Experience, more than either ideology or evidence, provides a guide to good policy.
I disagree with Eugene Lang’s prediction that federal government policies will change fundamentally in most election outcomes. It is more likely that there will be only cosmetic changes if a new government is elected, and few if Harper is re-elected. The Harper government has shown that it largely pursues the same agenda, irrespective of whether it forms a minority or majority government.
The analysis is more complicated for a new party taking power. Lang sees the civil service playing a key role, irrespective of whether the Liberals or the NDP are elected. He expects the civil service to push new policies to fill the Liberal Party’s policy gap. The experience of the brief Liberal government of Paul Martin, however, suggests that attempts to outsource policy-making to the civil service result in paralysis, leaving policies largely as they were. The civil service needs direction from its political masters and cannot fill either a policy or a leadership role.
Under an NDP government, Lang predicts, resistance from the entrenched civil service elite will lead to a palace revolution, with former senior civil servants brought in from the provinces to run an NDP federal administration. However, the almost complete absence of former provincial deputy ministers qualified to run large and complex federal departments suggests this is an unlikely outcome. Nor will Mulcair want to adopt many new policies, given that his priority will be reassuring Canadians that the NDP is capable of governing responsibly; he will have a priceless opportunity to permanently marginalize the Liberals and establish the NDP as the primary left-wing alternative to the Conservatives.
Lang posits that a new Trudeau administration lacking in policy depth would turn to the civil service for evidence-based policy advice. This would be a recipe for policy paralysis. Paul Martin’s brief interval as prime minister showed that the civil service looks for direction from the government, not vice versa. It is true that the civil service had high hopes for evidence-based policy-making under Martin. But within months it was disillusioned because Martin, without an ideological compass to guide him, could not make a decision. This reveals one of the flaws in our society’s obsession with evidence-based policy-making: the facts are usually unclear and often contradictory, rarely pointing clearly to a particular policy conclusion. Experience, more than either ideology or evidence, provides a guide to good policy.
Lang’s idea that a right-of-centre civil service — a fanciful concept outside of the Department of Finance — foisted an austerity program on Prime Minister Jean Chrétien does not square with the facts. Financial markets, not the civil service, forced austerity on Chrétien and then Finance Minister Martin, who would have been happy to continue with the gradual approach in their 1994 budget that markets found so disappointing. They were moved to adopt true austerity by shocking downgrades of federal government debt and a bond auction that came within 30 minutes of complete failure. The Wall Street Journal speculated that Canada would need an International Monetary Fund bailout, calling the loonie “the northern peso.” With the finances of several provinces just as shaky, Canada was on the brink of a financial crisis of its own making. Senior Finance officials did not need “the skilful use of evidence and argument” (as Lang claims) to make the case for austerity; they only had to clip articles from newspapers.
Nor would any government trust the civil service to implement “evidence-based policy.” The federal budget of 1981 provides a good example of what happens when the civil service is left on its own to make policy. With the Trudeau government distracted by its anti-American flirtations with Castro and the Soviet Union, the Department of Finance crafted a “rational” budget that got rid of many of the tax credits and exemptions that Lang decries, while lowering the income tax rate. This faithfully followed the “broaden the base, lower the rate” mantra so beloved by economists. It made the income tax system more progressive and lowered taxes for the middle class.
The result was a political disaster for both the government and the Department of Finance, on a par with the creation of the GST (another example of evidence-based bureaucratic policy-making that marked the end of federal politicians entrusting their political lives to a tone-deaf bureaucracy). The uproar from people and firms losing their tax breaks forced Allan MacEachen and his Department of Finance to reinstate the traditional tax structure, warts and all. The June 1982 budget eight months later was still repairing the damage caused by the 1981 fiasco. The long institutional memory in the Department of Finance of this rare “failed budget” ensures there is little chance it will step forward to convince a Trudeau government to “abandon some of the most egregious elements of the Harper government’s tax populi,” as Lang speculates.
