One of the truisms of political life is that the Prime Minister gets the blame when the economy does badly and the credit when it exceeds expectations. By that standard, Stephen Harper will benefit from how Canada came through the Great Recession of 2008-2009. The country emerged more quickly from recession than most developed nations and has fewer scars to show for it.
The real question is how much can the Conservatives really take credit for and how much has been luck and clever marketing?
Here are some of the facts to keep in mind:
Fiscal discipline: Canada had a $13 billion surplus when the Conservatives took power in 2006. It had dwindled to a mere $200 million, despite healthy economic growth, by the time the recession struck in 2008. With no cushion for hard times, the Harper government ran up a $56 billion deficit in the first year of the recession. The shortfall has now been whittled back to $45 billion.
Any chief executive who managed his company’s finances like that would face tough questions. Why did he spend the surplus he inherited? Why did he eliminate the contingency reserve set up by his predecessor? Why didn’t he show the restraint he keeps talking about?
Economic growth: Canada came out of the recession strongly. In late 2009 and early 2010, it led the global recovery with a growth rate of 5.4 per cent. But it did not maintain that pace. By the end of last year, it had fallen back to 3.2 per cent. And this year, according to the Conference Board of Canada, it will soften to 2.4 per cent.
To put that in perspective, the Organization for Economic Cooperation and Development projects 2.2 per cent growth for the U.S., 3.6 per cent for Australia, 3.5 per cent for Mexico, 3.3 per cent for Sweden, 2.5 per cent for Germany and 1.7 per cent for Britain. Canada’s figure is respectable, but not outstanding.
The recession: Most economists agree the Harper government’s two-year economic stimulus package blunted the impact of the recession. The key reason why Canada was spared a financial meltdown, though, was the prudence and stability of our banking system.
All parties can share in whatever political credit there is for that. But it was the Liberals, under Jean Chrétien, who put in place the banking regulations that made Canada a safe haven when the bottom fell out of the global financial market.
The recovery: The main contributors to the upturn were a stronger-than-expected housing market, steady consumer spending and rising demand for commodities in China. Ottawa played a small role, but the Canadian people and the oil patch did the heavy lifting.
Debt control: Until the recession, the Harper government had an enviable debt reduction record. It got Canada’s debt-to-GDP ratio down to 22 per cent, the lowest in the industrial world. It has crept back up to 34 cent, but that is still doing better than all but two comparable countries: Germany and Australia.
Productivity: Here the Conservatives’ record is dismal. Canada lags behind almost every other industrial nation. The average U.S. worker churns out 23 per cent more output per hour than his or her Canadian counterpart. A German worker produces 16.3 per cent more; an Australian worker 6.2 per cent more.
Unemployment: Canada’s jobless rate stands at 7.8 per cent. Compared to the U.S. (8.9 per cent) that looks good. Compared to other countries (Australia 5.2 per cent, Germany 6.9 per cent), Harper has nothing to boast about.
Poverty: Canada has one of the highest poverty rates in the 30-member OECD. Only the U.S., Ireland, Japan and Spain allow more of their people to live in need.
The bottom line for voters: Harper’s performance has been decidedly mixed. Canada could have fared worse on his watch, but with its many advantages it could have done better.
From the Toronto Star Opinion Page by staff