Jim Flaherty
Encyclopedia
James Michael "Jim" Flaherty, PC
, MP
(born December 30, 1949) is Canada
's Minister of Finance
and he has also served as Ontario
's Minister of Finance
. From 1995 until 2005, he was the Member of Provincial Parliament for Whitby—Ajax
, and a member of the Progressive Conservative Party
caucus. He was a cabinet minister
in the government of Mike Harris
, and unsuccessfully sought the leadership of the Ontario Progressive Conservatives on two occasions.
Flaherty won the riding of Whitby—Oshawa
in the federal election
held January 23, 2006 as a member of the Conservative Party of Canada
narrowly beating Liberal
incumbent Judi Longfield. He was re-elected in 2008
. Flaherty's wife Christine Elliott
represents Whitby—Oshawa
in the Ontario Legislature.
. He attended Bishop Whelan High School and Loyola High School, Montreal
. Flaherty has a Bachelor of Arts
degree from Princeton University
, as well as a Bachelor of Laws
degree from Osgoode Hall Law School
of York University
. He practised law
before entering political life, and was a founding partner of Flaherty Dow Elliott, a firm specializing in motor vehicle
accident
and personal injury litigation.
He and his wife, Christine Elliott
, have 20-year-old triplet sons.
, finishing third against New Democrat Drummond White
and Liberal
Allan Furlong
in the riding of Durham Centre
. He ran again in the 1995 election
.
of Premier Mike Harris
on October 10, 1997, and kept this position until after the 1999 election
. He also served as interim Solicitor General and Minister of Correctional Services from April 27 to July 27, 1998, when Bob Runciman
temporarily resigned from active duty after revealing privileged information in the legislature.
Flaherty was re-elected in the 1999 election
in the redistributed riding of Whitby—Ajax, and was named Attorney General with responsibility for Native Affairs
on June 17, 1999. On February 8, 2001, he was appointed Minister of Finance and Deputy Premier. He was a key promoter of tax credits for parents sending their children to private and denominational schools, which the Tories had campaigned against in 1999. Minister of Education Janet Ecker
opposed this policy change.
, but lost to frontrunner Ernie Eves
, his predecessor as finance minister. Flaherty's campaign featured attacks on Eves, calling him a "serial waffler" and a "pale, pink imitation of Dalton McGuinty".
Flaherty's leadership campaign focused on "law and order" themes, and one of his proposals was to make homelessness
illegal. His purported plan was to have special constables encourage homeless persons to seek out shelters or hospitals. He argued that his policy would save the lives of homeless persons; leadership rival Elizabeth Witmer
and other critics described it as callous, and ineffective against the root causes of homelessness.
Flaherty also promised to implement further tax cut
s, carry through with plans to create a tax credit for parents sending their children to private school, and privatizing
the Liquor Control Board of Ontario
. Flaherty also emerged as a social conservative in this campaign, particularly a staunch stance against abortion
and his association with pro-life
groups. On April 15, 2002, Eves demoted him to the less-prominent position of Minister of Enterprise, Opportunity and Innovation. Flaherty retained this position until the Tories were defeated in the provincial election of 2003
. Flaherty himself was re-elected by a sharply reduced margin.
by a margin of 54% to 46% on the second ballot of the PC leadership election
held on September 18, 2004. His supporters included former cabinet ministers John Baird
, Tim Hudak
and Norm Sterling
. His 2004 leadership campaign was similar to that of 2002. He emphasized fiscally conservative
themes, including further tax cuts and greater privatization. He promised to create EXCEL scholarships, whereby students attaining high grades in high school would have half their university tuition paid by the government. Until 2005, Flaherty served as finance critic
in John Tory
's shadow cabinet.
On February 4, 2006, the Toronto Star
reported that Flaherty still owed as much as $64,000 to the PC Party of Ontario from his 2004 leadership campaign.
bourque.org reported that a meeting of prominent Conservative organizers and fundraisers had been held to plan for a Flaherty bid for the leadership of the federal party should Stephen Harper
resign.
In December 2005, the 2006 general election
was called. Flaherty resigned his seat in the Ontario legislature to run for the Conservative Party of Canada
in the riding of Whitby—Oshawa
, narrowly unseating incumbent Judi Longfield.
Flaherty's wife, Christine Elliott
, won Flaherty's former provincial seat in a by-election
, defeating Longfield who was running as the provincial Liberal
candidate. This marked the first time in Canadian history that a husband and wife have simultaneously represented the same electoral district at two different levels of government.
in Stephen Harper's new Conservative cabinet.
s levelled the playing field between forms of business such that businesses operating as income trusts no longer enjoyed a tax advantage over businesses operating as corporations. The announcement was accompanied by a further planned reduction in the corporate rate so that the two moves together were not expected to generate additional revenue for the government.
