The Tories’ sad economic record

Imust say I admire my colleague Maxime Bernier’s chutzpah in his recent article in the National Post (“Debt dealer,” Feb. 26).

Putting aside my admiration, however, I would remind Minister Bernier that throwing stones in glass houses is not usually the best idea.

The last 10 years of the Liberal Chretien-Martin government delivered 10 surplus budgets in a row. The Conservative Harper-Flaherty combination has delivered eight deficits in a row. The Liberal government paid down debt. The Conservatives have raised it. Minister Bernier is a member of that government.

The Harper government has been one of the most profligate spenders in Canadian history, ramping up spending by 30% since 2006, adding upwards of $160-billion to the national debt, and beggaring Canadians by an additional $5,000 each.

And all of these wounds are self-inflicted. The Harper government destabilized the fiscal framework that the previous Liberal government needed a decade to build by destroying the federal government’s revenue base with HST cuts and other ill-advised tax cuts.

Tax cuts are fine if a government has the fiscal discipline to impose spending constraint. The Harper government, clearly, does not, as the 30% jump in spending since 2006 attests. Adding $160-bil- lion to the national debt is not disciplined. Enacting tax cuts contrary to the advice of the most senior economic advisors in the country is not disciplined. Tax cuts that produce little or no economic stimulus are not disciplined.

When the most senior economic manager in the country, former Bank of Canada governor Mark Carney, derides Canadian business for hoarding cash — “dead money” — he is pointing out the futility of Harper’s economic management. Tax cuts for the sake of political opportunism are foolish, dangerous and very costly, both immediately and in the long run.

Now Mr. Harper seems bound and determined on driving through income splitting, which would be very expensive and benefit very few Canadians, mostly those with high incomes, contrary to the advice of many economists. Even his own finance minister, Jim Flaherty, is balking at the measure, saying that it needs “a long, hard, analytical look” because “it benefits some parts of the Canadian population a lot and other parts of the Canadian population virtually not at all.”

But despite remonstrations from economists, the opposition and editorialists, the Conservatives have forged ahead with measures which have little benefit to the economy or Canadians and seem prepared to do so again in spite of massive evidence to the contrary.

In Justin Trudeau’s speech at the Liberal Convention this past weekend, Minister Bernier claims to see the spectre of big government and debt when Mr. Trudeau says that the federal government has to play a leadership role in helping provinces to deal with their debt.

This is a particularly eyebrow raising comment. Mr. Bernier boasts that Canada’s debt to GDP ratio is at 33%, however, when provincial debt is considered, that number climbs to 87%, according to the IMF. Perhaps a careful look in the mirror might be in order.

Under Mr. Harper, Canada’s growth rate has been an anemic 1.4%. Compare that with the record of Pierre Trudeau, who Mr. Bernier claims “ruined our economy.” Mr. Trudeau saw a roughly 3.5% growth rate over his tenure. In addition, the Trudeau government weathered the two oils shocks of 1973 and 1979.

I admire the temerity demonstrated by Minister Bernier in lecturing others on the evils of public debt even though his government holds the record for the largest one-year deficit in Canadian history. I also admire the boldness with which he puts on display his flawed analysis of Keynesian theory and his government’s blind adherence to “old” Chicago School economic theory which has produced record low economic growth rates in Canada. And despite his government’s dreadful economic record, I admire the chutzpah with which he accuses Justin Trudeau of not understanding the economy.

But the fact remains that the Liberal record on the economy and the national debt is far superior to what Mr. Bernier’s party can boast of. And people who live in glass houses should not throw stones.