NDP's new thinking lacking substance
National Post
Fri 11 Nov 2005
Page: FP19
Section:
Financial Post: Comment
Byline: William Watson
Column: William Watson

Source: Financial Post

Good sense is breaking out all over. A couple of weeks
ago Lucien Bouchard and a group of 11 other Quebec notables published a
manifesto saying the province had to re-examine its statist way of life. Now the
federal NDP recruits an investment banker, Paul Summerville, to run in the
Toronto riding of St. Paul's. Anyone who wants clear thinking on important
policy issues has got to be pleased. If the NDP learns to love the market,
that's great news for country.

But when dealing with investment bankers, best read the fine print. Let's not
get too excited just yet.

Actually, Paul Summerville isn't a pure investment banker. Rather, he was
chief economist for RBC Dominion Securities from 1996 to 2000. (You know how
slippery those economists can be!) And he's also worked for Richardson
Greenshields, TD Bank Financial Group, Jardine Fleming and Deutsche Bank. So
he's as capitalist a guy as you ever see in the NDP.

His speech last month to an NDP conference said lots of good things:

- We have to grow the economic pie -- a great sentiment even if a tired
metaphor.

- "Whenever the New Democratic Party has talked about wealth it has always
followed with the word taxation -- not prosperity."

- We have to "respect, and reward the genius and discipline of entrepreneurs,
the wealth-makers."

- "The tradition of Tommy Douglas" involves "a commitment to annual balanced
budgets."

- "Remember, it is Jack Layton who made the public commitment in the June,
2004, election to annual balanced budgets."

Well, actually, on that last one all the party leaders made that commitment,
and most made it years before. But, yes, Mr. Layton made it, too.

That's all great stuff few readers of this page will disagree with. But what
are the new NDP policies that go with this new common sense? Unfortunately, they
look a lot like the old NDP policies.

Take trade. Today the rules of the game involve "a bias to trade that is
free." If we want a seat at the table, we have to accept that rule. But what
will we do at the table? "Make the Canadian case for trade that is fair and free
[and] investment that empowers and fits our democratic priorities."

But "fair trade" is a euphemism for "managed trade," which is a euphemism for
protectionism, which is a euphemism for forcing local products on people. And
screening investment to empower our priorities -- Do you actually empower a
priority? -- is what the old Foreign Investment Review Agency did. In effect
we're going to accept the rules in order to get a seat at the table and then
change the rules back to the way they used to be. That may be a sensible
strategy. It's not a new NDP.

How about taxes? "When the Liberals and Conservatives together argue that
corporate tax cuts are the single most important economic tool at their disposal
they are more than unimaginative, they are wrong."

I doubt the Liberals argue that. Maybe the Conservatives do. And we could
have an essentially empty debate on which is the single most important economic
tool -- Who says you only get to use one tool? -- but what does that mean for
NDP policy on corporate taxes? Mr. Summerville says a focus on taxes is a danger
to prosperity. The World Economic Forum has declared that safety nets, good
schools, skilled and motivated workers and efficient public institutions are
more important wealth-creators.

Even the C.D.
Howe Institute
has issued a study concluding that Canada is "under-investing in education" and
that "literacy rates can have three times the impact on productivity and GDP
growth than capital investment." (The same report recommended that principals
and teachers be paid according to their ability to make students literate and
numerate. How does the new NDP feel about that?)

As for taxes, they "are just one piece of the puzzle." OK. But how big a
piece? "Certainly, it is absolutely true, that when corporate and other taxes
are wildly out of line with regional and global rates that this will have a very
negative impact..."

So -- headline! -- the new, more prosperity-oriented NDP is opposed to taxes
that are "wildly out of line." Obvious question: What constitutes "wildly out of
line"?

The same C.D.
Howe Institute
whose opinion on literacy and education is to be trusted recently reported that
Canada's tax rate on investments by large and medium-sized corporations is the
second highest, at 39%, among 36 countries studied. (China was the highest, at
45%).

Does that qualify as "wildly" out of line? Ireland, whose economy has been
pumping out prosperity lately, is way down at 13.7%. The U.K., where Tony Blair
made social democracy business-friendly, is at 21.7%. Even Sweden, mecca of all
lefties, is at 12.1%.

The only saving grace for traditional Leftists is that the United States is
fourth on the list at 37.7%. We're only 1.3 points above that, so I suppose we
aren't "wildly" out of line on a regional basis. But that's a strange theme for
the NDP: "If a tax is OK with Bush, it's OK with us."

Bottom line? New thinking in the NDP is great. But talk is cheap. Let's see
some real action. Stop whipping the corporate whipping-boy, then maybe we'll
invest in your banker.

Illustration:
• Black & White Photo: Paul
Summerville

Edition: National
Story Type: Business; Column

Length: 892 words