There had been an increasing number of corporations converting to income trusts which would result in them paying lowered taxes; Flaherty argued that income trusts would cost the government $500 million annually in lost tax revenue and shift the burden onto ordinary people. The Canadian Association of Income Trust Investors have argued that foreign takeovers of Canadian income trusts have had the opposite effect and caused decrease in federal government tax revenues. Tax leakage, which served as Flaherty’s central policy justification for his 31.5% income trust tax, was addressed during the Goodale
Income Trust public consultation process of Fall 2005, during which time HLB Decision Economics worked collaboratively with the Department of Finance and published their findings in paper entitled “The tax revenue implications of income trusts”, dated November 24, 2005. The study, available to Finance Minister Jim Flaherty prior to his October 31, 2006 decision, concluded that there is no tax leakage from income trusts. The author of the study, Dennis Bruce, went on to testify at the Finance Committee’s Public Hearings on Income Trusts in February 2007 and issued a press release following his first day of testimony entitled "Independent economists discredit govt tax leakage claims" which outlines the numerous gross errors that were made by Finance Minister Jim Flaherty and the government in asserting the claim of $500 million in annual tax leakage. Bruce concluded the ongoing tax leakage, post 2010, after taking into account legislated tax changes, is $32 million per year, about five percent of Flaherty's figures.
Diane Francis
, editor-at-large for the National Post
, urged that the rule changes be recanted, arguing that there were flaws in the policy which hurt ordinary, hard-working Canadian investors. Francis pointed out that the root of the problem is that the decision was based on analysis by federal officials who regard RRSP
s and pensions as tax "exempts" even though they are merely deferral mechanisms. The tax leakage analysis used by Flaherty is incorrect because it does not reflect deferred taxes paid by Canadian income trust unitholders.
Special hearings by the House of Commons Standing Committee on Finance commenced January 30, 2007. John McCallum
, the Liberal finance critic, called on Flaherty to explain the reasoning behind the change in income trust tax policy. McCallum said "Your first problem is that having lured hundreds of thousands of ordinary Canadians into income trusts by promising not to raise taxes you then cut them off at the knees."
On February 28, 2007, the committee released their report, Taxing Income Trusts: Reconcilable or Irreconcilable differences?, recommending a reduction of the proposed tax to 10% from 31.5%.
In a July 9, 2007 interview on Business News Network
, former Conservative Alberta Premier Ralph Klein criticized Harper and Flaherty for their mishandling of the income trust issue, and for not keeping their word on income trust taxation. According to the Canadian Association of Income Trust Investors, the change in tax rules cost investors $35 billion in market value. Stephen Harper specifically promised "not to raid Senior's nest eggs" during the 2006 federal election.
: "I don't think Jim's losing any sleep over it. As a matter of fact, I'm sure of it. I'm sure he'd love to go a couple of rounds with these CAITI guys in a debate situation." Fullard announced he would put up $50,000, payable to his favorite charity. Given the minister's "current crusade on financial literacy," Fullard believed a suitable charitable cause would be a scholarship for business education. "By doing this we could help repair the damage caused by the Minister's statement that Ontario is the last place to invest." Flaherty has turned down the request. "The tax fairness plan is law. The Minister made his position clear before the finance committee and there is no need for further debate," according to his press spokesperson.
that suggested that cities had an infrastructure deficit of $123 billion and the federal government should step up with some cash with the suggestion cities should stop “whining” and repair their own crumbling infrastructure.
Calgary
Mayor Dave Bronconnier
claims Flaherty sidestepped responsibility for billions in infrastructure dollars being sought, when Flaherty advised municipalities to “do their job” because the feds are “not in the pothole business.” “Let’s get on with the job and stop complaining about it and do their job,” Flaherty continued, noting the Building Canada fund will inject $33 billion into cities to help deal with the infrastructure crunch. However Bronconnier said the plan is merely a “repackaging” of a number of pre-existing funding arrangements. The Building Canada Fund has been strongly criticized for being designed to fail, due to excessive red tape, which has delayed much of the funding from being awarded.
Mississauga Mayor Hazel McCallion
went further by issuing a challenge to Flaherty to publicly debate the need for permanent federal funding for the repair and upkeep of municipal roads and bridges. McCallion said “Flaherty has stated in the media that some of the municipalities have not kept up with infrastructure and did not establish adequate reserves. Well, I can tell him that he is dead wrong. The facts are that Mississauga has carefully set aside reserves for infrastructure for years.” McCallion noted that cities are trying to maintain 58 per cent of public infrastructure with eight cents of every tax dollar. Flaherty did not accept Hazel McCallion's offer to debate.
rules requiring a bidding process for contracts of $25,000 or more, Flaherty admitted his office broke government contracting rules in hiring MacPhie & Company to help write the 2007 budget speech and provide advice on how to sell the document. MacPhie & Company was awarded the $122,000 contract without tender by Flaherty's office. On February 7, 2008, Liberal finance critic John McCallum
formally called on Auditor General
Sheila Fraser
to conduct an audit into the untendered contract awarded by Minister of Finance Jim Flaherty to MacPhie & Company for work done in advance of the 2007 budget.
