Tom Clark:
Welcome to The West Block from Ottawa, on this beautiful Sunday, June the 10th. I’m Tom Clark.
Well on today’s show the economic crisis situation deepens and we’re not as protected as we may think. With Spain looking for a bailout, the Eurozone is teetering on the edge and Harvard economist, Ken Rogoff says get ready to feel the fall here at home.
Expect massive gridlock in the House of Commons this week as the Opposition attempts to put the brakes on the government’s budget implementation bill.
And one bill that saw all the parties united without even pouring any water into their wine.
Well first though, the situation in Europe. This weekend Spanish banks asked for and will receive $125 billion dollars in emergency loans, but that’s perhaps the least of Europe’s worries right now. What is prompting this new round of concerns? Well here is your weekly West Block Primer:
All eyes used to be on Greece but that country is still in turmoil. The Greeks go back to the polls next week and the country’s exit from the Euro zone is still very much a concern. Then there’s Italy, the third largest economy in the Euro zone continues to slip deeper into recession, but a new threat is claiming centre stage, Spain. The country is back in recession and unemployment is at nearly 25 percent. Spain’s credit rating has been bumped down to a BBB; that’s just three notches above junk status. And the cost for Spain to borrow money to cover its debt is edging dangerously close to a level that experts say is unsustainable. At the same time, Spanish banks are in serious trouble. And so, Europe is asking the world to help out, to create a fund to help save the European economy if necessary. 430 billion dollars has already been secured from G20 nations but one country is refusing to donate; Canada.
Well joining me now to discuss this is one of the world’s premier international economists and the former chief economist at the International Monetary Fund, Harvard University’s, Ken Rogoff. Mr. Rogoff thanks very much for being with us here today. I just want to start with the issue that we raised and that is Canada’s refusal to contribute to the European bailout fund. Is it the right decision for this country?
Ken Rogoff:
Look, from a political point, I can’t judge. From an economic point, I think it’s a very reasonable decision. Europe is a very rich place. This is a domestic problem. They need to write down some of these debts. This isn’t a matter of just needing some liquidity to shore up their banks. They have deep problems, not only in their finances but the whole governance of the Eurozone. So I think sort of trying to step in to domestic violence as one of the hardest things for police, and it’s one of the hardest things for financial bailouts.
Tom Clark:
We saw over this weekend that Spanish banks have asked for and have received 125 billion dollars to stabilize themselves but of course, the issue is much broader than that, in fact just as you mentioned. Give me some idea of what you see on the landscape, if Europe goes over into that hole again, what happens here in Canada?
Ken Rogoff:
Well sort of there are two pieces to that Tom; 1) are they just hanging in the wind forever, which certainly looks like what they’re doing at the moment. It creates enormous uncertainty because nobody’s sure when their going go down. I think it’s been holding back investment in the United States. It’s been hurting exports all over the world. The world’s slowly grinding down so I think it’s very problematic if they just keep doing these sorts of one-off fixes. The Spain thing is the latest. This is not the end of the story, but if you want to get hyperbolic, if you want to know what’s going to happen if Europe just really falls apart. If the Euro blows up, and make no mistake, that could happen over the next year or two; even sooner. It’s really hard to know how far it would go. I think it would be worst than 2008.
Tom Clark:
I just to read you something that Mark Carney said on this show a few weeks ago. Of course he’s the governor of the Bank of Canada and talking about that very thing, the possibility of the Euro exploding and there being a new recession. Here’s what he said.
He said, “Our expectation at present is not that everything will be sunshine and roses in Europe in the coming spring and summer, but that the blowback into Canada would be contained and what will matter more for Canada is what we do here.” Would you agree with that?
Ken Rogoff:
Well, I think that’s the central scenario that Europe continues to struggle in its growth, deciding are they going be more Europe, are they going to blow up and leaving everyone twisting in the wind. And I think that indeed, you know Canada really forced to address its own issues. There’s just not much you can do. Of course if Europe just goes through the hole, there’s no place to hide. I mean it’ll hit Canada through commodity prices; it already has. I’ll hit it through financial markets. It’ll hit it through its trade with the United States but you know there’s not a lot you can do to protect yourself against that eventuality. Europe is huge.
