{"id":863471,"date":"2026-08-19T07:22:12","date_gmt":"2026-08-19T07:22:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/863471\/"},"modified":"2026-08-19T07:22:12","modified_gmt":"2026-08-19T07:22:12","slug":"canada-foreshadows-the-hidden-economic-dangers-of-a-u-k-tory-reform-deal-the-hill-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/863471\/","title":{"rendered":"Canada foreshadows the hidden economic dangers of a U.K. Tory-Reform deal – The Hill Times"},"content":{"rendered":"

Andy Burnham\u2019s arrival as the United Kingdom\u2019s prime minister has breathed new life into the Labour Party. This will intensify debate on a\u00a0possible deal<\/a>\u00a0between the Tories and Reform UK to\u00a0\u201cunite the right.\u201d<\/a>\u00a0<\/p>\n

Canada went through its own \u201cunite the right\u201d debate more than 20 years ago. The result was the 2003 merger between the Progressive Conservative (PC) Party of Canada and the right-wing populist Canadian Alliance (successor to the Reform Party of Canada). This merger helped bring about crucial errors in Canadian economic policy. A Tory-Reform UK union would likewise pose grave risks for the British economy.<\/p>\n

\u201cUnite the right\u201d backers in the U.K. argue that a Tory-Reform pact would cause Labour\u2019s defeat in the next election by halting the split of right-of-centre votes. Advocates of a PC-Alliance merger made similar arguments in Canada before 2003. U.K. Tories should look to Canada as a harbinger of what happens to economic policy when a mainstream conservative party allies with a right-wing populist party. After 2003, populists from the Canadian Reform movement quickly took control of the merged Conservative Party of Canada (CPC). When the CPC held power in Ottawa from 2006 to 2015, these populists got their chance to shape economic policy and fiscal management.<\/p>\n

\"\"Michael Huenefeld is a corporate governance consultant. Handout photograph<\/p>\n

One key example is tax policy. Brian Mulroney, PC prime minister from 1984 to 1993, introduced the\u00a0Goods and Services Tax (GST)<\/a>\u00a0at seven per cent in 1991. The GST replaced the Manufacturers\u2019 Sales Tax, a hidden tax at 13.5 per cent. While unpopular, the GST became a stable source of government revenue. It helped\u00a0balance<\/a>\u00a0the federal budget by the late 1990s. This, in turn, improved Canada\u2019s credit rating and reduced debt-servicing costs.<\/p>\n

Stephen Harper, a founding member of the Reform Party of Canada, became leader of the merged CPC in 2004 and prime minister in 2006. Harper cut the GST twice, in 2006 and 2008, lowering it to five per cent. These cuts, while doing little to spur growth, have\u00a0cost<\/a>\u00a0the federal government at least between $220-billion and $270-billion in forgone revenue over the last 20 years. As context, for the 2024-25 fiscal year, the total federal debt was\u00a0$1.266-trillion<\/a>. Harper\u2019s GST cuts made it harder for any future Canadian government to find the revenue needed for national defence, infrastructure investment, and debt reduction.<\/p>\n


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Under Harper, Canada\u2019s\u00a0budget<\/a>\u00a0went from a surplus of $13.2-billion in 2005-06 (one per cent of GDP) to a deficit of $1-billion in 2015-16. It is true that stimulus spending during the 2008-2009 financial crisis contributed to the deficit\u2019s return. Nonetheless, it is also true that Harper aided the deficit\u2019s comeback by slashing long-term government revenue. Moreover, by imposing a structural reduction on the federal revenue base, he made it harder for future Canadian governments to respond to new crises.<\/p>\n

During the 2022 CPC leadership race, Harper endorsed Pierre Poilievre, a former\u00a0activist<\/a>\u00a0in the Reform Party of Canada. Poilievre\u2019s policies, if enacted, would put Canada\u2019s monetary and fiscal stability at risk. In 2022, he\u00a0supported\u00a0the \u201cFreedom Convoy\u201d that illegally occupied Ottawa, and halted\u00a0$3.9-billion<\/a>\u00a0in trade activity. He promoted crypto currencies as a way to \u201copt out of inflation<\/a>.\u201d He stated his desire to\u00a0fire<\/a>\u00a0the Bank of Canada\u2019s governor. This called into question the bank\u2019s ability to pursue stable monetary policies under a CPC government. During the 2025 election campaign, Poilievre proposed large tax cuts whose funding was based on\u00a0questionable<\/a>\u00a0estimates.<\/p>\n

Supporters of a Tory-Reform UK merger argue that both parties share similar goals. This may seem true at a surface level, but at a deeper institutional level it is not. Mainstream conservatives in Canada and the U.K. want economic and social stability. Hard-right populists in Canada and the U.K. want radical disruption and ideological\u00a0wins.\u00a0<\/p>\n

British Tories should ponder the risks of helping Reform shape the U.K.\u2019s economic policy. Canada\u2019s experience shows that populist ideas will lead to bigger fiscal and monetary\u00a0risks.\u00a0<\/p>\n

Michael Huenefeld is a corporate governance consultant. A former sessional lecturer at the University of British Columbia Sauder School of Business and the School of Public Policy and Global Affairs, Huenefeld received an award from former prime minister Joe Clark for outstanding service to the Progressive Conservative Party of Canada in 2002. He volunteered for former Quebec premier Jean Charest\u2019s Conservative Party leadership campaign in 2022.<\/p>\n

The Hill Times<\/p>\n","protected":false},"excerpt":{"rendered":"Andy Burnham\u2019s arrival as the United Kingdom\u2019s prime minister has breathed new life into the Labour Party. This…\n","protected":false},"author":2,"featured_media":863472,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[49,48,44],"class_list":["post-863471","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-ca","tag-canada","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/863471","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=863471"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/863471\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/863472"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=863471"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=863471"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=863471"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}