The Toronto Star
determined that several people who supported Flaherty when he was an Ontario cabinet minister or who supported his two failed bids to lead the Ontario Tories were awarded employment contracts or given appointments. The employment contracts awarded were under the $25,000 Treasury Board contract bidding limit. Bronwen Evans received a $24,877.50 contract to write speeches for Flaherty from June 2006 until last February. David Curtain, who worked on Flaherty's Ontario leadership campaign, received $24,877.50 to write the finance minister's first budget speech. Curtain was also paid $3,350 to write a keynote address earlier in 2008 for Flaherty. Lawyer James Love, who donated $63,000 to Flaherty over two leadership campaigns, was appointed to the Royal Canadian Mint. Another Flaherty donor, Carol Hansell, was appointed to the board of directors of the Bank of Canada
in October 2006. Toronto family law lawyer Sara Beth Mintz, an Ontario Progressive Conservative Party vice-president, received $24,900 for budget "analysis, assessment and advice." MacPhie & Company also got another contract for $24,645 for work done on Advantage Canada, a long-term, national economic plan. Opposition parties say they are suspicious that contracts are coming in just under $25,000 in order to give business to Flaherty's friends and supporters.
On May 13, 2008, Flaherty appeared before the Public Accounts committee, facing questions about multiple sole-sourced contracts worth more than $300,000 that were given by the government. The finance minister says he was unaware his former chief of staff broke government rules in handing a well-connected Tory an untendered contract to write the 2007 budget speech.
Queen's Privy Council for Canada
The Queen's Privy Council for Canada ), sometimes called Her Majesty's Privy Council for Canada or simply the Privy Council, is the full group of personal consultants to the monarch of Canada on state and constitutional affairs, though responsible government requires the sovereign or her viceroy,...
, MP
Member of Parliament
A Member of Parliament is a representative of the voters to a :parliament. In many countries with bicameral parliaments, the term applies specifically to members of the lower house, as upper houses often have a different title, such as senate, and thus also have different titles for its members,...
(born December 30, 1949) is Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
's Minister of Finance
Minister of Finance (Canada)
The Minister of Finance is the Minister of the Crown in the Canadian Cabinet who is responsible each year for presenting the federal government's budget...
and he has also served as Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
's Minister of Finance
Ministry of Finance (Ontario)
The Ministry of Finance is a portfolio in the Executive Council of Ontario commonly known as the cabinet. The Finance Minister is responsible for managing the fiscal, financial and related regulatory affairs of the Canadian province of Ontario...
. From 1995 until 2005, he was the Member of Provincial Parliament for Whitby—Ajax
Whitby—Ajax
Whitby—Ajax was a federal and provincial electoral district in Ontario, Canada. It was represented in the Canadian House of Commons from 1997 to 2003, and the in Legislative Assembly of Ontario from 1999 to 2007...
, and a member of the Progressive Conservative Party
Progressive Conservative Party of Ontario
The Progressive Conservative Party of Ontario , is a right-of-centre political party in Ontario, Canada. The party was known for many years as "Ontario's natural governing party." It has ruled the province for 80 of the years since Confederation, including an uninterrupted run from 1943 to 1985...
caucus. He was a cabinet minister
Cabinet (government)
A Cabinet is a body of high ranking government officials, typically representing the executive branch. It can also sometimes be referred to as the Council of Ministers, an Executive Council, or an Executive Committee.- Overview :...
in the government of Mike Harris
Mike Harris
Michael Deane "Mike" Harris was the 22nd Premier of Ontario from June 26, 1995 to April 15, 2002. He is most noted for the "Common Sense Revolution", his Progressive Conservative government's program of deficit reduction in combination with lower taxes and cuts to government...
, and unsuccessfully sought the leadership of the Ontario Progressive Conservatives on two occasions.
Flaherty won the riding of Whitby—Oshawa
Whitby—Oshawa
Whitby—Oshawa is a federal electoral district in Ontario, Canada, that has been represented in the Canadian House of Commons since 2004.It has been represented in the House of Commons since 2006 by Jim Flaherty, the federal Minister of Finance.-History:...
in the federal election
Canadian federal election, 2006
The 2006 Canadian federal election was held on January 23, 2006, to elect members of the Canadian House of Commons of the 39th Parliament of Canada. The Conservative Party of Canada won the greatest number of seats: 40.3% of seats, or 124 out of 308, up from 99 seats in 2004, and 36.3% of votes:...
held January 23, 2006 as a member of the Conservative Party of Canada
Conservative Party of Canada
The Conservative Party of Canada , is a political party in Canada which was formed by the merger of the Canadian Alliance and the Progressive Conservative Party of Canada in 2003. It is positioned on the right of the Canadian political spectrum...
narrowly beating Liberal
Liberal Party of Canada
The Liberal Party of Canada , colloquially known as the Grits, is the oldest federally registered party in Canada. In the conventional political spectrum, the party sits between the centre and the centre-left. Historically the Liberal Party has positioned itself to the left of the Conservative...
incumbent Judi Longfield. He was re-elected in 2008
Canadian federal election, 2008
The 2008 Canadian federal election was held on Tuesday, October 14, 2008 to elect members to the Canadian House of Commons of the 40th Canadian Parliament after the previous parliament had been dissolved by the Governor General on September 7, 2008...
. Flaherty's wife Christine Elliott
Christine Elliott
Christine Janice Elliott is a Canadian politician, who was elected to the Legislative Assembly of Ontario in a byelection on March 30, 2006. Elliott was a candidate in the 2009 Progressive Conservative leadership election and came in third place behind winner Tim Hudak and runner-up Frank...
represents Whitby—Oshawa
Whitby—Oshawa (provincial electoral district)
Whitby—Oshawa is a provincial electoral district in Ontario, Canada, that has been represented in the Legislative Assembly of Ontario since the 2007 provincial election.-History:...
in the Ontario Legislature.