Tom Clark:
You’ve in the past, talked against more or less the idea of stimulus as a way to get out of this and I think you’re arguing more for a balance between austerity and stimulus. Should we go over the cliff again? Here in this country Prime Minister Stephen Harper is talking about a contingency plan which sounds a whole lot more like, you know another round of stimulus. Is stimulus a place that we should think of going if the worst happens?
Ken Rogoff:
If the worst happens, absolutely. I mean if the worst happens, you’re in danger once again of sinking into a second great depression and you really have to try everything. I don’t think anybody knows for sure what to do, but more monetary stimulus, more fiscal stimulus. But that’s in the worst case scenario. I think the debate right now is what do we do here and now while you’re growing slowly; unemployment’s, you know not where you want it to be. There are concerns do you do stimulus in this situation. That debate’s particularly keen in the United States and Britain. And I would say to that, you’re already running in these countries, 8 percent of GDP deficits; they’re big deficits already and saying that they should be larger is ignoring the longer term secular costs of this. In my research with Carmen Reinhart we find that when debts get up at the level they are now, public debts, it can hurt growth for decades and I think you have to weigh that. I mean Canada is perhaps more vulnerable to China slowing down even than the United States and that the second thing Canada has to watch. So certainly you want to stay on guard about having a really bad recession sinking into a deep hole, but I think for the moment, clearly policy is pretty aggressive already.
Tom Clark:
Yeah, give me some idea if you can, you said that it’s possible that the Euro zone could blow up. We’ve seen what’s happening in China, are you left with a sense of optimism or a sense of pessimism as to what’s going to happen? And also, can you place your optimism or your pessimism within some sort of timeframe?
Ken Rogoff:
Well, I’m cautiously optimistic. It’s just so bad what happens if the Europeans don’t figure this out. Fundamentally, Germany needs to write a blank cheque for the Eurozone in order to stop the panic, in order to slow down this run that’s going on in the banking system across Europe. But I think the Germans are rightly saying, fine we’ll write a blank cheque but we want some sort of quid pro quo and what that is, is we’d like to move towards more integration in Europe. That was always the plan and in some regions, I think notably France, the election of Hollande, it’s been a big pull back from that. The rejection of more Europe and on the one hand, Hollande and the French are saying we want the Germans to pay more. That’s what the code word for more growth policy says. And on the other hand, they say we want to integrate less and that’s really the key tension in Europe right now of which way they’re going to go.
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Tom Clark:
Ken Rogoff, economist at Harvard University. Great pleasure having you on the show this morning. I appreciate your time.
Ken Rogoff:
Thank you Tom.
Tom Clark:
Well still to come on The West Block, we’ll tell you how MP’s are freeing the grapes.
But first the government’s Omnibus budget implementation bill is on its way back to the House but it’s not going to have an easy ride. We’ll tell you why right after this.
Break
Tom Clark:
Welcome back. Well get ready for gridlock on the Hill. The government’s budget implementation bill will be back for third reading and it’s not going to get an easy ride. Now to give you a sense of the scope of this document, it will affect 70 pieces of legislation; everything from environmental reviews to employment insurance to charity rules. Now Opposition parties are calling it an affront to democracy and it puts some 1,200 amendments on the table in a show of defiance.
Well joining us to discuss what we can expect this week, Opposition House Leader, Nathan Cullen who joins us from Vancouver. Mr. Cullen, welcome to The West Block. Here’s my question, the government has a majority. We know that this bill ultimately will pass so what is the point of slowing it down with all these amendments? What’s the point?
