The worst kept secret regarding the economy was made official today -- Canada is in a recession. There is nothing technical about it; the definition of a recession is relatively straightforward: two consecutive quarters with negative economic growth. The fact that this definition might not be convenient for a sitting government's, which holds itself out as brilliant economic managers, political fortunes is irrelevant.
I strongly suspected on Sunday, when Jason Kenney was dispatched to the Sunday morning political talk shows to attempt to redefine the definition of a recession, to exclude Canada's current lacklustre performance, that the Stats Canada Report had been leaked to the government and that damage control had begun.
From an economic perspective, this is all much ado about nothing. Whether the Canadian gross domestic product shrank slightly in April and May, which it did, or if it expanded slightly, like it did in June, is really irrelevant. This is especially so if you've lost your job or are having trouble making payroll; the arguments regarding technical definitions of economic terms matters less than your inability to pay your bills.
By any objective standard, the Canadian economy is under-performing. The government can twist itself into a pretzel explaining that 80 per cent of the economy is functioning but that is irrelevant if the 20 per cent that's not functioning accounts for shrinkage in economic growth. That's like saying a patient is healthy if 80 per cent of his organs are working; if the brain is one of the non-functioning organs, the patient has a problem!
Political parties will cherry pick the parts of the Stats Can Report that best serves them. I am pleased to see slight economic growth in June and hope that that trend continues. But any myth of Stephen Harper as being a brilliant economic manager certainly has been dispelled. He is the only prime minister in Canadian history that has governed through two recessions.
Admittedly, economic factors beyond his government's control, such as severely depressed energy prices, have more to do with this recession than any of his government's policies. However by the same logic, if the prime minister is not responsible for an economic downturn caused by depressed resource revenue, he cannot take credit for an economic boom fuelled by the same resource sector, when prices were more than double that of their current trading price.
The simple reality is that for a trading country such as Canada, international market forces and prices are a much bigger determinant of the strength of our economy than the government's fiscal and monetary policies.
However, a couple of Prime Minister Harper's policies have compromised economic growth. His government's inability to bring forth emission regulations for the oil and gas sector, first promised in 2006, has given our country such a negative international environmental reputation, that getting important pipeline projects, such as Keystone XL, approved is impracticable.
Moreover, the government likes to brag about its trade policies and the number of free trade agreements it has signed. However, the only two of any major significance (the Trans Pacific Partnership and the European Free Trade Agreement) have yet to be, and may never be, ratified. The government's gutting of the temporary foreign worker program and therefore its lack of commitment to labour mobility plus its insistence on supply managed agricultural industries, seriously threatens both agreements.
Regarding Canada's fiscal policies, I quite enjoyed Stephen Harper mocking Justin Trudeau over the latter's policy announcement of running three deficits in order to fund much-needed infrastructure. It seems rich for a prime minister, who has tabled seven consecutive deficit budgets (likely eight due to the downturn in our economy resulting in decreased tax revenue) to criticize deficit financing.
We are both in a recession and likely deficit position. If I were the Prime Minister, I would not be mocking anyone regarding deficit financing, after adding over $150 billion to the national debt, including the single largest deficit Canadian history. It is very much like the proverbial pot calling the kettle black; or in this case red!
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