Early life, education, and family
Flaherty was born in Lachine, QuebecLachine, Quebec
Lachine was a city on the Island of Montreal in southwestern Quebec, Canada. It is now a borough within the city of Montreal.-History:...
. He attended Bishop Whelan High School and Loyola High School, Montreal
Loyola High School (Montreal)
Loyola High School is a private Catholic school for boys in grades 7–11 located in Montreal . The School was established in 1896 by the Society of Jesus as part of Loyola College, at the request of the English Catholic community in Montreal. It is named after St...
. Flaherty has a Bachelor of Arts
Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...
degree from Princeton University
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....
, as well as a Bachelor of Laws
Bachelor of Laws
The Bachelor of Laws is an undergraduate, or bachelor, degree in law originating in England and offered in most common law countries as the primary law degree...
degree from Osgoode Hall Law School
Osgoode Hall Law School
Osgoode Hall Law School is a Canadian law school, located in Toronto, Ontario, Canada and affiliated with York University. Named after the first Chief Justice of Ontario, William Osgoode, the law school was established by The Law Society of Upper Canada in 1889 and was the only accredited law...
of York University
York University
York University is a public research university in Toronto, Ontario, Canada. It is Canada's third-largest university, Ontario's second-largest graduate school, and Canada's leading interdisciplinary university....
. He practised law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
before entering political life, and was a founding partner of Flaherty Dow Elliott, a firm specializing in motor vehicle
Vehicle
A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....
accident
Accident
An accident or mishap is an unforeseen and unplanned event or circumstance, often with lack of intention or necessity. It implies a generally negative outcome which may have been avoided or prevented had circumstances leading up to the accident been recognized, and acted upon, prior to its...
and personal injury litigation.
He and his wife, Christine Elliott
Christine Elliott
Christine Janice Elliott is a Canadian politician, who was elected to the Legislative Assembly of Ontario in a byelection on March 30, 2006. Elliott was a candidate in the 2009 Progressive Conservative leadership election and came in third place behind winner Tim Hudak and runner-up Frank...
, have 20-year-old triplet sons.
Provincial politics
He first ran for the Ontario legislature in the provincial election of 1990Ontario general election, 1990
The Ontario general election of 1990 was held on September 6, 1990, to elect members of the 35th Legislative Assembly of the province of Ontario, Canada....
, finishing third against New Democrat Drummond White
Drummond White
Drummond White is a former politician in Ontario, Canada. He was a New Democratic Party member of the Legislative Assembly of Ontario from 1990 to 1995.-Background:...
and Liberal
Ontario Liberal Party
The Ontario Liberal Party is a provincial political party in the province of Ontario, Canada. It has formed the Government of Ontario since the provincial election of 2003. The party is ideologically aligned with the Liberal Party of Canada but the two parties are organizationally independent and...
Allan Furlong
Allan Furlong
Allan Furlong is a former politician in Ontario, Canada. He was a Liberal member of the Legislative Assembly of Ontario from 1987 to 1990....
in the riding of Durham Centre
Durham Centre
Durham Centre was a provincial electoral district in the Durham Region. Created in 1987, the riding contained the town of Whitby from south of Taunton Road...
. He ran again in the 1995 election
Ontario general election, 1995
The Ontario general election of 1995 was held on June 8, 1995, to elect members of the 36th Legislative Assembly of the province of Ontario, Canada...
.
Cabinet
He was named Minister of Labour in the cabinetCabinet (government)
A Cabinet is a body of high ranking government officials, typically representing the executive branch. It can also sometimes be referred to as the Council of Ministers, an Executive Council, or an Executive Committee.- Overview :...
of Premier Mike Harris
Mike Harris
Michael Deane "Mike" Harris was the 22nd Premier of Ontario from June 26, 1995 to April 15, 2002. He is most noted for the "Common Sense Revolution", his Progressive Conservative government's program of deficit reduction in combination with lower taxes and cuts to government...
on October 10, 1997, and kept this position until after the 1999 election
Ontario general election, 1999
An Ontario general election was held on June 3, 1999, to elect members of the 37th Legislative Assembly of the Province of Ontario, Canada....
. He also served as interim Solicitor General and Minister of Correctional Services from April 27 to July 27, 1998, when Bob Runciman
Bob Runciman
Robert William "Bob" Runciman is a veteran Canadian politician and former provincial Leader of the Opposition in the Ontario Legislature. First elected to the Legislative Assembly of Ontario in 1981, he held the seat continuously for Progressive Conservative Party of Ontario for the next 29 years...
temporarily resigned from active duty after revealing privileged information in the legislature.
