More of same from Harper won’t end economic woes
TheStar.com – Opinion/Commentary – To solve our economic woes, Harper says we just have to hunker down, and keep following his “plan” — a plan that has clearly failed.
Jul 20 2015. By: Ralph Goodale
While using careful language, Bank of Canada Governor Stephen Poloz confirmed last week what most Canadians could already feel in their daily lives. Another recession is hobbling this country and Stephen Harper’s economic “plan” has failed.
The official definition of “recession” is two consecutive calendar quarters when the economy shrinks. Governor Poloz says there was a “contraction” of 0.6 per cent through January, February and March of this year, followed by further shrinkage of 0.5 per cent in April, May and June. The government can no longer deny that hard reality. Significantly, Canada is the only G7 country to be suffering such a relapse. So much for Harper’s vain boast that we’re doing better than the rest of the world.
Poloz is hoping for some recovery over the next six months, but he is slashing his forecast of annual growth for the whole of 2015 from 1.9 per cent down to just 1.1 per cent — cutting it almost in half. He has also trimmed his growth projection for next year, while postponing any expectation of full economic recovery into 2017.
In the short run, using the calculations spelled out in the government’s own 2015 budget, an annual economic growth rate as low as 1.1 per cent surely eliminates any claim that the Harper Conservatives have balanced their books. Their deficit continues, and thus their rationale for big tax breaks for wealthier households has been destroyed.
So in real life, what does all this mean?
For middle class families and all those trying to get to the middle class, a “no growth” economy means sluggish employment, weak and sporadic job creation and poor job quality. It means stagnant incomes, ballooning consumer debts and serious concerns about making ends meet. A stalled or shrinking economy causes families to worry about the affordability of their housing and the costs of post-secondary education for their kids. It makes it harder to put money aside for retirement. And worsens inequality.
Perhaps most troubling, a majority of Canadians now doubt that their children will be able to do as well as their parents. Our usual expectation of progress — of upward mobility, almost automatically, from one generation to the next — has been eroded.
All this has happened on Stephen Harper’s watch. To obscure his failure, he always blames the 2008 recession (which ended six years ago), and then he blames the Americans and the Chinese and even the Greeks — any scapegoat he can find.
But more serious than his denial of responsibility is Harper’s claim that Canadians are helpless victims of circumstances beyond all control. There is nothing different or better to do, he says. We just have to hunker down, and keep following his “plan” — a plan that has clearly failed. What a dismal prospect. Canada deserves better.
To begin with, the federal government needs to stop contradicting the Bank of Canada. By cutting interest rates twice this year, Governor Poloz is pushing a pro-growth monetary policy, while the Harper regime insists on going in the opposite direction of restrictive fiscal policy, reducing aggregate demand. Such incoherence is untenable.
To help growth, the hodgepodge of existing programs to offset the high costs of raising children should be consolidated, remodelled and enhanced. We need a new “Canada Child Benefit” — one that’s more generous, linked to income, indexed and non-taxable. That way, you can provide more support to nine out of 10 families, boosting their spending power. It’s also more fair and greater fairness is good for growth. Also helpful would be a substantial tax-rate reduction on incomes in the middle class bracket ($45,000-$90,000).
The federal government should also invest more in public and community infrastructure (which the federal finance department itself says is the single most cost-effective way to generate immediate growth and jobs), plus better access to post-secondary education, higher learning and advanced skills, and a big leap forward in Canadian science, technology and innovation.
These are just some of the alternatives that would be distinctly better than Harper’s recession. Canadians don’t need to be as helpless or as vulnerable as the current government has made us.
Ralph Goodale is a member of Parliament, a former finance minister and the deputy leader of the Liberal Party of Canada.
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Tags: budget, economy, globalization, ideology, standard of living, tax
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