Jim Flaherty: The right man for the times

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Though he was often derisively called the “Minister for Bay St.” because of  financial policies that favoured the wealthy, Jim Flaherty is being memorialized today by colleagues on both sides of the political spectrum as a “a very decent man” with “a strong social conscience.” History will remember him as a successful, tenacious and  pragmatic politician who not only waged war on government debt but responded expertly and efficiently to a major financial meltdown that happened on his watch.

His long and successful career in politics – first as Ontario finance minister from 2001-2002 and later as federal finance minister from 2006 to 2013 – was largely defined by his steely determination to pay down debt and balance the budget.

Prime Minister Stephen Harper walks from the podium after delivering a speech with wife Laureen at his side on Parliament Hill in Ottawa on Monday, April 10, 2014., in reaction to the death of former Finance Minister Jim Flaherty. THE CANADIAN PRESS/Sean Kilpatrick

And while he was closely associated with two right-wing politicians, Premier Mike Harris in Ontario and Prime Minister Stephen Harper, he preferred to be described as a populist or pragmatist. These two quotes certainly shed a lot of light on where he stood on the political spectrum.

  • “I’m still a fiscal conservative and I’m inclined to pay down debt. And you never know what’s going to happen along the road five years, 10 years from now, I don’t know what’s going to happen in different parts of the world, but I want to protect my own country and if we are in a good fiscal situation, then we will be strong like we were in the last crisis.”
  • “People think I have some grand political notion. I’m not an ideological person.”

During his term as federal finance minister, Flaherty backed numerous financial policies that had direct impact on the older Canadians. Here’s a brief look at some of his most popular – and unpopular – policies.

2006: In a move that does not sit well with older investors, Flaherty imposes a tax on distributions from income trusts, then a popular investment vehicle for seniors. His announcement effectively eliminates $20 billion in stock market value overnight, ending what had been reliable source of investment return.

2006: In his budget, Flaherty introduces pension splitting, which allows couples to split certain types of pension income in a more tax effective way. Backed by CARP, it’s a move that benefits many Canadian retirees.

2006: Perhaps in an effort to lessen the Income Turst blow, Flaherty doubles the pension income amount from $1,000 to $2000. This reduced the tax rate on eligible pension income and means up to $300 in savings for seniors come tax time.

2007: Flaherty restores the cut-off age for RRSPs to 71, from 69. This receives applause from older Canadians who now have two extra years to make tax-sheltered contributions to their RRSPs, before they have to begin making withdrawals.

2008: The global financial crisis hits and Flaherty responds to the emergency quickly and effectively. Aligning his strategy with Bank of Canada Governor Mark Carney, he puts in place a system of banking support and government spending that allows us to escape the worst consequences of the financial meltdown and its resulting recession.

2009: The tax-free savings account comes into effect, a measure introduced in the Conservative budget of the previous year. TFSAs allow Canadians to save or invest $5,000 per year tax-free, a move that’s applauded by financial industry, which views it as an effective tool for people to save for retirement.

2012: Flaherty budget announces the Family Caregiver Tax Credit, a 15% non-refundable credit that on an amount of $2040 that provides relief for Canadians who are providing care for loved ones.

2013: In the same budget, Flaherty is lambasted for raising the age of eligibility for Old Age Security from 65 to 67, despite the fact the move would not start to affect seniors until 2023. The finance minister went ahead with the policy despite a fierce campaign from CARP.

2014: Flaherty announces that he’s achieved his long sought-after goal of eliminating debt. In his final budget, he announces that Canada will have a surplus in 2015. He closes with his final meaningful speech in Parliament: “Mr. Speaker, I am proud of our Government’s record of fiscal restraint and good management. This record has been the envy of the world. I believe we have been, as Sir John A. wanted us to be, “trustees for the public.”