Lang may be correct that a Trudeau-led Liberal party “lacks an ideological anchor and is often internally conflicted on big issues.” The result is more likely to be a Martin-like dithering and policy drift than a takeover of the policy levers by the civil service, especially in a minority government.
The first thing Lang mentions about an NDP government is that it is unclear whether NDP policies well outside the mainstream would actually be implemented — in particular, whether the NDP government “would meddle with the independence of the Bank of Canada to ensure a low interest rate policy.” This has no chance of happening. First, any intimation of political meddling in the Bank of Canada would trigger the very instability in financial markets that the NDP desperately would want to avoid as it attempts to reassure Canadians that it was not risky to entrust Mulcair with governing. More importantly, such meddling is completely unnecessary. How could Bank of Canada Governor Stephen Poloz lower interest rates when he already has cut them to near zero, sending the dollar sinking well below 80 cents US?
Lang argues that the civil service will play a key role under the NDP, just as he outlined for the Liberals. However, instead of the close cooperation Lang expects under the Liberals, he predicts that distrust of the civil service will lead Mulcair to “reach back into provincial ministries and bring to Ottawa senior mandarins who have worked well with NDP governments in the provinces.”
This is a truly frightening scenario for both the country and the federal civil service — amateur hour on the national stage. There has not been an NDP government in any province with much more than 1 million inhabitants since British Columbia’s in 2000 and Bob Rae’s ill-fated administration in Ontario in the early 1990s. Since these were too long ago to form a talent pool deep enough to currently draw from, Mulcair would be left with the dregs from Nova Scotia, Saskatchewan and Manitoba that have not already been drafted to help Rachel Notley’s fledgling administration in Alberta.
One of the things I learned working for a federal government agency that regularly dealt with provincial counterparts was that provincial civil servants were mostly parochial and borderline incompetent, with the quality deteriorating exponentially the farther one moves away from the most populous provinces. Ambitious people who want to impact policy-making move to Ottawa, not Halifax or Winnipeg.
So it is a vast understatement to say, as Lang does, that “Canadians could be in for some policy surprises if a few deputy ministers from the provinces get the helm of a handful of federal departments.” Actually, I doubt this could ever happen. It takes decades to learn the ropes of being a senior manager in Ottawa, supervising hundreds of employees, overseeing budgets in the billions of dollars and managing relations with Parliament, powerful central agencies and the provinces. Nothing about being a deputy minister in Nova Scotia or Manitoba prepares one for the big leagues in Ottawa. The results would be disastrous for an NDP government desperately trying to establish its credibility to handle the ship of state.
Mulcair would have to work amicably with the Bank of Canada and the rest of the civil service. As Lang notes, some social democratic policies like daycare would be adopted to appease the NDP’s base. But continuity in policy is more likely, especially given the constraints of a weak economy and the promise of fiscal responsibility.
As for the Harper government, I doubt you would see any significant change in policies. Harper does not need to create or embellish his legacy; simply having removed the Liberals as the “natural governing party of Canada” assures that. He would continue with free trade deals such as the Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement, continue the withdrawal from areas of provincial jurisdiction that has sucked the life out of separatism, continue chipping away at the compensation of civil servants (especially pensions) and generally continue reducing the footprint of government spending and taxes in the economy while balancing the books.
If anything characterizes the Harper style of governing, it is his faith in gradualism when undertaking large reforms. There have been few announcements of dramatic overnight reform. Instead, in areas from criminal justice to overhauling the civil service to changing the tax code, the process is always one of small changes each year, which after a decade have a large cumulative effect. It has proved to be a winning formula, so why would the Conservatives change it?
So don’t expect radical change in the federal government’s direction, no matter what the outcome of the election. A Harper government would continue on the road it has mapped out over the past decade. A Liberal government unsure of itself and an NDP government wanting to replace the Liberals as the main alternative on the left will not push for significant change.
Philip Cross is a senior fellow at the Macdonald-Laurier Institute. Prior to joining MLI, Cross spent 36 years at Statistics Canada, specializing in macroeconomics.