Flaherty was re-elected in the 1999 election
Ontario general election, 1999
An Ontario general election was held on June 3, 1999, to elect members of the 37th Legislative Assembly of the Province of Ontario, Canada....
in the redistributed riding of Whitby—Ajax, and was named Attorney General with responsibility for Native Affairs
Ministry of Aboriginal Affairs (Ontario)
The Ministry of Aboriginal Affairs is the Government of Ontario ministry responsible for issues relating to First Nations, Métis and Inuit in Ontario. The current Minister of Aboriginal Affairs is Kathleen Wynne who sits in the Executive Council of Ontario or cabinet...
on June 17, 1999. On February 8, 2001, he was appointed Minister of Finance and Deputy Premier. He was a key promoter of tax credits for parents sending their children to private and denominational schools, which the Tories had campaigned against in 1999. Minister of Education Janet Ecker
Janet Ecker
Janet Ecker is a politician in Ontario, Canada. She was a member of the Legislative Assembly of Ontario from 1995 to 2003, and was a senior cabinet minister in the governments of Mike Harris and Ernie Eves.-Background:...
opposed this policy change.
2002 Ontario PC leadership bid
Flaherty ran to succeed Harris in the 2002 PC leadership electionOntario Progressive Conservative leadership election, 2002
The 2002 Ontario Progressive Conservative leadership election was a leadership election called in the fall of 2001 when Ontario Progressive Conservative Party Premier Mike Harris announced his intention to resign....
, but lost to frontrunner Ernie Eves
Ernie Eves
Ernest Lawrence "Ernie" Eves was the 23rd Premier of the province of Ontario, Canada, from April 15, 2002, to October 23, 2003.-Beginnings:...
, his predecessor as finance minister. Flaherty's campaign featured attacks on Eves, calling him a "serial waffler" and a "pale, pink imitation of Dalton McGuinty".
Flaherty's leadership campaign focused on "law and order" themes, and one of his proposals was to make homelessness
Homelessness
Homelessness describes the condition of people without a regular dwelling. People who are homeless are unable or unwilling to acquire and maintain regular, safe, and adequate housing, or lack "fixed, regular, and adequate night-time residence." The legal definition of "homeless" varies from country...
illegal. His purported plan was to have special constables encourage homeless persons to seek out shelters or hospitals. He argued that his policy would save the lives of homeless persons; leadership rival Elizabeth Witmer
Elizabeth Witmer
Elizabeth Witmer is a politician in Ontario, Canada. She has been a member of the Legislative Assembly of Ontario since 1990, originally representing Waterloo North and later Kitchener—Waterloo for the Progressive Conservative Party.Witmer moved with her family to Ontario at a young age...
and other critics described it as callous, and ineffective against the root causes of homelessness.
Flaherty also promised to implement further tax cut
Tax cut
A tax cut is a reduction in taxes. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. Due to the perceived benefit in growing real incomes among tax payers politicians have sought to...
s, carry through with plans to create a tax credit for parents sending their children to private school, and privatizing
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
the Liquor Control Board of Ontario
Liquor Control Board of Ontario
The Liquor Control Board of Ontario is a provincial Crown corporation in Ontario, Canada established in 1927 by Lieutenant Governor William Donald Ross, on the advice of his Premier, Howard Ferguson, to sell liquor, wine, and beer through a chain of retail stores...
. Flaherty also emerged as a social conservative in this campaign, particularly a staunch stance against abortion
Abortion
Abortion is defined as the termination of pregnancy by the removal or expulsion from the uterus of a fetus or embryo prior to viability. An abortion can occur spontaneously, in which case it is usually called a miscarriage, or it can be purposely induced...
and his association with pro-life
Pro-life
Opposition to the legalization of abortion is centered around the pro-life, or anti-abortion, movement, a social and political movement opposing elective abortion on moral grounds and supporting its legal prohibition or restriction...
groups. On April 15, 2002, Eves demoted him to the less-prominent position of Minister of Enterprise, Opportunity and Innovation. Flaherty retained this position until the Tories were defeated in the provincial election of 2003
Ontario general election, 2003
The Ontario general election of 2003 was held on October 2, 2003, to elect the 103 members of the 38th Legislative Assembly of the Province of Ontario, Canada....
. Flaherty himself was re-elected by a sharply reduced margin.
Opposition and 2004 Ontario PC leadership bid
Following the defeat of the Conservatives, Eves announced that he would resign as leader in 2004. Flaherty declared himself a candidate to succeed him, but was defeated by John ToryJohn Tory
John Howard Tory is a Canadian businessman, political activist, former leader of the Progressive Conservative Party of Ontario, former Member of Provincial Parliament and broadcaster...
by a margin of 54% to 46% on the second ballot of the PC leadership election
Ontario Progressive Conservative leadership election, 2004
On January 23, 2004, the Progressive Conservative Party of Ontario leader Ernie Eves announced his intention to step down as leader before the fall of 2004. Eves was elected party leader in the party's 2002 leadership election, and became Premier of Ontario...
held on September 18, 2004. His supporters included former cabinet ministers John Baird
John Baird (Canadian politician)
John Russell Baird, PC, MP is a Canadian politician currently serving as the Minister of Foreign Affairs in the cabinet of Prime Minister Stephen Harper....
, Tim Hudak
Tim Hudak
Timothy Patrick "Tim" Hudak is a politician in Ontario, Canada, and the Leader of the Progressive Conservative Party of Ontario . He also serves as member of the Legislative Assembly of Ontario for the riding of Niagara West—Glanbrook.-Background:Tim Hudak was born in Fort Erie, Ontario...
and Norm Sterling
Norm Sterling
Norman William Sterling is a politician in Ontario, Canada. He is one of the longest-serving members of the Legislative Assembly of Ontario, having been first elected in 1977....
