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Cablegate: A Conservative Score-Card: A Solid B+, but No Gold Star

VZCZCXRO5480
PP RUEHGA RUEHHA RUEHMT RUEHQU RUEHVC
DE RUEHOT #0884/01 1792106
ZNR UUUUU ZZH
P 272106Z JUN 08
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC PRIORITY 8112
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE

UNCLAS SECTION 01 OF 04 OTTAWA 000884

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON PTER SOCI CA
SUBJECT: A CONSERVATIVE SCORE-CARD: A SOLID B+, BUT NO GOLD STAR

Ref A: OTTAWA 833
Ref B: 07 OTTAWA 1928
Ref C: OTTAWA 866

1. (SBU) Summary. Two-and-a-half years into its mandate, the
minority Conservative government is effectively implementing its
policy agenda and delivering on core pledges to rebuild Canada's
armed forces, tackle violent crime, and cut taxes. The extension of
Canada's combat mission in Afghanistan to 2011 and the weakness of
the Liberal official opposition defined the spring sitting of
Parliament. The Conservatives capitalized on the opposition vacuum
to push through far-reaching budget, justice and immigration changes
under threat of an election, although a bill to strengthen the
Anti-terrorism Act is still pending in the Commons and the
government has yet to deliver a promised formal statement on
national security. The Conservatives plan to stick with the same
formula for the fall, but the Liberals have nailed their colors to a
new carbon tax (ref A) in the hope of reshaping the national debate
on their terms. The tax is a "Hail Mary", sink or swim proposition
for Liberal leader Dion and one that will make an already volatile
political situation even more uncertain. End summary.

"A RECORD OF ACHIEVEMENT"
---------------------------------------------

2. (U) PM Harper lauded the Conservative government's record during
the spring sitting that ended on June 20 as "a remarkable record of
achievement," especially given the opposition's prior vow to defeat
key policies. Harper repeatedly used the threat of an election to
force the official opposition Liberals to swallow policies they
opposed. Liberal leader Stephane Dion practiced what he called
"strategic patience," offering up only a handful of Liberal MPs to
vote on 42 major and minor confidence votes since October while the
remainder of his caucus sat on their hands. In the short-term, the
strategy hurt Dion's credibility and allowed the Bloc Quebecois and
New Democratic Party (NDP) to posture with impunity. However, after
the economy slowed in the spring, and the Conservatives became
distracted by minor scandals, Dion was given some credit for buying
time.

3. (U) The Conservative agenda as set out in the October Speech from
the Throne (ref B) eschewed a "Big Bang" policy approach and focused
on five achievable priorities: strengthening Canadian sovereignty
and Canada's international role, delivering effective economic
leadership, tackling crime, building national unity, and improving
the environment. The focus on practical deliverables bolstered the
government's claim that it was "getting the job done" and keeping
its promises as it methodically ticked items off the list. Taken
cumulatively, the government made significant progress on a broad
range of issues consistent with Harper's stated objective of
bringing about incremental, but fundamental, change to how Canada
works.

AFGHANISTAN, DEFENSE, AND NATIONAL SECURITY
---------------------------------------------

4. (U) The Conservatives' signal achievement was the crafting of a
bipartisan consensus to extend Canada's combat mission in
Afghanistan to 2011. PM Harper's ability to build bridges in a
minority parliament was an act of statesmanship that belied the
perception that the present minority situation is inherently
dysfunctional. It demonstrated a degree of flexibility on the part
of the government and of the official opposition that was unmatched
on any other issue. The government followed this success with
efforts to secure helicopters and aerial drones for the mission --
as per the conditions of the extension -- which are ongoing. On
Qas per the conditions of the extension -- which are ongoing. On
June 10, Canada pledged an additional $600 million in development
aid to Afghanistan, bringing total Canadian aid between 2001 and
2011 to $1.9 billion.

5. (U) In May, the Conservatives announced their Canada First
Defence Strategy to expand the regular Canadian Forces to 70,000 and
the Reserve Force to 30,000, improve key military infrastructure,
increase overall Canadian Forces readiness, and proceed with major
combat fleet replacements of surface combat ships, maritime patrol
craft, fixed-wing search and rescue aircraft, fighter aircraft, and
land combat vehicles and systems. The Strategy complemented steps
the government had already taken to rebuild the Canadian Forces,
including new investment in Arctic defense to bolster Canadian
sovereignty in the North, and a commitment in the 2008 Budget to
stable, predictable funding with annual increases in defense
spending of two percent starting in 2011-2012 that will provide an
additional $12 billion over 20 years. However, systemic bottlenecks
in the procurement process have hampered progress on materiel and
recruitment targets.


