The Week That Was - Sept 21, 2015 - The Economy Debate - did anybody win? did anyone watch?

Rivers 100x100By Ray Rivers

September 21, 2015


The Globe and Mail held its debate on the economy. This was round two for the three leaders and still, neither a clear winner nor loser emerged. The PM stuck to his mantra that the economy is not great, but that he’s done a pretty good job – he’s not perfect. And despite several well-placed jabs by the opponents, and his ‘old stock Canadian’ slip. some pundits thought he performed the best.

G&M debate

Leaders of the three mainline parties taking part in the Globe and Mail debate on the economy. Green party leader Elizabeth May tweeted about the event – she may have had a bigger following than the one webcast by the Globe and Mail.

The way the Nanos nightly polls bob up and down you’d think you were lying, with a good friend, on a water bed. Last night’s poll showed the Tories rebounding slightly as the parties continue this slow dance to the final bell. The CBC’s poll tracker, which uses a weighted average of various polls, shows a tight race with the NDP still in the lead, which is where they have been since the beginning.

The Conservatives wanted this election to be about the economy, so they have run on their record. How is that working out for them? Well, Canada is technically in a recession, the only nation among the G7 to be in economic decline. Unemployment, though near its long term average, jumped to 7% in August. And a small surplus was unexpectedly recorded last year.

A surplus is normally something to be proud of, but not so much in a recession. The announcement sparked criticism that the Tories had deferred spending into future years, just to make the books look good. And others claimed that the surplus had inadvertently contributed to this year’s recession.

Harper with economy signs

Protecting the economy has been the Conservative pith to voters from the beginning. will it work

Mr. Harper claims he is not perfect, but then neither is Canada’s economic condition – what you see is what you get. Still, he has no choice at this point. His last budget is his election platform, notwithstanding the scattering of election goodies he announces every few days or so.

The NDP’s Mulcair is shadow boxing. This is particularly true in Ontario where the words NDP are inextricably associated with high taxes and high deficits – the ghost of a government punching above its weight during one of Canada’s worst recessions. So he’s decided to play it safe, buying into the PM’s budget, using it as his own platform.

Not to appear too cozy with the PM, he has tried to personalize it with his own list of goodies. And, his biggest promise, the $15 day national day care plan, will be just a pipe dream unless all ten provinces ante in. Otherwise he might as well be campaigning with the PM.

Federal NDP Leader Tom Mulcair speaks to supporters at a rally Wednesday, August 12, 2015  in Quebec City, Que. THE CANADIAN PRESS/Ryan Remiorz

Federal NDP Leader Tom Mulcair speaks to supporters at a rally where he promotes his view that the country is ready for a change. it appears to be working

Last week Mulcair unveiled his ‘fiscal plan’ essentially a ‘back-of-the-envelope’ summary of how he would alter the last Tory budget to make it his own. For example, he added extra revenue from raising the corporate tax rate and subtracted revenue loss from cutting the small business rate before summing the difference.

And all three leaders are now promising to do something to lower the small business tax rate. That would be a progressive measure though it is questionable how much small business investment and job creation would spring forth as a result. Taxes are only one factor affecting small business decisions of investment and hiring, and not the most important one.

Consumer demand is the key determinant for small business expansion and that means a healthy growing economy. If you can’t sell your product, because people aren’t buying or they’re buying cheap imports, then how much tax you’d have to pay on your profits is the last thing you’d worry about. The best policy to help small business is for government to help the economy out of the recession, deficit or not.

Mr. Mulcair is the only major leader planning to raise corporate taxes. One should wonder why all the leaders are not promising to do that. Canada’s corporate tax rate is the lowest in the G7 by a good measure. Further, there is no proof that the government revenue forfeited by lowering corporate taxes can stimulate the economy any better than direct investment in public goods like infrastructure – or cutting the HST. Didn’t we learn a while ago that ‘trickle down economics’ doesn’t work?

Do Mr. Harper and Mr. Trudeau really believe that lowering the taxes of the banks and insurance companies, so they can cut their CEO’s even fatter bonus cheques, really helps our economy? How can these leaders reconcile the dramatic slashing of corporate tax rates over the last decade with the evaporation of some 400,000 manufacturing jobs over that same time period?

Mr. Harper has been criticized for using an unrealistically high oil price as the basis for revenue projections in his budget. That shaky, disingenuous foundation stone for his plan has been ignored and glossed over by Mulcair’s steely-eyed strategists, it appears. As a result Mr. Mulcair’s fiscal plan can be made to balance, just as easily as the PM’s. It is such irony to hear Mr. Harper claim that NDP will be running deficits, knowing that is also in his cards.

Trudeau Justin with signs behind

Justin Trudeau believes the country needs economic stimulation and is prepared to live with deficits to revive an economy that is technically in a recession and has an unemployment rate that is rising – every so slightly.

Unlike the other two leaders Mr. Trudeau isn’t pretending he can run a surplus with imaginary numbers. He’s set a spending target for Canada’s much needed infrastructure investment and… to hell with the deficit, at least for the near future. Unlike the other leaders, Mr. Trudeau has come out of his corner making no pretence that he can balance an unbalance able budget.

