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If you’re looking for the single biggest loser from last week’s federal budget, look no further than Dan Kelly, president of the Canadian Federation of Independent Business.

The small-business lobby was singled out for the biggest broken election promise contained in the budget — the decision by Finance Minister Bill Morneau to cancel a planned cut in the income tax rate for small business to 9 per cent from the current 10.5 per cent. It’s a big deal. By 2019 — when the cut was supposed to be in place — small business will pay $900 million more in taxes than they otherwise would have.

Calling the document “one of the worst budgets we’ve seen in the last decade or two,” Kelly said the decision to cancel the planned tax cut was both “alarming” and “puzzling.”

You might argue about the policy merits of giving small business a further break on taxes, but it should be come as no surprise that the Liberals decided to give the middle finger to Kelly and the CFIB. During the Harper years, the organization turned itself into a shrill, partisan, ideological arm of the Conservative party — a tactic that may have won it short-term gains but also made it an easy target for the newly-elected Liberal government.

Time and again, the Harper government lifted demands from the CFIB’s wish list and turned them into government policy — sometimes without even doing cursory analysis of the measures themselves. When the CFIB wanted a lower small-business tax rate, it got one. When it asked for a kickback of EI premiums and decided to call it a Hiring Credit, it got one. When it asked for an assurance that employers would never have to pay a cent for even a modest improvement in the Canada Pension Plan, the answer — again — was yes.

The process became obscene. Rather than have the government announce policy and applaud it later, Kelly would be right there on the podium with Jim Flaherty or Joe Oliver — as if he were a junior minister or a local Tory MP, rather than the head of a non-partisan industry group. In the most outrageous example of the CFIB’s hold on the Harper government, Ottawa introduced a Small Business Job Credit that turned out to be a gift of $550 million in lower EI premiums for small business owners (small-business employees, of course, got no such break).

In a democracy, governments come and go — and when industry groups hitch the interests of their members to one side only, they do so at their peril. In a democracy, governments come and go — and when industry groups hitch the interests of their members to one side only, they do so at their peril.

The CFIB estimated that the measure would create 25,000 person-years of employment over two years. The Parliamentary Budget Office studied the measure and calculated that the total was more like 1,000 jobs — at an astounding cost of $550,000 per job.

Asked to explain the huge discrepancy, Oliver admitted that the Finance Department hadn’t even been asked to analyze the measure, preferring to take the CFIB’s word for it. As it turns out, CFIB never really analyzed the measure either and simply used an existing economic model to guess at the benefits.

This unseemly tag team performance continued into the fall election campaign. Stephen Harper gave Kelly an “exclusive” video interview posted on the CFIB website, with Harper appearing before a Conservative party backdrop. Kelly, acting like a presenter from North Korean state TV, lobbed a series of softball questions at the prime minister about the glories of the Conservatives’ small-business-friendly policies. When Harper listed a series of measures that his government planned to cut-and-paste from a CFIB wish list, a breathless Kelly responded, “Terrific!”

It all worked well enough for the Harperites. They saw themselves as representatives of Main Street rather than Bay Street. The car dealers and restaurant owners of small-town Canada who make up the core of the CFIB were their natural base. Big business never quite figured out the Harperites and their brand of right-wing populism. Whether it was with the railways or the telecom firms, Harper never hesitated to pick a fight with large corporations if he thought it could win him credit with Main Street.

As for Kelly, maybe he should be looking for another line of work. Industry groups and lobbyists have their role in society but, in a democracy, they have to remember that governments come and go — and when they hitch the interests of their members to one side only, they do so at their peril.

David Culver, the retired longtime CEO of Alcan Inc. (he ran it when it was Canada’s leading multinational), had some wise words about dealing with governments. He should know. Alcan always managed to maintain excellent relations with governments of every stripe, getting along with both federalists and separatists during the fraught Quebec referendum years. (Disclosure: I worked with Culver in writing his memoir.)

One of Culver’s key pieces of advice was to “always stay in with the outs … Spend your time with people who are not in power. The people who are in power now may not have time for you while everyone is seeking their attention, but those who are not in power have time galore to spend with you, and most importantly will eventually be in power. So stay in with the outs.”

Rather than playing sycophant to the Harperites, perhaps Kelly should have been spending a bit more time with Justin Trudeau and Bill Morneau.

Alan Freeman is a Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs. He came to the U of O from the Department of Finance, where he served as assistant deputy minister of consultations and communications. Alan joined the public service in 2008 after a distinguished career in journalism as a parliamentary reporter and business journalist for The Canadian Press, The Wall Street Journal and The Globe and Mail. At the Globe, he spent more than 10 years as a foreign correspondent based in Berlin, London and Washington.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

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A comment from Dan Kelly of the CFIB:

I needed a good laugh after a terrible budget week Alan – thanks for providing. Just a few thoughts from my perspective. I agree completely that it would be the height of foolishness to run a partisan business association or advocacy group. You’d have a few good years when your party is in power and then sit in the dark when they are not. That’s why we’ve had 45 years of non-partisan lobbying at CFIB. My job is to applaud good government policy and sharply criticize the bad regardless of who is in power.

I’d love the author to explain my 1,500 media interviews slamming the Tories on their changes to the Temporary Foreign Worker Program or the 500 I did criticizing their moves on the ridiculous anti-spam regulations. Or the joint news releases from the NDP when they were the first party to suggest the cut in the small business tax rate. In fact the NDP was the only party to ask me to present to their entire caucus in their platform setting meeting. That’s right, I’m a giant partisan.

The Star wrote on this and reached a very different conclusion:

I know the author dislikes the influence my organization and small business has in general. I am fine with any fair minded criticism of our ideas or agenda, and he does often go there. Not only does my organization meet with all parties, including in opposition, Alan should know we met with PM Trudeau in opposition, connected with Scott Brison every few months, and have met 5 Liberal Ministers since they’ve taken power.

CFIB was criticized as anti-Tory when we opposed the GST (Mulroney singles us out in his book), we were accused of being pro-Liberal during some of the Martin/Chretien budgets and were thought to be Tory in some of the Harper years. It is a mistake to confuse partisan with influential.

In fact, CFIB publicly commended two big measures in the Liberal platform: the 4 year plan to cut the small biz rate to 9% and a holiday for businesses paying Employment Insurance when they hire a young person between ages 18 and 24. Both of these were scrapped in the 2016 budget. The small biz tax cut was also promised in a signed written letter to CFIB and in campaign stops across the country. It is still on the Liberal Party website.

We are truly unhappy with this budget. But our lobbying to reinstate the cuts started this week. We told government that we will continue to commend any good policy when they implement it and criticize bad policy. That is my job and I’m pleased to say 109,000 small businesses seem to feel I do it reasonably well.

But it was a fun read. I do enjoy fiction when I need a break from the challenging reality of running a national business association.