Quebec-Ontario Relations: A Shared Destiny?

8. Do They Walk Like They Talk?

8. Do ThEy wALk LIkE ThEy TALk? speeches from the Throne and Budget Deficits in ontario and Quebec LouIs m. ImBEAu Why should we pay attention to what policy makers say? My short answer to this important question is: because they spend most of their time and energy “discoursing,” that is, giving speeches, writing memos, discussing issues, sending messages, etc .; they talk . As Giandomenico Majone rightly reminded us: “[P]ublic policy is made of language . . . Political parties, the electorate, the legislature, the executive, the courts, the media, interest groups, and independent experts all engage in a continuous process of debate and reciprocal persuasion” (1989: 1) . But policy makers also walk: they spend, tax, and borrow money; they conceive, adopt, and amend laws, regulations, and international agreements; they create, change, and terminate administrative bodies; they enforce law and wage war; they hold press conferences, dissolve Parliament, send missions abroad, etc . Speech and action are the core of policy making and both deserve our attention . My objective in this chapter is to explore the consonance and dissonance (Imbeau 2009) between policy speech and policy action in the realm of fiscal policy . More precisely, I ask the question whether governments that realize a higher budget balance (or a lower deficit) have a more fiscally conservative stance in their speeches . I address this issue in four parts . First, I discuss the theoretical relationship between speech and action . Second, I broadly describe the bottom-line results of the fiscal policy of the Ontario and Quebec 168 Quebec–ontario Relations –A shared Destiny? governments over the last 33 years . Third, I describe a method for measuring the provincial premiers’ fiscal policy stance and, applying it to their speeches from the throne, I assess their fiscal conservativeness . In the last section I describe the relationship between speech and action and I propose an answer to my starting question . 1. ThE wALk–TALk RELATIonshIP I look at the policy process as involving three types of rational actors: policy makers, special interest groups, and voters . When thinking about the role of policy speech in the policy process, I look at the objectives policy makers pursue while “speaking” to special interests and to voters and while “acting” on the budget . This leads me to three conceptions of the walk–talk relationship, each one based on a specific theory and leading to a specific hypothesis (see Table 1) . Table 1 three conceptions of the Walk–talk relationship conception Politician’s Objective underlying theory hypothesis Benevolent To inform economic agents Ricardo-Barro equivalence theory Positive sophisticated To convince voters median voter theory negative Cynical To seduce clients Political entrepreneurship no relationship Let’s start with a conception that focuses on the relationship between policy makers and special interest groups, the benevolent conception , which ensues from Ricardo-Barro’s equivalence theorem . It considers a closed economy in which a representative agent consumes, works, and saves . The government is represented by a benevolent planner whose objective is to maximize the welfare of the representative agent . Both the government and the agent have an infinite temporal horizon; therefore, neither intergenerational aspects nor the limited terms of government mandate are taken into account . When public deficits increase public debts, the representative agent knows that, in the future, the government will have to increase taxes in order to pay back the debt . According to the theory of permanent income, the agent 8 . Do They walk Like They Talk? 169 determines her consumption level based on her total actualized future revenues . In this case, she concludes that financing public spending through taxes is “equivalent” to financing through borrowing (Barro 1989: 38–39) . In this context, the optimal strategy for the benevolent planner is to maintain constant tax rates in order to avoid costs related to unexpected variations in tax rates . To reach this goal, he uses surpluses and deficits as cushions through the application of a tax-smoothing policy: deficits appear when public spending is temporarily high, surpluses when spending is temporarily low (Roubini and Sachs 1989: 910–913) . While applying his tax-smoothing policy, the benevolent planner uses policy speeches to inform the agent of his policy choice so that she makes the right consumption choices, that is, she adjusts her savings to the budget balance: when there is a deficit, the agent saves the money she would have paid in additional tax had the budget been balanced, knowing that futures taxes will have to...