It is known around ottawa
simply as “the Kingston speech,” in which Finance Minister Jim Flaherty laid out what he has in mind for Canada’s fiscal policy, the provinces, the taxpayers and future generations.

Yet the speech received scant attention in the media, and it seems to have escaped the attention of the Opposition party as well. However, it is definitely worth reading.

On Sept. 28, Flaherty made a keynote speech on fiscal policy and federalism in Kingston, Ont., to Queen’s University’s Institute of Intergovernmental Relations. Although there was the usual self-congratulatory stuff about Canada’s federation being a world success story, and predictable scorn about the Liberal habit of going on last-minute spending splurges on under-forecast surpluses, Flaherty made several startling points, including:

> The Harper government plans to expand federal involvement by pumping money into two areas normally under jurisdiction of the provinces: post-secondary education and infrastructure. This point may come as a shock to some of the Conservatives’ core supporters who believe that the less Ottawa is involved in anything, the better. But more on this later.

> Large surprise federal surpluses — which the former government used to boast about as evidence of good fiscal management, even as they were on pre-election shopping sprees — should be used for tax relief as well as debt reduction. By cutting federal taxes on a sustained basis, the provinces and territories will have increased tax room, which they badly need, to fund programs under their jurisdiction. With this point, the minister is finally getting the question of who really owns the federal surplus — Ottawa or the country as a whole — on the agenda.

> Confederation is out of sync, thanks to those large federal surpluses, with the central government collecting more taxes than needed while the other levels of government are chronically underfunded. Flaherty says Ottawa should stick to its core responsibilities and let the provinces stick to theirs. Obviously, there may be some confusion here, as education and highways traditionally have been provincial responsibilities. But Flaherty seems to be making the point that the areas should also be considered core federal responsibilities because of the importance of skilled labour and highways, such as the 401 in Ontario, to an export economy.

Flaherty noted post-secondary education “is one of the cornerstones of our success as a nation, but we are facing real pressure to do more.” He also said infrastructure is a key element in a competitive and productive economy.

Perhaps Flaherty was giving this speech as a road show or test-market exercise to try things out on the policy wonks before going public in next year’s budget with what clearly is a new fiscal federalism.

The Kingston speech was an excellent way to keep something away from the attention of the Parliamentary Press Gallery and the Opposition. Flaherty made the speech at a small-town university on a Thursday night, when MPs were heading home to their ridings and the political scribes were busy with their weekend punditry pieces.

Or perhaps the minister simply doesn’t have the mandate yet within his own government to take a higher profile. Sure, the speech can be found on the Department of Finance Web site, but government departments have ways of making sure the minister receives wide coverage — or not.

This government’s communication style is like a specialty cable channel, with Stephen Harper on all the time. With the exception of a couple of ministers — such as Jim Prentice or John Baird, who are permitted to say things the prime minister cannot afford to — Harper prefers to use his ministers as background props in photo-ops.

Harper has been able to keep the Bible-thumpers, libertarians, gun-loving contrarians and other colourful constituencies among his party’s supporters quiet by reopening the gay marriage debate and treading carefully on anything that appears suspiciously liberal, such as Ottawa assuming new responsibilities.

Let’s hope Flaherty’s ideas are soon on the public record. He will have to convince the public that good economic policy is more than just putting tax money back in people’s pockets. The provinces need a bigger share of tax revenue collected in this country.

Certainly, Flaherty will stand our idea of equalization on its head. To most Canadians, equalization is when the richer provinces throw their poorer cousins a bone. The minister wants us to see it as something governed by responsible federal spending.

@page_break@Just as Paul Martin was able to eliminate the deficit as finance minister by winning over the public early on the need for sacrifice, Flaherty will have to appeal to the public sense of overall good. That means this government won’t be able to remain in its permanent jingoistic pre-election mode and must actually lay out some clear policy options for Canadians to debate.

It will also mean the prime minister will have to start letting his ministers show their stuff. Certainly, the finance minister will need some latitude to get competitiveness on the national agenda. IE