. His 2004 leadership campaign was similar to that of 2002. He emphasized fiscally conservative
Fiscal conservatism
Fiscal conservatism is a political term used to describe a fiscal policy that advocates avoiding deficit spending. Fiscal conservatives often consider reduction of overall government spending and national debt as well as ensuring balanced budget of paramount importance...
themes, including further tax cuts and greater privatization. He promised to create EXCEL scholarships, whereby students attaining high grades in high school would have half their university tuition paid by the government. Until 2005, Flaherty served as finance critic
Shadow Cabinet
The Shadow Cabinet is a senior group of opposition spokespeople in the Westminster system of government who together under the leadership of the Leader of the Opposition form an alternative cabinet to the government's, whose members shadow or mark each individual member of the government...
in John Tory
John Tory
John Howard Tory is a Canadian businessman, political activist, former leader of the Progressive Conservative Party of Ontario, former Member of Provincial Parliament and broadcaster...
's shadow cabinet.
On February 4, 2006, the Toronto Star
Toronto Star
The Toronto Star is Canada's highest-circulation newspaper, based in Toronto, Ontario, Canada. Its print edition is distributed almost entirely within the province of Ontario...
reported that Flaherty still owed as much as $64,000 to the PC Party of Ontario from his 2004 leadership campaign.
Federal politics
On June 13, 2005, the Canadian news websiteWebsite
A website, also written as Web site, web site, or simply site, is a collection of related web pages containing images, videos or other digital assets. A website is hosted on at least one web server, accessible via a network such as the Internet or a private local area network through an Internet...
bourque.org reported that a meeting of prominent Conservative organizers and fundraisers had been held to plan for a Flaherty bid for the leadership of the federal party should Stephen Harper
Stephen Harper
Stephen Joseph Harper is the 22nd and current Prime Minister of Canada and leader of the Conservative Party. Harper became prime minister when his party formed a minority government after the 2006 federal election...
resign.
In December 2005, the 2006 general election
Canadian federal election, 2006
The 2006 Canadian federal election was held on January 23, 2006, to elect members of the Canadian House of Commons of the 39th Parliament of Canada. The Conservative Party of Canada won the greatest number of seats: 40.3% of seats, or 124 out of 308, up from 99 seats in 2004, and 36.3% of votes:...
was called. Flaherty resigned his seat in the Ontario legislature to run for the Conservative Party of Canada
Conservative Party of Canada
The Conservative Party of Canada , is a political party in Canada which was formed by the merger of the Canadian Alliance and the Progressive Conservative Party of Canada in 2003. It is positioned on the right of the Canadian political spectrum...
in the riding of Whitby—Oshawa
Whitby—Oshawa
Whitby—Oshawa is a federal electoral district in Ontario, Canada, that has been represented in the Canadian House of Commons since 2004.It has been represented in the House of Commons since 2006 by Jim Flaherty, the federal Minister of Finance.-History:...
, narrowly unseating incumbent Judi Longfield.
Flaherty's wife, Christine Elliott
Christine Elliott
Christine Janice Elliott is a Canadian politician, who was elected to the Legislative Assembly of Ontario in a byelection on March 30, 2006. Elliott was a candidate in the 2009 Progressive Conservative leadership election and came in third place behind winner Tim Hudak and runner-up Frank...
, won Flaherty's former provincial seat in a by-election
By-election
A by-election is an election held to fill a political office that has become vacant between regularly scheduled elections....
, defeating Longfield who was running as the provincial Liberal
Ontario Liberal Party
The Ontario Liberal Party is a provincial political party in the province of Ontario, Canada. It has formed the Government of Ontario since the provincial election of 2003. The party is ideologically aligned with the Liberal Party of Canada but the two parties are organizationally independent and...
candidate. This marked the first time in Canadian history that a husband and wife have simultaneously represented the same electoral district at two different levels of government.
Appointment to cabinet
On February 6, 2006, Flaherty became Minister of FinanceMinister of Finance (Canada)
The Minister of Finance is the Minister of the Crown in the Canadian Cabinet who is responsible each year for presenting the federal government's budget...
in Stephen Harper's new Conservative cabinet.
October 31, 2006 income trust announcement
Flaherty has become a central figure in the debate surrounding the new proposed rules for taxation of Canadian income trusts. His announcement on October 31, 2006 of a rule change to tax income trustIncome trust
An income trust is an investment that may hold equities, debt instruments, royalty interests or real properties. The trust can receive interest, royalty or lease payments from an operating entity carrying on a business, as well as dividends and a return of capital.The main attraction of income...
s levelled the playing field between forms of business such that businesses operating as income trusts no longer enjoyed a tax advantage over businesses operating as corporations. The announcement was accompanied by a further planned reduction in the corporate rate so that the two moves together were not expected to generate additional revenue for the government.
