CONSERVATIVES SETTING THE STAGE FOR THIS FALL

UNCLAS SECTION 01 OF 02 OTTAWA 001027

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PGOV CA
SUBJECT: CONSERVATIVES SETTING THE STAGE FOR THIS FALL

Ref: A. OTTAWA 1006
- B. OTTAWA 886
- C. OTTAWA 866


1. (SBU) Summary: Over the past two months, the Conservative Party
has fine-tuned the Cabinet, shaken up its managerial team, and
revamped communications strategy to re-group ahead of the return of
Parliament in mid-September. The new look was on display at the
Conservative caucus summer policy retreat in Levis, Quebec on July
30 and 31, notably by allowing Cabinet ministers much greater
inter-play with the media. These changes appear part of renewed
efforts to re-position the party for the final phase of this
minority government, to move forward on its policy agenda, and to
ready itself for a possible fall 2008 federal election. Although
the main Conservative theme is that its focus remains on governing,
Prime Minister Harper on July 30 again challenged Liberal leader
Dion to "fish or cut bait" -- i.e., acquiesce in the Conservative
agenda again this fall or face an election. End summary

SETTING THE PARTY LINE
--------------

2. (U) Conservative members of Parliament and other key party
figures gathered in Levis, Quebec on July 30 and 31 for the annual
summer caucus retreat. Ministers publicly reiterated that the
government is "on track" and will continue to advance its agenda to
control spending, to provide prudent economic management, and to
crack down on crime, while the party's priority is "governing."


3. (SBU) The media welcomed a new Conservative approach to public
relations in this year's caucus with the unusual access to key
Ministers, a sharp contrast with the earlier tightly controlled
events. Defence Minister Peter MacKay briefed reporters on
Afghanistan, insisting that NATO must send more troops to RC-South,
describing the region as the "flashpoint" of the mission and
insisting that Canada will not relent in pressing its partners to
send more personnel. Public Safety Minister Stockwell Day and
Justice Minister Rob Nicholson praised the party's tough-on-crime
agenda and pledged to pursue other new crime bills this fall,
including on juvenile justice. Finance Minister Jim Flaherty
insisted that Conservative tax measures would add C$21 billion in
"structural" economic stimulus to the economy this year, and held
out the prospect of future tax reductions (not actual cuts) to
assist Canadians with the rapid rise in the cost of living. Senior
Quebec minister Lawrence Cannon indicated that the government would
extend greater economic autonomy to the provinces, such as offering
a green light to a new labor mobility agreement between Quebec and
France.

NEW BLOOD
--------------


4. (SBU) The apparent new tactics follow a June Cabinet reshuffle
(ref c) and the more recent shakeup of the managerial team in the
Prime Minister's Office (PMO). New Chief of Staff Guy Giorno took
up his duties on July 1, succeeding long-term Harper loyalist Ian
Brodie, who also helped plan the recent reorganization. Giorno, a
Toronto lawyer and former top aide to Conservative then-Ontario
premier Mike Harris in the late 1990s, has a reputation as a smart,
aggressive, and highly partisan political operator. He moved
swiftly to streamline reporting structures, to reduce the number of
deputy chiefs of staff from three to one, and to replace some key
personnel. According to one senior PMO official, upon return
recently from vacation, he found half of his colleagues fired or
reassigned.


5. (SBU) PM Harper also replaced his highly unpopular (with
reporters, at least) Director of Communications, Sandra Bucker, with
Kory Teneycke, the former director of the Conservative Resource
Group. Teneycke has garnered most of the credit for the more open
QGroup. Teneycke has garnered most of the credit for the more open
caucus. Pundits expect Teneycke and Giorno to do the heavy lifting
to succeed in the immediate goal of winning the next federal
election -- perhaps as early as fall 2008 but no later than October
2009 -- as well as the longer-term objective of effecting a durable
transformation of Canadian politics.

READY - OR NOT?
--------------


6. (SBU) In a speech that won widespread coverage nationally (but
almost none in Quebec),PM Harper publicly called upon Official
Opposition Leader Stephane Dion to "fish or cut bait" by either
acquiescing in the Conservative Parliamentary agenda again this fall
or by bringing the government down in an early confidence vote and
then facing the electorate this fall. The key test for both parties
will their performances in the September 8 by-elections in Quebec
and Ontario (ref a). Dion continues to send mixed messages on his
party's intentions. He recently insisted in an interview that "I
want to have elections yesterday," but he has also again emphasized
that he will also choose a "good time" for an election, which might
be any time "between the fall and October 2009." PM Harper again
tweaked Dion on July 31 for showing "poor judgment" in offering the

OTTAWA 00001027 002 OF 002


Liberals' carbon tax ("Green Shift") and vaguely warned the Liberals
not to block the government's agenda this fall.


7. (SBU) Comment: The Liberals remain underfunded and poorly
organized, while most Liberal candidates in the 2006 leadership race
-- including Dion -- have not even yet repaid their debts. The
Conservatives have the more coherent policy agenda and the fatter
bank account, but, having already accomplished most of their major
agenda items (ref b),have few dramatic legislative achievements
left for the upcoming parliamentary session, which will begin on
September 15. The shake-up within the PMO likely reflects the
Conservatives' assessment that the government may well remain until
the obligatory election date of October 19, 2009, under the
assumption that -- somewhat to the Conservatives' chagrin -- the
Liberals will continue not to call their bluff.
WILKINS