Nathan Cullen:
Well, we wanted Canadians to know exactly what is about to happen to this country. As you mentioned in your introduction, this bill is incredibly sweeping and I think an abusive power in fact and Conservatives used to believe the same thing. To use a tool like this in Parliament to move so many different things through Parliament without proper oversight is an affront, exactly as you said to our democracy. Now my friends from the Conservatives will say there’s been more debate on this than previous budget bills but we’ve never seen anything like this. Something so massive, so broad sweeping that the impacts on employment insurance has been much discussed; the pensions taking $12,000 away from seniors and gutting our environmental legislation. All these things should be stand alone parts so people can understand them so that MP’s can do our jobs because, in fact that’s the very reason why Parliament exists is to hold government to account.
Tom Clark:
Okay, but when you say that though, I mean 1,200 amendments. You know the speaker will probably allow some 500 or 600, we’re not sure yet.
Nathan Cullen:
That’s right.
Tom Clark:
This is going to take up an enormous amount of time in Parliament.
Nathan Cullen:
Yep.
Tom Clark:
Canadians might say, okay, a protest is nice but you know, when you know that you’re not going to win at the end, what is the point of taking up all this public time, rather than being on the streets perhaps talking to Canadians about it because in the end Mr. Cullen, we have not seen a massive outpouring of public outrage about this. There are no demonstrations on the Hill.
Nathan Cullen:
Yes, sure.
Tom Clark:
It doesn’t seem as if the public’s engaged.
Nathan Cullen:
Well the public is very much engaged and getting more engaged as we bring more attention to it but it’s a budget implementation act. The government…the Conservatives threw this into the weeds on purpose. Look it, if these folks were proud about each of these things that they were doing, which they didn’t campaign on most of them by the way, the vast majority and most of them also have nothing to do with the budget by the way then they would be stand alone legislation. The government would take credit for each and every one but they haven’t. Our job as Opposition, our job as any Member of Parliament, even Conservatives is to shine light on what the government’s actually doing; hold them to account. At the very beginning of this whole process, we offer the government a way out of this mess and said let’s break this bill into separate pieces. We offered it again just last week. They’ve refused so they’ve made this bed. They’ve made the circumstance which they now have to lie in. They’ve been digging this hole for a while. We offered to take this shovel away. They went out and got a bigger shovel. That’s their choice. Now for Canadians paying attention through social media and through the news talking about what the impacts of these things are going to be on the lives and the quality of life of Canadians is absolutely critical for me. So standing and forcing the government to stand on each of these votes is to say that you don’t get these ones easy because if they did Tom, well we know they would just learn the lesson that it’s easy to do this to the Opposition so we’re going to do it again and again and I don’t want to see a Parliament that only meets once or twice a year for two big omnibus bills that ram every piece of government legislation into one. The Conservatives don’t like that either. Well they used to. When they were in Opposition, they said these were bad things but now they’re in government, I think they like these tools of power.
Tom Clark:
But to be absolutely clear, you’ve got no expectation that at the end of this, if you want to call it filibuster or protest that much is really going to change?
Nathan Cullen:
Yeah, the tragedy or irony in all of this is that with a majority government, even if these had been stand alone pieces of legislation, the government could have rammed them through. What we’re defending are the democratic principles of Parliament that says the job of each and every MP, everyone, Conservatives included is to hold that government to account and to understand what the impacts of each of these things will be. In a bill so massive, absolutely so far reaching, there is nobody in that House can understand each of the impacts and our job is to show that to Canadians and we’re doing the best job that we can to allow people to understand this is what’s going to happen. Your EI is going to change, your pension’s going to be reduced, environmental protections; we just saw another oil spill in Alberta. All of these things are going to be impacted so let’s talk about it in the full light of day.
Tom Clark:
Nathan Cullen, House Leader for the NDP, thanks very much for being with us this morning. I appreciate your time.
Nathan Cullen:
My pleasure Tom.
Tom Clark:
Well on the other side of this issue of course, is the government. And Peter Van Loan is the Conservative House Leader. He’s been listening to all of this from Toronto. He joins us now. Thanks very much for being here. You know, Mr. Van Loan, Mr. Cullen brought up the fact that when the Conservatives were in Opposition you indeed objected to this idea of omnibus bills, and you know I can think of all sorts of people right now who are writing saying that this is an affront to democracy. I can’t find many who are supporting what you’re doing but let me ready you just one excerpt from Hansard and it reads as such, it says, “The omnibus bills we have before us attempt to amend several different existing laws…in the interest of democracy I ask: How can members represent their constituents on these various areas when they are forced to vote in a block on such legislation and on such concerns.” Well that was said by none other than Stephen Harper back in 1994. Was Stephen Harper right then or is he right now?