6. (U) The government enacted revised immigration security
certificate legislation in February to better balance national
security with the Charter of Rights. It has also introduced
amendments to the 2001 Anti-terrorism Act to reinstate powers to

OTTAWA 00000884 002 OF 004


compel testimony at investigative hearings and permit preventive
arrest that expired under automatic sunset clauses in February 2007.
The bill -- introduced first in the Senate -- has passed the upper
House, and is pending in the Commons. It should pass the Commons in
the fall, unless Parliament is prorogued or there is an election.


THE ECONOMY AND COPYRIGHT
---------------------------------------------


7. (U) The Conservatives have rested their claim to be prudent
fiscal managers on tax cuts and debt repayment. To combat the
slowing economy, they delivered $60 billion over 5 years in
individual and corporate tax cuts in October, including an
earlier-than-expected second cut to the GST sales tax to 5 percent.
The 2008 Budget introduced a Tax-Free Savings Account aimed at the
middle-class and allocated $10.2 billion to debt reduction. When
added to locked-in spending commitments to the armed forces and to
the provinces in the 2007 budget, the effect of the Conservative tax
cuts has been to profoundly constrain the fiscal capacity of future
governments to spend on new programs. The 2008 Budget projected
only a razor-thin operating surplus of $1.3 billion in 2009, the
smallest since 1998. Responding to calls to do more to assist
displaced workers in central Canada's hard-hit manufacturing and
auto industries, the government established a $1 billion trust fund
for manufacturing and resource communities in January.

8. (U) The Conservatives signed a Free Trade Agreement with the
European Free Trade Association in January, and, as part of Canada's
renewed engagement with the Americas, concluded negotiations for a
FTA with Peru in January and with Colombia in June. They have also
appealed to women and families with bills to improve product and
food safety and to stiffen regulations for made-in-Canada labeling
to bolster the agricultural sector.

9. (U) The Conservatives introduced a bill to amend the Copyright
Act, a key USG priority, on June 12. However, initial reaction in
the media and the internet community has been negative, and all
three opposition parties have made statements critical of the bill,
making its future in the Commons uncertain.

IMMIGRATION, JUSTICE AND ABORIGINAL AFFAIRS
---------------------------------------------

10. (U) In spite of controversy, the government used the 2008 Budget
as a back-door channel to change immigration policy, granting the
Minister of Immigration discretionary authority to fast-track
applications for specific categories of immigrants. By folding this
authority into the Budget bill -- an automatic confidence matter --
the Conservatives overrode charges that the changes are unfair to
those already in line, allow the government to cherry-pick
immigrants, and threaten to politicize the immigration process.
They argued the changes are necessary to cut wait times of up to six
years and bring in the skilled immigrants Canada needs when it needs
them. Stephane Dion has promised to repeal the changes, but the
Liberals no longer own the immigration issue in Canada, nor can they
continue to count on immigrants as a rock-solid base of support.
Immigrant communities themselves are divided on the changes and a
May poll suggested the Conservatives may be on the right track; 85
percent of respondents thought it was important to select immigrants
whose skills fit the needs of the workforce.

11. (U) The Conservatives have made significant progress on their
flagship "safe streets" justice agenda, enacting their key Tackling
Violent Crime Act in February, a compendium of five earlier justice
QViolent Crime Act in February, a compendium of five earlier justice
bills raising the age of sexual consent, increasing penalties for
impaired driving, cracking down on dangerous offenders and bail
provisions, and imposing mandatory minimum sentences for serious gun
crime. The government has also introduced new bills targeting
property, auto and identity theft, and establishing mandatory
minimum sentences for serious drug crime to complement a revamped
National Anti-Drug Strategy in October.

12. (U) The Conservatives have also made progress on aboriginal
affairs, establishing a landmark Indian Specific Land Claims
Tribunal to streamline the land claims process and passing a bill to
extend the Canadian Human Rights Act to aboriginal reserves. On
June 11, PM Harper issued a historic formal apology for the federal
role in the operation of Indian Residential Schools and a national
Truth and Reconciliation Commission on the Residential Schools issue
began work in May.

13. (U) The Conservatives have moved forward with bills important to
their western Canadian support base, such as dismantling the
Canadian Wheat Board marketing monopoly on barley, and have made
largely symbolic progress on Senate reform (bills to limit
senatorial terms and allow for public consultation on the
appointment of senators).