Rivers-direct-into-camera1-173x300Ray Rivers writes weekly on both federal and provincial politics, applying his more than 25 years as a federal bureaucrat to his thinking. Rivers was a candidate for provincial office in Burlington where he ran as a Liberal against Cam Jackson in 1995, the year Mike Harris and the Common Sense Revolution swept the province. Rivers is no longer active with any political party.

Background links:

The Economic Debate     Key Debate PointsNanos Poll    Poll Tracker

Unemployment NumbersMulcair’s Fiscal Plan –  Mulcair’s Critique –  More Mulcair

Actual Plan    Small Business Tax      Corporate Taxes

Trickle Down Economics

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8 comments to The Week That Was – Sept 21, 2015 – The Economy Debate – did anybody win? did anyone watch?

  • Bill Sullivan

    Harper has hurt the Canadian economy, in particular the oil sands, with his distain for the environment. The rest of the world understands the oil economy must be dramatically reduced. We can not continue to pollute our world without suffering devastating consequences. Harper has been left behind by progressive forward thinking politicians within our country and without. We need to “heave steve” so we can advance our economy and our quality of life.

  • BCarlton

    That pretty well sums it up, thanks James for your logical comment.

  • Bill Statten

    Well done James. I agree with you. However, I am still undecided about my vote since all the negative media publicity about the Harper government is starting to wear me out. i’m not sure I could withstand another 4 years of their negativity and complaining.

  • James

    My 2 cents:

    Mulcair is like that minimum wage worker that thinks he can run the company better than the owner. Can you imagine how unprepared he would be if actually given the corner office? It’d be an eye opening experience for sure. He’s already copying the Conservative television ads, how quickly would he be scrambling through the desk to see if there’s a “Prime Minister for Dummies” book tucked away somewhere after realizing he’s in way over his head?

    Trudeau was born on third base, but acts like he hit a triple (a quote I heard from someone else that I think explains it perfectly). He’s like that kid fresh out of university that thinks he’ll have a senior management position, $100K+ a year salary and a company car the moment he gets his first job. If you think the Liberals have been bad for Ontario, imagine how much worst it would be if Trudeau gets elected! It’s easy to criticize others when you have no record of your own, and no real experience or understanding of what it takes to lead a nation. Just because my dad was a doctor doesn’t mean I’m qualified to do open heart surgery. The same applies to Trudeau. Nice hair though.

    Elizabeth May is a wasted vote. Nothing against her, but she’s not even close to being a serious contender. You’re better off staying home and saving your gas money.

    Harper is the lesser of the evils. He’s not perfect, and while I look forward to the day he’s no longer the leader of the Conservative Party, he’s the only real choice to ride things out a little longer while the global economy hopefully stabilizes. He’s not the most popular guy out there, but he’s the best of the options we have.

  • Gary

    We are rooting for you too, Bob.

  • Bob Zarichansky

    Why was the debate hidden away on the internet and why did the three leaders conspire to exclude Elizabeth May? Surely with all the nefarious activity at the federal level over the past four years, Integrity, rather than the economy should have been the focus for debate.
    We can eliminate Harper from any discussions here, as the public would be safer with him in jail rather than on the hustings.
    Although Elizabeth May seems trustworthy, perhaps that is because she is probably the farthest away from the reality of power.
    That leaves the choice between the Liberals and the NDP. How do you choose between the two when Trudeau lacks firm commitments to specific policies and Mulcair is burdened with some awful and impractical NDP pre-dispositions?
    I know that this is risky, but I will have to make my choice based on the character of the individuals running in my riding. Are they just empty suitcases being carried by the party in the need for numbers or, individually, can they actually make a difference? The price of responsible government is surely dependent upon making an effort to elect representatives with integrity. I hope I make the right choice.

  • Hans Jacobs

    Re: …”a small surplus was unexpectedly recorded last year.”
    That surplus was generated by selling a $3.3 Billion government asset. I understand that it would have been a deficit of $1.4 billion without that sale. What will Harper sell next time he wants to cook the books? He has increased the national debt by over 40%. Is that good management of the economy? Luckily interest rates are currently low…

  • Fred Pritchard FCPA, FCGA

    I watched the debate, and really don’t understand the NDP. They promise the moon, and a balanced budget. Highly unlikely both can be achieved at the same time with their spending.

    Lets take one issue in particular – Child Care. They seem to be pandering for votes with this silly notion of $15 a day for babysitting.

    I believe that you made a choice to have the children, you ought to have known what you were going to do with the child while you were at work and the costs associated with it. For the NDP to pretend that $15 will cover the cost is nuts. That won’t even pay the wages of the worker, let alone lunch, diapers, capital cost of the building, heat/air, etc.

    I am very willing to provide some assistance to help low income Canadians who are single parents trying to build a career and get off welfare and become self-sufficient.

    However, those of us without children will be demanding we extend the argument, why not $15 a day senior sitting? If the Government is going to pay for your kids, then you can pay for my mother to be babysat.

    Overall, it is disingenuous to offer up $15 a day babysitting, when the NDP already know that many Provinces have said no. It seems the Federal NDP haven’t grown up and gotten out of the habit of making promises they know they would never have to keep since in the past they would have never been given the opportunity to govern. Sorry Tom, your numbers just don’t add up.