It looks like Prime Minister Stephen Harper has had to backtrack, according to this report from The Canadian Press on ctv.ca:
Prime Minister Stephen Harper insisted Friday there will be no fire sale after his finance minister, Jim Flaherty, said the government is considering an asset sale to raise cash and try and stave off a budget deficit. "The government of Canada will never engage in a fire sale of assets," Harper said prior to heading off to Washington for an emergency summit of global leaders on the economy.
But I think wasn't hard for the CP reporter to find people with credentials to agree that the Conservatives have a bad idea:
"It's hard to believe this is an ideal environment to sell any asset," said Bank of Montreal economist Douglas Porter. "And it raises the bigger issue of just how hard should the federal government press to keep its books balanced. My view is if it comes down to selling the family silver at a discount rate just to make the books balance, that doesn't make sense."
Scott Brison, the new opposition finance critic just appointed by Stephane Dion, is a pretty sensible and knowledgeable fellow:Brison said Canadians should be especially concerned because Flaherty was finance minister in Ontario when the provincial Conservative government of former premier Mike Harris sold the electronic toll Highway 407 north of Toronto for $3.1 billion in 1999. Three years later, a private investment bank valued the property at four times the sale price. "After three years of bad tax policy, and big spending, Flaherty has put the country in deficit. Now he wants to sell the house to pay for the groceries," said Brison.
There are still groups with tunnel vision, though. The CP reporter was able to count on the Canadian Taxpayer's Federation (CTF) for this quote:Adam Taylor of the Canadian Taxpayers Federation said the government should do whatever it needs to -- including selling assets -- to balance the budget. "The government owns things that have no strategic value to Canadians and they could be sold," he said. "Property values haven't completely bottomed out and when the government owns thousands upon thousands of acres, there's a legitimate argument for selling a lot of it."
If Mr. Taylor really meant what he said (do whatever it needs to...to balance the budget), he'd advise the government to also consider the possibility of raising taxes (or rescinding promised tax cuts). But that's the last thing the CTF would ever say, so they can't be that serious about balancing the budget, especially since they've been applauding the various tax cuts that helped get us to our current fiscal position.There are, moreover, a lot of economists who are questioning the rationale for balancing the budget right now (and I agree with them). In a severe recession, balancing the budget may come only at the price of a lot of pain for economically vulnerable Canadians, and reduce the number of options the government has to manage the economy and plan for its eventual recovery.
I see that Mr. Taylor is a market-timer who thinks he knows that, after a sale sometime in 2009 or 2010, property prices will continue to fall. If that's so obvious, I'd challenge the CTF to open a trading account, put its money where its mouth is, and sell some S&P Case-Schiller home price index futures on Jan 1, 2009. Hey guys, bet the house because maybe you'll be right!
Finally, the whole idea of balancing the budget by selling assets is based on their being valued on the government books at old, below-market prices. Any revenue you get from their sale is purely accounting revenue - not real added value for Canadian taxpayers.