SOLID MARKS, BUT NO GOLD STAR

OTTAWA 00000884 003 OF 004


---------------------------------------------

14. (U) Voters generally give the government good marks, and the
Conservatives scored two seats in upset by-election victories in
September and March from the Bloc Quebecois and the Liberals
respectively. In a late May poll, the Conservatives were at 37
percent nationally compared to 29 percent for the Liberals, and 55
percent of those surveyed felt the country was on the "right track"
in spite of rising anxiety over the economy. Harper is still the
first choice among voters for prime minister at 35 percent to 26
percent for Dion (whose overall performance rating plunged to a
historic low of 10 percent in May), and more Canadians (43 percent)
appear to have faith in Harper to manage the economy than Dion (25
percent). However, the Conservatives have not been able to capture
the public imagination and Canadians appear evenly split over
whether the government deserves re-election (46 believe the
Conservatives deserve re-election and 47 percent want a change).

15. (SBU) Unease over the economy in central Canada has sapped
Conservative support, and the government has suffered the wear and
tear of minor 'scandals', including the resignation of former
Foreign Minister Maxime Bernier, the so-called "In and Out" dispute
with Elections Canada over 2006 campaign financing that prompted a
humiliating "raid" on federal Conservative headquarters, allegations
that the party tried to bribe the late independent MP Chuck Cadman
in 2005 to vote to defeat the-then Liberal government, "NAFTA-gate",
and former Conservative PM Brian Mulroney's questionable business
dealings with Karlheinz Schreiber. None of the 'scandals' appear to
have significantly dented the Conservatives' popularity, but they
consumed valuable energy and will prevent the Conservatives from
playing the "clean" card again in the next election. Extreme
partisanship on both sides of the Commons prompted Speaker Peter
Milliken privately to express his frustration to U.S. officials over
the government's refusal to consult and negotiate -- the "grease" of
any minority government -- with the opposition. The negativity of
Question Period also spilled over to committees, the workhorses of
the Commons.

WHAT'S NEXT?
---------------------------------------------

16. (SBU) Major issues left to be dealt with include legislation to
place formal limits on the federal power to spend in areas of
exclusive provincial jurisdiction, national security, and more
effective action on the environment. However, with key components
of the Conservative economic, defense and justice agenda passed, PM
Harper has taken minor steps to reposition his government. These
include a new Chief of Staff, Guy Giorno, on July 1, replacing Ian
Brodie, and a Cabinet shuffle (ref C). Giorno, a key aide to former
Conservative Ontario premier Mike Harris in the late 1990s, will
work to improve relations with the media and to engage the public
service more effectively.

17. (U) Pundits continue to speculate whether Harper will prorogue
Parliament for the second successive year, and return in the fall
with a fresh Throne Speech that will serve as a platform for a fall
election or a blue-print to take him to the fixed-date election of
October 19, 2009. Parliament is currently scheduled to resume on
September 15, but prorogation -- if it happens -- could push that
back to October, or even November, after the Conservative policy
conference in Winnipeg from November 13 to 15.

18. (SBU) The PM has made it clear that his agenda is on track and
voters can expect more of the same. Conservatives appear to believe
Qvoters can expect more of the same. Conservatives appear to believe
that their bumper-sticker formula of lower taxes, safer streets and
promises kept, will prevail over the Liberals' complex "Green Shift"
carbon tax plan. A June 22 poll, the first since Green Shift's
launch, indicates the plan has the potential to be a game-changer
for the Liberals (47 percent in favor, 39 percent opposed), with
cross-cutting support among New Democrats, Greens and Bloc
supporters, women (48 percent) and those under 35 years (61
percent). However, most respondents conceded they did not know the
details, and much depends on Liberal leader Dion's ability to pitch
it convincingly as energy costs rise. He has effectively staked his
leadership on the tax and, if Canadians are receptive, he may be in
the mood to gamble on an election in the fall.

COMMENT
---------------------------------------------

19. (SBU) Election brinkmanship has been the tool of choice for this
minority Conservative government; one Liberal MP told us a year ago
that he had already signed leases for an election campaign office
three times and had to cancel each one. Conservative insiders have
similarly told us that the government script for the next election
-- whenever it comes -- has already been written, subject to ongoing
fine-tuning. In office, Harper's motivation has been less to
implement a radical vision than to establish a credible record of
governance, to engender confidence, and to implement incremental but
significant change. On that score, the last nine months have been
the Conservatives' most productive to date. However, the Liberals

OTTAWA 00000884 004 OF 004


may be more willing to push back in the fall, making developments in
the coming months even more difficult to predict. End Comment.
WILKINS

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