There had been an increasing number of corporations converting to income trusts which would result in them paying lowered taxes; Flaherty argued that income trusts would cost the government $500 million annually in lost tax revenue and shift the burden onto ordinary people. The Canadian Association of Income Trust Investors have argued that foreign takeovers of Canadian income trusts have had the opposite effect and caused decrease in federal government tax revenues. Tax leakage, which served as Flaherty’s central policy justification for his 31.5% income trust tax, was addressed during the Goodale
Ralph Goodale
Ralph Edward Goodale, PC, MP was Canada's Minister of Finance from 2003 to 2006 and continues to be a Liberal Member of Parliament...
Income Trust public consultation process of Fall 2005, during which time HLB Decision Economics worked collaboratively with the Department of Finance and published their findings in paper entitled “The tax revenue implications of income trusts”, dated November 24, 2005. The study, available to Finance Minister Jim Flaherty prior to his October 31, 2006 decision, concluded that there is no tax leakage from income trusts. The author of the study, Dennis Bruce, went on to testify at the Finance Committee’s Public Hearings on Income Trusts in February 2007 and issued a press release following his first day of testimony entitled "Independent economists discredit govt tax leakage claims" which outlines the numerous gross errors that were made by Finance Minister Jim Flaherty and the government in asserting the claim of $500 million in annual tax leakage. Bruce concluded the ongoing tax leakage, post 2010, after taking into account legislated tax changes, is $32 million per year, about five percent of Flaherty's figures.
Diane Francis
Diane Francis
Diane Francis is a Canadian journalist, author, and editor-at-large for the National Post newspaper since 1998. She was previously the Editor of the Financial Post from 1991 to 1998, when it was taken over by the National Post and incorporated into it...
, editor-at-large for the National Post
National Post
The National Post is a Canadian English-language national newspaper based in Don Mills, a district of Toronto. The paper is owned by Postmedia Network Inc. and is published Mondays through Saturdays...
, urged that the rule changes be recanted, arguing that there were flaws in the policy which hurt ordinary, hard-working Canadian investors. Francis pointed out that the root of the problem is that the decision was based on analysis by federal officials who regard RRSP
Registered Retirement Savings Plan
A Registered Retirement Savings Plan or RRSP is a type of Canadian account for holding savings and investment assets. Introduced in 1957, the RRSP's purpose is to promote savings for retirement by employees. It must comply with a variety of restrictions stipulated in the Canadian Income Tax Act...
s and pensions as tax "exempts" even though they are merely deferral mechanisms. The tax leakage analysis used by Flaherty is incorrect because it does not reflect deferred taxes paid by Canadian income trust unitholders.
Special hearings by the House of Commons Standing Committee on Finance commenced January 30, 2007. John McCallum
John McCallum
John McCallum, PC, MP is a Liberal Canadian politician, economist and university professor. Following the 2006 Federal Election, he became the Liberal Finance Critic in the Official Opposition Shadow Cabinet...
, the Liberal finance critic, called on Flaherty to explain the reasoning behind the change in income trust tax policy. McCallum said "Your first problem is that having lured hundreds of thousands of ordinary Canadians into income trusts by promising not to raise taxes you then cut them off at the knees."
On February 28, 2007, the committee released their report, Taxing Income Trusts: Reconcilable or Irreconcilable differences?, recommending a reduction of the proposed tax to 10% from 31.5%.
In a July 9, 2007 interview on Business News Network
Business News Network
Business News Network ' is a Canadian English language Category A specialty channel. BNN broadcasts programming related to business and financial news and analysis. As of December 2010, the station is based from 299 Queen Street West in Downtown Toronto and is owned by Bell Media...
, former Conservative Alberta Premier Ralph Klein criticized Harper and Flaherty for their mishandling of the income trust issue, and for not keeping their word on income trust taxation. According to the Canadian Association of Income Trust Investors, the change in tax rules cost investors $35 billion in market value. Stephen Harper specifically promised "not to raid Senior's nest eggs" during the 2006 federal election.
Flaherty challenged to debate tax leakage
On August 21, 2008, Brent Fullard, president of the Canadian Association of Income Trust Investors, challenged Flaherty to debate supposed tax leakage associated with income trusts. Fullard was responding to a comment attributed to a Flaherty spokesperson in April 2008, as quoted in The Hill TimesThe Hill Times
The Hill Times is a Canadian weekly newspaper that covers the federal government and politics. Founded in 1989, this Ottawa based periodical is owned by Jim Creskey and Ross Dickson....
: "I don't think Jim's losing any sleep over it. As a matter of fact, I'm sure of it. I'm sure he'd love to go a couple of rounds with these CAITI guys in a debate situation." Fullard announced he would put up $50,000, payable to his favorite charity. Given the minister's "current crusade on financial literacy," Fullard believed a suitable charitable cause would be a scholarship for business education. "By doing this we could help repair the damage caused by the Minister's statement that Ontario is the last place to invest." Flaherty has turned down the request. "The tax fairness plan is law. The Minister made his position clear before the finance committee and there is no need for further debate," according to his press spokesperson.
Federation of Canadian Municipalities report on infrastructure
Flaherty responded to a report from the Federation of Canadian MunicipalitiesFederation of Canadian Municipalities
The Federation of Canadian Municipalities is a civic advocacy group representing many Canadian municipalities. It is an organization with no formal power but significant ability to influence debate and policy, as it is main national lobby group of mayors, councillors and other elected municipal...
that suggested that cities had an infrastructure deficit of $123 billion and the federal government should step up with some cash with the suggestion cities should stop “whining” and repair their own crumbling infrastructure.
