The troubled plight of the Canadian economy took centre stage on the nation’s political scene last week.
While news that Canada’s economy has slipped into recession didn’t come as a shock to many financial analysts – apart from the nation’s finance minister who was still denying fiscal reality only weeks before – the reaction it prompted from the federal government was certainly a little unusual.
Prime Minister Stephen Harper’s response to the nation was to say, in effect, ‘I didn’t do it.’ Apparently, the buck stops with falling oil prices, Beijing or Washington, D.C. – anywhere but 24 Sussex Drive.
In fact, the Conservatives have done little to diversify Canada from its resource-based economy. While China’s economy has slowed, is Harper saying Canada is doomed without double-digit GDP growth in China? And in the U.S. the Fed is on the verge of hiking interest rates to slow their red-hot economy. The prime minister might as well have come out and blamed his Liberal predecessors for only leaving him a paltry $13 billion surplus to squander.
Not content to merely dodge responsibility, Harper went on to say things would be worse under Justin Trudeau and brought up the spectre of Greece in relation to Tom Mulclair. ‘At least we’re not Greece,’ doesn’t seem like an inspiring election platform.
The downward revision to Canada’s GDP outlook means that the country will almost certainly run a deficit again this year. The irony here is that the Conservatives’ actions to create a balanced budget to campaign on helped foster the conditions for recession. Despite what Harper might claim now, a recession was far from inevitable – a quick look at other G7 nations shows that Canada is the only one now mired in negative growth.
Instead of looking for an economic solution the government would rather change the definition of recession itself, with the Bank of Canada governor calling the use of the ‘R’ word not helpful. Fair enough, maybe a more accurate description would be Stephen Harper’s Economic Action Plan at work.