Nik: Hi Pauline and Sarah,

Ottawa might be deluged in snow but politically things are hot. The Cadman affair, a budget passed, a spat with a premier — they are all the makings of a very disruptive and volatile federal political environment.

The biggest surprise was the Cadman affair. For a government that won an election based on voter anger directed at the federal Liberals on issues related to trust and ethics, the Chuck Cadman controversy is bad news for the Harper Tories.

What makes this a problem is the existence of the recording of the prime minister. Setting aside who said what and whether an insurance policy was offered, the prime minister has to bring some clarity to what he knew and what he thinks actually transpired.

Trust and ethics are part of the core Conservative brand franchise and the Tories have to bring some sort of closure to this before this issue it takes on a life of its own. I'd watch out for the RCMP and what they decide to do. Remember, polling showed that the announcement of a criminal investigation by the RCMP in the 2006 federal election derailed the Liberal campaign and set in motion a Conservative victory.

Pauline: Having just returned from travel south of the border, it has also been fascinating to see, for the first time I can remember, a Canadian issue in the U.S. presidential primaries and the U.S. media.

The accumulation of the things you are describing, plus the NAFTA-gate kerfuffle, it all adds up to something potentially very damaging in addition to the trust and integrity factor: A blow to the image of competence that Stephen Harper has very successfully maintained in his minority government. I'd be curious to hear your evaluation of the relative weight of this competence factor in the Conservative brand, Nik.

The Liberals are palpably delighted with all this — clearly, it gives them a reprieve to change the channel from public scrutiny of their internal woes — their biggest Achilles heel.

I will go out on a limb (not) and predict that they and the other opposition parties will be stringing out their grilling on the Cadman affair and NAFTA as long as they possibly can.

I'm watching Question Period as I write this, and Stephen Harper is responding in his usual hard-hitting, unflappable style, fighting off aggressive questions and demands that he fire his chief of staff from all three opposition parties. But he does look more tired than I ever remember seeing him, and some of his members behind him look worried.

Nik: Pauline, South?! Nice…I was in Old Ottawa South (not as tropical)…to your post…..

Canada's beloved Mounties once again may be drawn into the political fray. There really has been a litany of investigations, Adscam (Chrétien), Income Trusts (Martin), Airbus-Schreiber (Mulroney) and now this potential Cadman affair (Harper).

It's hard to see how this plays as a major advantage for either the Conservatives or the Liberals. Most Canadians likely tar all our politicians with the same brush.

The possible political beneficiaries are the NDP, the Bloc and maybe even the Greens. The challenge for the Tories is that there is an increasing number of cynical Canadians who will assume the politician is guilty regardless of whether it is true or not. That's probably why Harper launched the libel suit so quickly.

Sarah: I agree with both of you that this is a fascinating development. I'm sure the opposition are delighted. After being manipulated to accept all sorts of ugly compromises on the budget and the throne speech, these developments make it clear that the Harper government is ruthless in their ambition to get what they want.

I'm also wondering if Bill C-10 will become an election issue. It seems to me that Canadians do not have an appetite for censorship. At a time when Canadian film and television are doing so well, jeopardizing financing will potentially unravel the industry.

Canadian film makers are known for their edgier content. It doesn't help that the Canadian Family Action Coalition has publicly claimed credit for these changes to the Income Tax Act. While some Canadians surely support denying tax credits to films that offend their sensibilities, most Canadians would happily watch Eastern Promises or Porky's.

Pauline: We certainly have a lot of stuff on our plates today!

Cynical Canadians may think: a pox on all their houses—politicians and Canadian film and television creators alike. But my reading of the Bill C-10 issue is that there is a definite attempt underway to distance the Conservatives from any desire to introduce censorship.

The position has moved very quickly from "the new regulations won't say that" (Minister Verner) to "there are no new regulations yet" (Jim Abbott, her parliamentary secretary, to his colleagues at heritage committee).

Aside from the very problematic issue of having bureaucrats decide on artistic merit after the fact, this poorly-thought-through idea has two huge problems: Tax credits would still go to non-Canadians producing any content they want in Canada (and foreign productions are far more likely to have graphic or gratuitous violence).

Plus, unless the projected regulations are changed, it will become impossible to finance any Canadian production. Tax credits are an essential piece of every Canadian production's viability. What bank or lender would advance money on the basis that a government agency might yank a huge piece of the budget after the production is finished?

If the C-10 regulations are enacted as discussed, a $2-billion-dollar industry has just had the rug jerked out from under it, never mind the cultural implications. The fact that the Canadian Family Action Coalition is crowing victory over this will just increase uneasiness among people the Harper government needs to convince it can be trusted with a majority.

Nik: Sarah/Pauline,

When the Harper government veers into social issues it is likely to have a negative impact on their support. This development on C-10 is surprising considering how disciplined the Conservatives have generally been in not talking about social issues.

This does, however, make sense from a political fundraising perspective. This is exactly the type of initiative that motivates the Conservative base and opens their wallets, so to speak.

Pauline: This just released:

"Liberals promise hearings on C-10. The opposition Liberals have promised public hearings in the Senate over Bill C-10, and a possible amendment to the controversial tax-credit legislation for the House of Commons to review."

Sarah: Hi Folks, sorry, I got called away to a meeting.

If I were in the Liberals position, I might use this as an opportunity to point out that there are more effective ways to reduce violence and exploitation. Restoring funding for women's programs would be a good start.

Nik: Politically, this gives the Liberals a platform to attack the Conservatives on social issues and ironically it also validates the current Senate as relevant to our legislative system contrary to the views of the Harper Tories.

Pauline: Who would have thought that the film and television industry would come to view the Senate as its saviour! Talk to you both again ...