Peter Van Loan:
Well he was making arguments on a point of order and the speaker of the time said that the bill was in order and complied with the rules of Parliament. What we have here is a bill that implements our budget. It’s the Jobs, Growth and Long Term Prosperity Act and that budget was actually already approved by this Parliament and now we’re talking about basically two months ago. And we are through this legislation implementing that budget…
Tom Clark:
But I’m still interested though Mr. Van Loan because it did seem to be part of the Conservatives DNA for many, many years and it wasn’t just in 1994. Go back into the 1980’s, Conservatives boycotted Parliament because of an omnibus bill. I’m just wondering what has changed when Conservatives hated the idea of omnibus bills before and now they love omnibus bills, what happened?
Peter Van Loan:
What we have here is a comprehensive plan to deliver for jobs and economic growth for the country. It takes advantage of the strengths that Canada has. Canada has certain advantages. We have great resource potential. We have the most skilled workforce in the world. We have a strong relatively speaking fiscal position. We have a chance now to carve a different path for Canada than what the Europeans are facing and even where the Americans are going and that’s what this budget seeks to do. So you’ve put together a bill that does actually what we say it does, implements the budget. And that comprehensive plan is designed to ensure that we have job creation and economic growth both in the short term and in the long term. So that’s where we’re heading with this bill. That’s why it fits together as a comprehensive plan because it is exactly that Economic Action Plan 2012. So when put to Canadians that our focus is on the economy that’s what we’re doing here.
Tom Clark:
Fair enough, but why then…why not break this bill up, which is what the Opposition is asking. They’re saying that you’re afraid of discussion because the environment bill is not going to be looked at by the environment committee. The EI bill is not going to be looked at by its proper committee. It does appear in a sense that you’re afraid of debate and discussion on this wide range of legislation.
Peter Van Loan:
Not at all. This has had the longest debate in the House of Commons of any budget bill, certainly in the past two decades, I think ever. It’s had the longest consideration…
Tom Clark
It’s also the biggest budget bill in the history of Canada too.
Peter Van Loan:
No it’s not. In fact, there have been longer bills but the reality is it’s also had the longer consideration at committee. It’s even had a special sub-committee on resource development above and beyond that, so there’s been ample consideration, ample debate. The reason we won’t break it up is because the Opposition says break it up from one bill we oppose to seven or eight bills that we oppose. Now they’re proposing instead of one vote on a budget bill they opposed they want to have thousands of votes on a budget bill they oppose. It’s really just about obstruction, delay and time wasting for them. You know, we have an economic action plan for job creation we want to put in place. It’s a contrast with the one that Thomas Mulcair was arguing for in the House which would have had us protect the Canadian economy by sending billions to bailout Spanish banks this week. We think our focus should be on the Canadian economy and that’s where we’re headed.
Tom Clark:
Okay, I’ve only got about 20 seconds left but because of this filibuster that’s about to break on the Hill, is there a chance if it goes on for a long, long time that you’re going to keep Parliament sitting into the summer as a result?
Peter Van Loan:
Well there’s a very interesting thing coming up. This is the first time the speaker will rule on a new power that was put into the standing orders in 2000 where he can actually not allow votes go forward on amendments that are designed or calculated to waste time and duplicate at report stage. I think we’ve got that here in the hundreds so I’m looking forward to the speaker’s decision on it. It will be important because it will be the first time that those new rules will be interpreted.
Tom Clark:
Peter Van Loan, Conservative House Leader, I appreciate your time this morning. Thanks for coming in.
Peter Van Loan:
Thank you.
Tom Clark:
Well still to come on The West Block, a bill that saw absolutely no opposition. If you have transported wine from one region of the country to another you have been breaking the law, but not for long. That’s coming up next.
