To the Editor:
Following a speech I gave about economic growth last week to the “Canada 2020” group in Ottawa, I want to thank all those who have joined the debate – about the fiscal records of past federal governments, and more importantly, how to rise above the last nine years of mediocrity and move Canada forward more successfully.
At long last, Mr. Harper’s claim of being a good fiscal manager is being challenged more aggressively. And rightly so.
It’s interesting to note that even among those who didn’t much like my speech, the focus of their disagreement was largely historical – i.e., how much responsibility for previous fiscal problems should properly be borne by each previous government. What did they inherit from their predecessors? What new challenges arose? How did they respond? And what did they leave to their successors? The arguments run back 50 years or more.
But however you might rank Diefenbaker, Pearson, Trudeau, Clark, Mulroney and Campbell – it is clear that an important corner was turned in the 1990s with Chretien and Martin. They inherited the makings of a fiscal crisis. Canada’s financial circumstances were described by international media as worthy of honorary membership in the Third World. The debt ratio was approaching 70%. Just servicing that debt consumed a third of all federal revenues. Chretien and Martin faced it squarely, and fixed it.
As a consequence, when Mr. Harper took power in February of 2006, he was handed one of the strongest fiscal situations in the western world.
He inherited a decade of balanced budgets, an annual surplus of some $13-billion, declining taxes, a debt-ratio that had been slashed in half, a strong banking system, a secure Canada Pension Plan, regular monthly trade surpluses, an annual economic growth rate of better than 3%, and some 3.5-million net new jobs.
Transfers to provinces were at a record high, and the country was investing in fairness and growth – ie., in families, medicare, education, science and infrastructure.
But in less than three years – while the economy remained strong – Mr. Harper squandered Canada’s hard-won fiscal security. Ignoring concerns about a potential housing bubble in the US and emerging weaknesses in American banks, his government made reckless decisions about fiscal policy, spending and management which put this country back on the verge of deficits once again.
It’s critical to note the timing. This happened BEFORE, not because of, the recession. Arriving in the latter part of 2008, the recession undoubtedly made things worse, but it was Mr. Harper before that who made us far more vulnerable than we needed to be.
And remember how he denied it – to bluff his way through the 2008 election. He said a recession was unlikely; we’d all just have “good buying opportunities”. He said he would not run a deficit, and promised five more balanced budgets. Was this deceit or incompetence?
And note this too – that recession which Mr. Harper still blames for everything lasted only nine months and ended six years ago. But Canada continues to struggle with a slack economy. Growth is weak. Both job creation and job quality are poor. Household debt is at a record high. Young people cannot get a decent start on their own. Retirement incomes are woefully inadequate. Confidence in the future is at a low ebb.
In the latest global forecasts for economic growth over the next two years, a number of countries, like the US and the UK, are positioned well ahead of Canada. Some others (Germany, France, Italy, Japan, India, etc.) have had their growth prospects recently upgraded, while Canada is among a few who have fallen back. Despite all the Harper government’s expensive advertising to the contrary, Canada is no longer leading the pack.
Which brings me back to the key point that dominated my speech last week:
Mr. Harper’s policies have failed. Canada needs a new economic plan, one centred on the imperative of greater growth to lift the well-being of the middle-class and all those working so hard just to get there, to foster greater fairness, and to balance the nation’s books on a sound and durable basis.
Ralph Goodale
Member of Parliament Wascana
