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The Conservative-Liberal two step
I have often thought that we owe Brian Mulroney, Jean Chrétien, and Paul Martin a great debt of gratitude as a country. I call their contribution to Canada the Conservative-Liberal Two Step.
Step One: When Brian Mulroney became prime minister, he made two very substantial changes to Canada’s economy. The first change was to negotiate a Free Trade Agreement (FTA) with the United States.
The second change was the implementation of a Goods and Services Tax (GST), which replaced the Manufacturers Tax. If Canadian businesses were to compete with U. S. businesses under the new Free Trade Agreement, the Manufacturers Tax had to be eliminated. These two controversial moves could have cost Mr. Mulroney his political career, but he did them anyway.
Step Two: When Mr. Chrétien became Prime Minister, he realized the benefits of the FTA and the GST and kept them. Then he and his Finance Minister, Hon. Paul Martin, were able to cut federal spending and reduce transfers to the provinces. Combining the spending reductions and the revenues from the GST, Mr. Chrétien was able to have budget surpluses for ten years. Canada had not had a surplus for 30 years… only deficits. And we have not had a real surplus since… only deficits.
Both the Conservative “Steps” and the Liberal “Steps” were not popular, but they worked hand in glove to give Canada ten years of critical surpluses. As a result of this “Conservative-Liberal Two Step”, Canada still enjoys the lowest “Debt to GDP Ratio” in the G7 by a considerable margin.
Had Canada continued to have deficits through those 10 years of Chrétien-Martin, we would be in a completely different situation today. Because of the low Debt to GDP Ratio, Canada is in a much better position to deal with the Trump Tariff Turmoil than most countries.
So, thank you Mr. Mulroney, Mr. Chrétien, and Mr. Martin for your fearless moves doing the Two Step. Little did they know!
Step One: When Brian Mulroney became prime minister, he made two very substantial changes to Canada’s economy. The first change was to negotiate a Free Trade Agreement (FTA) with the United States.
The second change was the implementation of a Goods and Services Tax (GST), which replaced the Manufacturers Tax. If Canadian businesses were to compete with U. S. businesses under the new Free Trade Agreement, the Manufacturers Tax had to be eliminated. These two controversial moves could have cost Mr. Mulroney his political career, but he did them anyway.
Step Two: When Mr. Chrétien became Prime Minister, he realized the benefits of the FTA and the GST and kept them. Then he and his Finance Minister, Hon. Paul Martin, were able to cut federal spending and reduce transfers to the provinces. Combining the spending reductions and the revenues from the GST, Mr. Chrétien was able to have budget surpluses for ten years. Canada had not had a surplus for 30 years… only deficits. And we have not had a real surplus since… only deficits.
Both the Conservative “Steps” and the Liberal “Steps” were not popular, but they worked hand in glove to give Canada ten years of critical surpluses. As a result of this “Conservative-Liberal Two Step”, Canada still enjoys the lowest “Debt to GDP Ratio” in the G7 by a considerable margin.
Had Canada continued to have deficits through those 10 years of Chrétien-Martin, we would be in a completely different situation today. Because of the low Debt to GDP Ratio, Canada is in a much better position to deal with the Trump Tariff Turmoil than most countries.
So, thank you Mr. Mulroney, Mr. Chrétien, and Mr. Martin for your fearless moves doing the Two Step. Little did they know!
