Thursday, November 02, 2006

Jim Flaherty Does the Right Thing

So it’s a matter of trust – income trust that is. There is lots the “Gnu Government of Canada” has done that I disagree with but the phasing out of income trusts is not amongst them. This is the kind of political action and courageous hard choices we need from government.

Income trusts were getting out of hand. They force a short term and shallow definition of business success plus a narrow planning and management perspective on those businesses. They reward the here and now at the expense of the future. Research and development, productivity enhancements, new technology investment, even maintenance, anything with any immediate cash demands can tend to get deferred if they drain the pool of immediately distributable cash from the income trust. Management gets rewarded on quarterly results and effective corporate tax avoidance. Nothing wrong with that if your view of the role of business and enterprise is shallow and superficial. We were just setting our selves up to be even more non-competitive and more quickly with the BRICK countries (Brazil, Russia, India, China and Korea).

Sure it was a political promise broken. Perhaps the promise should not have been made in the first place because it was unrealistic. Income trusts were growing rapidly and part of the political drama in the last federal election. You will recall the campaign rhetoric about "leaks" from Liberal Cabinet Ministers about the future of income trusts and the “timely” intervention of the RCMP’s very public announcement of an investigation about the so-called "leaks"right in the heat of the campaign. Does anyone remember what happened or the current status of that investigation? Was it purely political?

Campaign promises have been broken before and for far lesser reasons. Trudeau beat Stanfield saying never would he institute wage and price controls and did it soon after winning. Chr├ętien was promising to abolish the GST…enough said. Both men won subsequent elections as I recall. I am not justifying breaking political promises. Just saying it could be worse. Look at this clip from the TV show Boston Legal about the American state of political culture and tell me if it is more of a documentary than drama.

So are political campaign promises really equivalent to Pulitzer Prize winning fiction? It really depends on the capability, conscience and character of the candidates at the end of the day. What unrealistic promises are bing made by PC candidates that will be broken once power is achieved. It is called the Catch 23 of politics. The skills necesary to become the leader are entirely different than those needed to be the leader.

An old mentor of mine once said “Sometimes you have to put away your ‘principles’ and do the right thing.” That is what happened yesterday with the Harper government and I for one, in this instance, applaud it.