I’m puzzled that the Harper Conservatives’ are getting such a free ride from the other parties and from the media on their main campaign mantra: that they are the best economic managers, that Canada is leading the international pack to economic recovery, and that Harper knows best what’s good for jobs and the economy going forward.
Let’s look more closely at the Harper record, beginning with his response in the fall of 2008 to the recession that engulfed the world, the deepest since the Great Depression of the 1930s.
In October 2008, the Harper government ordered a massive infusion of liquidity to protect the banks. However, incredulously, Harper’s economic and fiscal statement the following month completely denied the reality of Canada’s descent into recession. It blithely projected budget surpluses going forward three years. (In fact, the deficit ballooned to $55 billion in 2009.)
Harper’s economic statement signaled his plans for $4.5 billion worth of public spending cuts on 2009 alone—measures that would have made the recession even worse. It included a plan for major cuts to civil service wages and equalization payments to the provinces, and no new infrastructure investment.
It took the prospect of his government going down to defeat for Harper to reverse himself and bring forward a credible fiscal stimulus program of his own two months later.
In touting (with the help of a $53 million advertising campaign) his economic action plan, Harper claims that Canada has recovered all the jobs lost since the beginning of the recession. While it is true that overall employment is up 55,000 from October 2008, during this period an additional 374,000 workers have entered the work force boosting the number of unemployed by 321,000, and pushing up overall unemployment to 1,435,000.
Canada has still not recovered the number of full-time jobs that existed in October 2008. And the critical manufacturing sector has continued its free fall over the last decade, shedding another 172,000 jobs since October 2008.
Harper’s claim that Canada is leading the pack compared to other industrialized countries does not hold up either. According to the OECD, our unemployment rate ranked 18th out of 34 countries in 2010. And on GDP growth performance the OECD ranked us 13th.
According to the IMF, in 2010 Canada ranked 6th on GDP per capita growth amongst the seven leading industrialized nations (G7), 5th on productivity growth, and had the second highest trade and investment income deficit, exceeded only be the US.
The key Conservative economic commitment this election is its implementation of the final $6 billion installment of corporate income tax cuts over the next two years.
Harper says that these cuts are vital for job creation, and charges that the opposition parties’ plans to reverse these cuts would destroy jobs. He cites business lobby organizations and University of Calgary business economist Jack Mintz, to back up his claim.
But this claim is widely challenged by economists, including our own research, which concludes that corporate income tax cuts have an extraordinarily weak impact on business investment, and therewith, on job creation. Canadian corporations are sitting on a huge $700 billion pile of cash, and the lion’s share of these extra billions flowing into corporate coffers will go shareholder dividends and compensation hikes for corporate executives.
Harper’s own Finance department’s figures contradict his job claims. They imply that ending the infrastructure investment program (as Harper has done) and transferring those funds to corporate tax cuts would result a net loss of 86,000 jobs. So much for the Harper story line on job creation.
Finally, the question needs to be asked, whose economy are the Harper policies benefiting? The big banks and energy companies are getting an estimated 30-40% of the corporate tax cuts. Corporate owners will reap the benefits from increased dividends and rising share prices, and executives will get hefty pay hikes. Wealthy Canadians will be able to shelter even more of their income thanks to the Conservative’s proposed doubling of the contribution limits to the Tax Free Savings Accounts.
These measures may be good for the wealthy Conservative backers, but they are clearly not in the best interests of the vast majority of Canadians who will have to settle for a few extra dollars in their pockets while vital resources needed to strengthen public health care, education and pensions are squandered.
Bruce Campbell is the executive director of the Canadian Centre for Policy Alternatives.