There is an interesting branding exercise going on in Ottawa, even though the fall session of Parliament has barely started.

The exercise started a week after the House of Commons resumed sitting and will probably continue for the balance of the fall.

Finance Minister Jim Flaherty and Treasury Board President John Baird jointly announced the latest federal surplus of $13 billion would be used exclusively to pay down the debt and federal spending would be cut by $1 billion.

The latest surplus is certainly an impressive number. However, financial markets are well aware that Canada’s battle with the federal debt was won long ago. We have had one of the lowest debt-to-GDP ratios among the major developed nations for several years, and will continue to do so for a long time.

And for a bureaucracy that spends $210 billion a year, $1 billion in spending cuts is hardly belt-tightening, especially as they will be phased in over two years.

This is why financial markets and economic policy wonks seem to be underwhelmed. But the government probably doesn’t care.

Politics — not economics — is the operative word here. This is why the cuts have been generating so much attention in the media, despite the relatively small amount of money.

Just as the Liberals will always own the franchise for deficit elimination, the Tories would like to stake a claim on wiping out most of the debt. And what a better way to establish that than by fighting a war that is already within sight of being won?

As for the cuts, why not shore up your core vote by targeting programs that have been sticking in right-wingers’ craws, such as the federal court challenges program?

And the $11.7 million that had been set aside to fight pine beetles in British Columbia, the money had not been used. So, the nation as a whole will hardly miss it.

As for those who were offended by the cuts, they probably won’t vote Tory anyway.

As has happened in previous times of low unemployment and a strong economy, no political party would qualify as fiscally conservative. In addition, the Tories and the Grits are still a lot alike.

So, the initiation of a long-term branding exercise makes good strategic sense. It will be interesting to see how this exercise continues with the Tories’ much ballyhooed environmental package later this fall.

There is a risk, of course, that the branding will go so well that those who voted for the NDP in the last election will vote strategically for the Liberals next time in order to deny the Tories a majority, or even power altogether. (The idea of the Liberals returning to power is not as far-fetched as it was last spring.) Polls show that NDP voters are the least comfortable with the prospect of a Tory majority. And, historically, the NDP has been the second loser when the Liberals gain voter support.

As well, the Tories are going to have to take time out from wooing Main Street and impress Bay Street with some real economic policy. A good place to start is our lagging productivity. Debt repayment will help, but shoring up Canada’s competitiveness will take a wide range of tough measures, from balancing provincial budgets to eliminating interprovincial trade barriers once and for all.

And with surpluses continuing to be so high, Canadian voters will soon want to know why their taxes aren’t going down.

If the Tories really want to establish their brand, they should make productivity a priority and begin building the necessary public consent for the policy changes ahead. IE