Canadian Prime Minister Stephen Harper, who won a minority government in the Jan. 23 federal election, has ignored adviceаtoаtake a cautionary course and quickly is steering the nation inа a new direction. Harper's Conservative government rolled out its first budget on Tuesday with widespread tax cuts and a substantial boost in funding for the nation's beleaguered military and national security endeavors. He is signalling a change of course for our neighbor to the north.

Harper's finance minister, James Flaherty, immediately set the tone when he declared 'For years, Ottawa has been overtaxing Canadians.' The former Ontario provincial Conservative finance minister then declared, 'In this budget we now deliver real tax relief for Canadians.' He told the House of Commons his budget would deliver combined cuts of $20 billion for individual Canadians. That, he said, represents larger cuts than in the previous Liberal government's last four budgets. To assess the significance of the cuts, it's worth noting Canada's population is slightly under 33 million, a bit more than one—tenth of the United States population.

Flaherty then announced the hated federal sales tax, called the Goods and Services Tax (GST), will be cut as of July 1 from 7% to 6%. The general personal income tax rate will be lowered by half—a—percentage point, and corporate taxes will be eased or eliminated. There are also various tax credits for average working Canadians for employment—related expenses.

All families will soon receive $100—a—month subsidy — or $1,200—a—year —for each child they have under six years of age. This can be used either toward paying day care costs, or to allow 'traditional' mothers help to stay at home and look after their children.

The military will get a $5.3 billion (Cnd.) boost in its $14 billion budget over the next five years. Some of that amount will be used to replace the aging heavy transport fleet of C—130 Hercules aircraft, and some to add 13,000 regular personnel to the forces and 10,000 reservists. The Conservatives are rumoured to be edging to buying the replacement aircraft from Boeing, rather than its European competitor — partly as a friendly nod to Washington.

Canada, with the second largest land area in the world after Russia, has only 60,000 men and women in its military. Just 20,000 of those are combat troops. Of the NATO countries, Canada spends less of its GNP on defence than any other member except the Duchy of Luxembourg. Ousted Liberal prime minister Paul Martin, as finance minister, himself cut the defence budget and military personnel strength by 25%.

There will also be an extra $404 million for border security, and an extra $161 million for the Royal Canadian Mounted Police and to hire more federal prosecutors.

Canada has roughly the same population and economy as that of California. Its dollar this week touched 90—cents (U.S.), its highest level since 1997. For a time in the 1990s under the Liberals it sank to 63—cents (U.S.), with many critics claiming the Liberal government favored an artifically low dollar to enable the country to sell products to the U.S. at firesale prices.аMore than 80% of Canada's world exports go to the U.S. Yet the low dollar severely hampered Canadian travel to the U.S. and elsewhere, hiked the cost of imported goods, and damaged many people's pension plans.

Flaherty pegged total federal budget revenues for 2006—07 at at $227 billion (Cdn.), with $223 billion in program spending and interest on the accumulated debt. Some $3 billion will go this year and in 2007—08 to pay down the accumulated debt of about $486 billion (Cdn.) In this fiscal year the Conservatives expect a small budget surplus of $600 million, and next year of $1.4 billion.

Compared to Liberal budgets, the Conservative budget is a relatively slim and simple affair. The Liberals were often accused of 'backloading' their budgets, offering longrange tax cuts and spending programs that could only be instituted over several terms of government, and often never were.

It is estimated the average Canadian family sees half of its income taken away by federal, provincial and municipal taxes. Canadian taxes are said to be on average 20% higher than U.S. taxes, and, incidentally, Canadian productivity is also said to be 20% lower than U.S. productivity.

"God Bless Canada"

The 46—year—old has also done what is believed to be unprecedented in this countryа by ending his speeches with the words 'God bless Canada.' While there is virtually no organized Christian Right in Canada, those words appear to have helped Harper endear himself to voters. Some 65% of Canadians polled on the 'God bless Canada' issue said they felt it an 'acceptable' way for Harper to end his speeches.

Coincidentally, the Conservatives have risen in opinion polls to a 40% level in popularity, which, given there are four major political parties in Canada, would theoretically take him into majority territory if an election were held now.

The Liberals, wracked by scandal and currently leaderless, are down to 26% in recent polls. Indeed, 40% of those polled who voted Liberal in January now say they have a favourable opinion of Harper. One survey even suggested 81% of those polled believe Harper should be given a fair chance to govern rather than be quickly defeated by the three opposition parties.

