS and GIS. And so, annual cuts via inflation were begun for poor children but not for seniors. It figures: seniors were a powerful lobby but poor children were not. This was deficit fighting at the least political cost.
 

Politics has never rewarded honesty. Just ask Kim Campbell or Robert Stanfield, who lost elections because they told the truth.

  The Liberals, then in opposition, opposed de-indexation. Their minority report to the Finance Committee concerning the GST Credit complained that "virtually all social groups were unanimous that the lack of full indexation of the refundable tax credits will make an already unfair GST system even more unfair over time."
  Decrying what they portrayed as a "Conservative attempt to increase taxes on the poor," the opposition Liberals rejected the Finance Minister's assurances that he would "adjust the credits and the thresholds to protect the poor" if lower-income Canadians lost too much ground. The Liberals' response was that "If the government really intended to fully protect the poor from inflation... then there is no reason not to fully index the protection for the poor in the first place."
 

  Funny how things change when a party assumes power. The Liberals were elected in 1993 and took no action on indexation until seven years later, in Paul Martin's year 2000 budget.
  In fact, a 1998 private member's motion proposing indexation of the Child Tax Benefit, was opposed by the governing Liberals. Party Politics being what they are in Canada, the motion was made by a Conservative, despite the fact that deindexation was begun by that same party.
  I watched the vote on this motion, from the gallery of the House of Commons. The motion was supported by each and every Conservative and every Reform party member. It was opposed by every government cabinet member and all but 14 brave souls within the Liberal back benches. Democracy in action.
  And now, two years later, the government has finally indexed the Child Tax Benefit and the Income Tax System. I celebrate this victory - that the purchasing power of supports for children is no longer being eroded by inflation - just as I celebrate the fact that Paul Martin did eventually give up this powerful tool for deception. Yet the whole sordid affair remains a sad commentary on the intellectual dishonesty of Party Politics.
  Of course, politics has never rewarded honesty - ask Kim Campbell who expressed the view that unemployment would not likely decline. Or compare the fortunes of Robert Stanfield, who called for wage and price controls, to those of Pierre Trudeau, who ridiculed the idea during the campaign but implemented it after the election.
  Given that the indexation story is typical of the way parties work, it is understandable that those interested in real policy-making will shun political parties in favour of interest groups.
  Tom Kent expressed it well in a paper for the Caledon Institute:

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