Break
Tom Clark:
Welcome back to The West Block. Well I want the camera to zoom past me here if you could to take a look at a bridge. It’s the bridge between the Ottawa and Gatineau. In other words, between Ontario and Québec and that has been the heart of a problem for decades now because if you took a bottle of wine across that bridge you were breaking the law and potentially facing time in jail. Well that has all come to an end. Dan Albas, a Conservative MP from Okanagan-Coquihalla. Private members bill got all party support for this. It is now legal, or soon to be legal to bring wine from one place to another. Congratulations, one of the great policy initiatives of our day.
Dan Albas:
Well thank you. It’s really exciting for people in my riding because as you know, Okanagan is you know a wine region and there are many other aspiring wine regions across Canada. But basically what the law will do is the change will allow personal exemptions. So people, just like you gave the example of the bridge will be able to legally for personal consumption, bring it across. This is a small but important step for the wine industry in Canada. It’ll build more jobs, more production and more investment and it’s something that I think most Canadians will be supportive of.
Tom Clark:
Well in fact, two people are supportive. Mathieu Ravignat of the NDP, Mauril Belanger of the Liberals; guys voted in favour of this. I have an assignment for everybody and we can talk as we’re doing this. I have brought in three wines. This is a blind taste testing. Now that we can have wines brought from anywhere in Canada, all brought in legally I might add. There’s a wine from…two wines from Ontario; one from Niagara and one from Prince Edward County and there’s one wine from British Columbia. So what I’d like everybody to do is to taste (A) first of all; your first glass and tell me where you think this is from. And Mauril, I’ll give you the first go on that.
Mauril Belanger:
From Prince Edward County.
Tom Clark:
Ah you think Prince Edward County? (“Wrong” buzzer sounds)
Mathieu Ravignat:
Wrong, the Niagara.
Tom Clark:
(“Correct” buzzer sounds) There we go. Well, now you know the answer, there’s no point in asking you but let’s go to (B) and you’ll be the first one on that.
Dan Albas:
Oh, okay, well I’m more of a white fan but well let’s give it a shot.
Tom Clark:
Okay.
Dan Albas:
I’d say Niagara.
Tom Clark:
(“Wrong” buzzer sounds) No.
Dan Albas:
They’re never going to forgive me for that.
Tom Clark:
Mauril?
Mauril Belanger:
Prince Edward County.
Tom Clark:
Prince ah…(“Correct buzzer sounds)…there you go! Well now you know the answer, so now we’re going to move on to (C). I think the obvious answer…(laughter by all)…I just wanted to see if anybody had any doubts. That’d be more interesting. You know, it’s
Amazing, I think a lot of Canadians…so now we all agree that that’s British Columbia
All collectively say, that’s very good wine.
Tom Clark:
So British Columbia wins the contest as the best wine. Not to say there are bad wines in Ontario but great ones in British Columbia.
Mauril Belanger:
I have a small cellar so I’ll be able to add some to the collection.
Tom Clark:
And I think it’s wondering now that all of us, maybe particularly you guys because you’re from the Ottawa area that you will no longer be facing potential jail time for what you have maybe been doing all these years anyway.
Mathieu Ravignat:
If we cross that bridge on a daily basis, that’s a good thing.
Laughter by all
Dan Albas:
I’m not American but I’ll plead the 5th.
Laughter by all
Tom Clark:
Anyway, this has been great fun, I appreciate it. Dan Albas, thank you very much and Mauril Belanger, Mathieu Ravignat of the NDP, of course Mauril with the Liberals, thanks for joining in on this.
And that is, a rather unique edition of The West Block for today. And Dan, everybody raises a glass to you for bringing in the private members bill.
Dan Albas:
Cheers.
Tom Clark:
Remember you can go on our website: http://www.thewestblock.ca or follow us on Twitter. Send us your thoughts on the issues of the day. We love to read them. In the meantime, have a great Sunday and have a great week. And we will see you back here in seven days time. Cheers.
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