Moves to solidify Harper's position

Harper, who started off his political career on the relatively far right in Canadian politics, purposely moderated his image after losing the 2004 federal election to then Liberal Prime Minister Martin. Ahead for a while in the campaign, he was sabotaged by Liberal election strategists who painted him as being 'scary' and having an 'hidden agenda.' With just 125 seats out of 308 in the four—party House of Commons, the theory now isаthat he intends to prove to voters he is a reasonable, common sense leader and advance his ideas incrementally.

Harper's two great coups since coming to power were his sudden two—day visit to meet with Canadian troops in Afghanistan, and finally ending a decades—old dispute with the U.S. over Canadian softwood lumber exports south of the border.

It's thought no other Canadian prime minister since Sir Robert Borden visited Canadian troops in France in the First World War had ventured into a war zone until Harper did. Indicatively, Harper received not one word of criticism from any of his political opponents for his visit.

The softwood lumber issue was the biggest trade dispute the two nations have had in recent years. The American forestry industry and American manufacturers claimed Canadian lumber to be unfairly subsidized. Washington had imposed penalties on Canadian exports totalling $5 billion. Neither of the two former Liberal prime ministers, Jean Chretien or Martin, managed to negotiate a settlement.

Harper pulled off a seven—year deal that will see 80% of the $5 billion returned to Canadian companies, and guarantee an acceptable level of future exports to the U.S. The agreement was quickly pulled together by Bush and Harper after a telephone call in which the President initially offered condolences about Canadian military deaths in Afghanistan.

Policy initiatives

In other areas Harper has made strides that have shown he is in command of his government and which can't fail to have pleased Washington.

Foreign Affairs Minister Peter MacKay quickly banned any more federal government funds from going to the Hamas—dominated Palestinian Authority. The Conservative government has also started to back Israel in resolutions presented before the United Nations. Generally, the previous Liberal government either backed anti—Israel resolutions at the UN, or abstained from voting. MacKay is said to have already formed a positive working relationship with his U.S. counterpart, Secretary of State Condoleezza Rice.

Almost simultaneously, Public Safety Minister Stockwell Day, whose equivalent in Washington would be Homeland Security Secretary Michael Chertoff, announced the Tamil Tigers had been put on Canada's list of banned terrorist organizations. The Tigers are fighting for an independent state in Sri Lanka and have used political assassinations and bombings in their campaign. In Canada they have been accused of extorting huge amounts of money from Tamil immigrants here.

The previous Liberal government repeatedly refused to listen to requests from both the Canadian Security and Intelligence Service (CSIS) and the Royal Canadian Mounted Police to add the Tigers to the terrorist list. In fact, Martin actually went to Tiger—sponsored events to curry votes. Day is very pro—American, and pro—Israel.

The Conservatives are also moving steadily to distance themselves from the controversial Kyoto Protocol on so—called greenhouse gas emissions and develop a 'Made—in—Canada' policy similar to that of the U.S. and Australia. Canadian Environment Minister Rona Ambrose met in April with Bush's senior advisor on environmental issues, James Connaughton, and with Paula Dobriansky, the U.S. undersecretary of state for global affairs. Ambrose, who has movie star good looks and is considered one of the Conservative government's brightest younger stars, hinted Canada should ease out of Kyoto and join instead the Asia—Pacific Partnership on Clean Development and Climate (AP6) with the U.S., Australia, South Korea, Japan, China and India.

Under Kyoto, Canada is committed to reducing fossil fuel emissions to 6% under 1990 levels by 2012. Yet, by some accounts emissions are already almost 30% over 1990 levels here. Few seriously believe Canada can meet its Kyoto comments without disastrous economic damage. Also coming into play are Alberta's huge oil sands where multi—billion plants are now being built to process what are said to be the largest oil reserves outside of Saudi Arabia, and the country's long and harsh winter climate. Several weeks ago the Conservative government began cutting back on funding to various environmental groups promoting Kyoto.

The Conservative platform

The Conservatives fought the January election on five major policy planks:

— Cutting the federal sales tax from 7% to 5% over their term in office. The first half of that commitment has now been made.

— Offering $,1200—yearly to families for each child they have five years and under to pay for day care costs or to allow traditional mothers to stay home and tend to their children. The Liberals planned only to aid parents who would send their children to approved day care centres. The Conservatives want to treat all families equally.

— Bringing in one of the toughest 'ethics in government' laws of any western democracy. This was spurred by scandals that badly hurt the reputation of the previous Liberal government. One aspect of this law would ban all corporate, union and association donations to political parties, and limit personal donations to $1,000 (Cdn.) a year.

