Jim Flaherty: Parliamentary System An Advantage Because It Gets Things Done

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Finance Minister Jim Flaherty says Canada has an advantage over the U.S. in dealing with the economy — it has a system of government that can make decisions. (CP)
Finance Minister Jim Flaherty says Canada has an advantage over the U.S. in dealing with the economy — it has a system of government that can make decisions. (CP)

OTTAWA - Finance Minister Jim Flaherty says Canada has an advantage over the U.S. in dealing with the economy — it has a system of government that can make decisions.

The finance minister extolled the virtues of a parliamentary system to reporters in New York on Tuesday after participating at George W. Bush Institute tax conference.

Asked if his model for reducing corporate taxes could be extended to the United States, Flaherty told reporters a majority government made that easier but he acknowledged that he was able to get important policies passed even while the Conservatives had a minority mandate.

In language that might surprise Canadians, Flaherty said the minority Conservatives were able to work with the opposition over the course of five years and implement fundamental policies, including tax reductions.

"One of the advantages that Canada has is we have a government that can make decisions," he said.

"We have a majority government. But even when we had a minority government, we were able to work with the opposition over the course of five years and implement the important policies, the fundamental policies that we wanted to follow."

That's a different view the government appeared to take while in minority — at least publicly — when it often complained about obstructionism from Liberals and the NDP.

Prime Minister Harper dropped the writ in 2008, breaking the spirit of his four-year election law, because he said Parliament had become dysfunctional.

Flaherty, however, was able to get his first five budgets through the House of Commons without concessions to the minority parties.

The minister did not specifically refer to gridlock in Washington that many blame for the country's inability to deal with massive deficits and debt in his response, although the implication from the question was clear.

Months of wrangling over extending America's debt limit last summer contributed to a market panic over the possibility of a default and an eventual downgrade of the U.S. credit rating.

Flaherty gave no hints about where he stood on issues confronting the U.S., but as for Canadian corporate taxes, he said Ottawa has realized greater revenues after the cuts.

"Grow the economy. More corporate profits, more taxes," he said by way of an explanation.

"We're not going to get rich by increasing our taxes so we're going to go the other way, which we have. And it's worked."

Flaherty described Canada's economic recovery as fragile, but said he had hopes the country could realize even stronger growth this year than the estimated 2.2 per cent he used in the last month's budget.

He also said he took "with a grain of salt" last week's stellar report from Statistics Canada that 82,000 jobs were created in March. He said he had also previously been surprised by job losses in some preceding months.

And the finance minister dismissed suggestions he might be ready to intervene in Canada's hot housing market to restrain household debt.

"We've intervened three times during the course of our six years of government and there has been some moderation in the market of late," he said. "I would prefer for the market itself to correct to the extent that a correction is necessary."

Since taking office in 2006, the Conservatives tightened mortgage rules on three separate occasions in an effort to stem borrowing and lending, with limited results. The latest figures show household debt to income stands at about 151 per cent, near the all-time high.

Bank of Canada governor Mark Carney has declared household debt the number one domestic risk for the economy.

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