No matter how you add it up, Harper’s fiscal record is a catastrophe
On April 8, Finance Minister Joe Oliver stood up before the Economic Club in Toronto and delivered what can only be described as one of the greatest “fantasy economics” speeches in decades.
It was a message from a parallel universe — one in which the Harper government delivered ‘sound economic management’ through the recession (it didn’t), the economy recovered its pre-recession growth pattern (it hasn’t) and Ottawa is delivering tax relief for the average Canadian household (it isn’t). Stranger still, it’s a parallel universe where Pierre Trudeau is still around, haunting us.
In his speech, Oliver somehow contrived to blame Justin Trudeau for the alleged fiscal sins committed by his father during Trudeau Senior’s decade in power. (Justin Trudeau is 43. He was in his early teens when his father left office. Somehow we doubt Pierre was taking Justin’s fiscal advice at the time … but that’s the magic of rhetoric for you.)
According to Oliver, federal spending tripled between 1969 and 1979, driven by “the ideology of the man at the wheel and on the reckless assumption that commodity prices would remain high”. Change the timeline and Oliver could have been talking about Stephen Harper — but this is not a crowd that’s open to irony.
How bad a fiscal manager was Pierre Trudeau? Program spending did indeed triple between 1969 and 1979 in absolute terms. But measured as a share of GDP, program spending only rose from 15.4 per cent in 1969-70 to 16.7 per cent in 1979-80. As a share of GDP, revenues actually fell from 17.6 per cent in 1969-70 to 15.5 per cent in 1979-80.
According to Oliver, “Trudeau-era debt clung to Canada like a bad flu”. Actually, the federal debt burden only rose from 23.0 per cent to 27.7 per cent over the ten-year period. It rose further to 37.5 per cent in 1983-84, but this was due to the effects of the 1980-1981 recession.
In fact, the fiscal record of Trudeau Senior actually looks pretty good when compared to that of Brian Mulroney. Under Trudeau, the average annual deficit was 2.9 per cent of GDP between 1969-70 and 1979-80; under Mulroney the average annual deficit was 6.7 per cent of GDP between 1983-84 and 1994-95.
Between 1983-84 and 1994-95, program spending under Mulroney fell from 18.4 per cent of GDP to 15.7 per cent, while the revenue share actually rose from 15.6 per cent to 16.6 per cent. This weak performance, along with rising interest rates, resulted in the debt burden dramatically increasing from 37.5 per cent in 1983-84 to 66.6 per cent in 1994-95.
Mulroney did balance the operating budget — but that wasn’t nearly enough to solve the fiscal problem facing the government. In retrospect, the Mulroney government was simply reluctant to take the fiscal actions needed to stop the country from sliding into crisis in the early 1990s.
READ MORE: http://www.ipolitics.ca/2015/04/19/no-matter-how-you-add-it-up-harpers-fiscal-record-is-a-catastrophe/