— Putting teeth into the Criminal Code and instituting harsh sentencing, particularly for violent crime. Automatic parole after serving two—thirds of a sentence would be greatly restricted, and so would 'conditional' sentences in which many serve their time at home under curfews.

— Cutting hospital waiting lists. All Canadian are entitled to government—funded health care, and only a minuscule number go to private doctors. But while emergency care is readily available free of charge, as is cancer treatment, elective surgery, such as hip replacements, can take two to three years to obtain.

Constitutional reform

The Conservatives face obstruction to their proposed legislation in Canada's appointed Senate, where the Liberals hold roughly two—thirds of the seats.

Harper wants to turn the Senate into an elected body, as in the U.S., and if he is repeatedly thwarted in what is known as Canada's 'Upper House' he may well go to the people seeking a new mandate with Senate reform as a major plank. Harper also wants to institute fixed election dates. Currently, majority governments are elected for a five—year term, but generally call an election when opinion polls show them well in the lead in approval, thereby catching the opposition parties at a disadvantage. Harper wants to see four—year terms, likely with a governing party only calling an election before that if it is defeated in a minority Parliament on a vote of confidence.

In the House of Commons, Harper faces opposition from 102 Liberal Members of Parliament (MPs), and at least heavy wheeling and dealing from the 51 separatist and left—leaning Bloc Quebec members, and the 29 New Democrat (Socialist) MPs. That said, none of the opposition parties want to face an election in the near term.

"Our best friend"

A month ago, when Harper's government laid out its legislative plans the prime minister made a point of referring to the United States as 'our best friend and largest trading partner.' That was meant to signal to President George W. Bush and Washington that after years in which the two former prime ministers, Martin and Chretien, were openly hostile to both Bush and Washington, the close relationship with the U.S. enjoyed in the 1980s and early 1990s under Progressive Conservative Prime Minister Brian Mulroney was going to be rekindled.

Indeed, when in April, Mulroney was honored by many environmental groups for being the 'greenest prime minister' in the nation's history he told his audience that little could be accomplished on the international stage without 'engaging' the U.S. as a partner. Mulroney insisted a close personal relationship with any U.S. president is essential if a prime minister wants to get Washington 'on side' to achieve Canadian objectives. Paradoxically, perhaps, one of the groups praising Mulroney for his environmental record was the Sierra Club. Then again, Mulroney is greatly credited with persuading President Ronald Reagan to take the issue of acid rain seriously.

It's already evident Bush and Harper admire each other and get on well together. Harper was urged to be cautious in his relationship with Bush to avoid accusations from the Liberal—Left of 'selling out to the Americans' but he appears to have ignored that advice.а Settling the softwood lumber dispute after more than a decade of acrimonious debate is seen as an example of what Harper can achieve by working with Bush.

The Liberals reorganize

The Liberals, with 102 seats in the 308—seat House of Commons are somewhat in disarray and just at the start of a leadership campaign with voting set for early December. Three of some 10 candidates are considered credible. The frontrunner is thought to be academic Michael Ignatieff, a former Harvard professor and an author and political commentator. Ignatieff, who actually supported the U.S. liberation of Iraq, faces one major obstacle in that he has lived outside of Canada for much of the past 20 years and was a 'parachute' candidate in the January elections in his Toronto riding [district]. Nevertheless, he is articulate, photogenic, and unblemished by the party's recent scandal—ridden past.

After Ignatieff comes former federal environment minister Stephane Dion, another academic, who is prominent in Quebec for his tough anti—separatist stance. Like Ignatieff, Dion is articulate and attractive. However, he has little appeal in English Canada, although he is also noted for being above the various corruption scandals that engulfed the governments of Chretien and Martin.

Next comes Bob Rae, a former New Democrat (Socialist) premier of Ontario. Rae, who says he moved away from socialism and to the centre some years ago, is best remembered for his 1990—95 reign in Ontario when taxes and spending went wild, and labor troubles soared. He blamed his problem—plagued administration on the recessionа ofа that time, and insists he learned from his mistakes. Many longterm Liberals are upset he would jump from the NDP to their party, and also fear memories of his premiership in Ontario are still bitter in the minds of voters in that province.

Right now, though, it looks as if Harper is steadily cementing his hold on the nation, and may well gain the majority government he seeks in an election inа a year or so.

Paul Jackson is an award—winning journalist who has spent 40 years writing on politics for many of Canada's major metropolitan daily newspapers. He is now Editor Emeritus of the Calgary Sun, in Calgary, Alberta.