Angry in the Great White North

Is the Sponsorship Scandal, and by extension, the Liberal Party, responsible for damaging Canada's productivity?

The Conservative government Wednesday accepted the findings of a study by accountants that the Liberal sponsorship scandal was an added drag on Canada's lagging productivity.

It imposed both direct and indirect costs on the economy and tarnished Canada's image, said Jason Kenney, Conservative MP and secretary of state for multiculturalism and Canadian identity.

However, Liberal finance critic John McCallum dismissed the report.

"I've never heard of a sillier explanation of Canada's lagging productivity," said McCallum, who before entering politics was a senior bank economist.

I'm offended, since it is clear McCallum has not been reading my blog. I offered exactly that "silly explanation" in June 2005 ("Liberal corruption eroding view of Canada internationally"):

I'm laying the blame for this at the feet of the Liberal Party of Canada. My reasoning is simple. First, when it comes to corruption, the Liberals have been the most visible example of an organization struggling with systemic corruption, and it sets the tone for the rest of the country. Second, when good news comes out, such as Canada ranking so high on the United Nations quality-of-life index (the UN being the shining beacon of incorruptable governance that it is), the Liberals have been quick to take credit. It seems only fair that they be compelled to take credit for this as well.

For the curious, here are the top 12 in 2000 (the rank number is sometimes repeated because the countries have the same score):
1: Finland
2: Denmark
3: New Zealand
3: Sweden
5: Canada
6: Iceland
6: Norway
6: Singapore
9: Netherlands
10: United Kingdom
11: Luxembourg
11: Switzerland

And in 2004:
1: Finland
2: New Zealand
3: Denmark
3: Iceland
5: Singapore
6: Sweden
7: Switzerland
8: Norway
9: Australia
10: Netherlands
11: United Kingdom
12: Canada

You can see there isn't all that much motion on the list, other than Canada dropping down dramatically.

We think Adscam cost taxpayers somewhere in the vicinity of $350 million. Looking at this list, I can't help but wonder if it is costing us a great deal more.

It appears that the Certified General Accountants Association of Canada agrees with me:

The report by the Certified General Accountants Association of Canada, however, said the sponsorship scandal was a factor in Canada's drop this decade to 16th place in a global competitiveness index from ninth.

Canada's standard of living is at risk because of lagging productivity, it warned.

"Institutional corruption and inefficiency, particularly within government, has had a decidedly negative impact on productivity and competitiveness," concluded the study, which also cited the usual suspects of excessive business regulation, and declines in investment in education, skills training, and machinery and equipment.

"When scandal erupts within the public sector, a number of side-effects occur that negatively impact productivity and competitiveness," it said, pointing to direct costs from the misappropriation of funds and the ensuing investigation to indirect costs such as the negative impact on public-service morale and turnover and the country's reputation.

The Liberals can whine all they want, but when it comes to be held to account for what has happened to Canada, losing the election in February 2006 marked the beginning of that process, not the end.