Calgary
Calgary
Calgary is a city in the Province of Alberta, Canada. It is located in the south of the province, in an area of foothills and prairie, approximately east of the front ranges of the Canadian Rockies...
Mayor Dave Bronconnier
Dave Bronconnier
David 'Dave' Thomas Bronconnier is a Canadian politician, who served as the 35th Mayor of Calgary, Alberta.- Biography :...
claims Flaherty sidestepped responsibility for billions in infrastructure dollars being sought, when Flaherty advised municipalities to “do their job” because the feds are “not in the pothole business.” “Let’s get on with the job and stop complaining about it and do their job,” Flaherty continued, noting the Building Canada fund will inject $33 billion into cities to help deal with the infrastructure crunch. However Bronconnier said the plan is merely a “repackaging” of a number of pre-existing funding arrangements. The Building Canada Fund has been strongly criticized for being designed to fail, due to excessive red tape, which has delayed much of the funding from being awarded.
Mississauga Mayor Hazel McCallion
Hazel McCallion
Hazel McCallion, née Joueneaux, CM is the mayor of Mississauga, Ontario. McCallion has been Mississauga's mayor for years, holding office since 1978...
went further by issuing a challenge to Flaherty to publicly debate the need for permanent federal funding for the repair and upkeep of municipal roads and bridges. McCallion said “Flaherty has stated in the media that some of the municipalities have not kept up with infrastructure and did not establish adequate reserves. Well, I can tell him that he is dead wrong. The facts are that Mississauga has carefully set aside reserves for infrastructure for years.” McCallion noted that cities are trying to maintain 58 per cent of public infrastructure with eight cents of every tax dollar. Flaherty did not accept Hazel McCallion's offer to debate.
Department of Finance contracts questioned
Despite Treasury BoardTreasury Board
The Treasury Board is the Government of Canada's only statutory Cabinet committee and is responsible for the federal civil service much of the operation of the Canadian government. Among its specific duties are negotiating labour agreements with the public service unions and serving as Comptroller...
rules requiring a bidding process for contracts of $25,000 or more, Flaherty admitted his office broke government contracting rules in hiring MacPhie & Company to help write the 2007 budget speech and provide advice on how to sell the document. MacPhie & Company was awarded the $122,000 contract without tender by Flaherty's office. On February 7, 2008, Liberal finance critic John McCallum
John McCallum
John McCallum, PC, MP is a Liberal Canadian politician, economist and university professor. Following the 2006 Federal Election, he became the Liberal Finance Critic in the Official Opposition Shadow Cabinet...
formally called on Auditor General
Auditor General of Canada
The role of the Auditor General of Canada is to aid accountability by conducting independent audits of federal government operations. The Auditor General reports to the House of Commons, not to the government...
Sheila Fraser
Sheila Fraser
Sheila Fraser served as Auditor General of Canada from 2001 to 2011.Ms. Fraser was born in Dundee, Quebec, Canada. She earned a Bachelor of Commerce degree from McGill University in 1972. She then became a chartered accountant in 1974 and FCA in 1994...
to conduct an audit into the untendered contract awarded by Minister of Finance Jim Flaherty to MacPhie & Company for work done in advance of the 2007 budget.
The Toronto Star
Toronto Star
The Toronto Star is Canada's highest-circulation newspaper, based in Toronto, Ontario, Canada. Its print edition is distributed almost entirely within the province of Ontario...
determined that several people who supported Flaherty when he was an Ontario cabinet minister or who supported his two failed bids to lead the Ontario Tories were awarded employment contracts or given appointments. The employment contracts awarded were under the $25,000 Treasury Board contract bidding limit. Bronwen Evans received a $24,877.50 contract to write speeches for Flaherty from June 2006 until last February. David Curtain, who worked on Flaherty's Ontario leadership campaign, received $24,877.50 to write the finance minister's first budget speech. Curtain was also paid $3,350 to write a keynote address earlier in 2008 for Flaherty. Lawyer James Love, who donated $63,000 to Flaherty over two leadership campaigns, was appointed to the Royal Canadian Mint. Another Flaherty donor, Carol Hansell, was appointed to the board of directors of the Bank of Canada
Bank of Canada
The Bank of Canada is Canada's central bank and "lender of last resort". The Bank was created by an Act of Parliament on July 3, 1934 as a privately owned corporation. In 1938, the Bank became a Crown corporation belonging to the Government of Canada...
in October 2006. Toronto family law lawyer Sara Beth Mintz, an Ontario Progressive Conservative Party vice-president, received $24,900 for budget "analysis, assessment and advice." MacPhie & Company also got another contract for $24,645 for work done on Advantage Canada, a long-term, national economic plan. Opposition parties say they are suspicious that contracts are coming in just under $25,000 in order to give business to Flaherty's friends and supporters.
On May 13, 2008, Flaherty appeared before the Public Accounts committee, facing questions about multiple sole-sourced contracts worth more than $300,000 that were given by the government. The finance minister says he was unaware his former chief of staff broke government rules in handing a well-connected Tory an untendered contract to write the 2007 budget speech.
External links
- Jim Flaherty MP official site