PM fights storm with sunshine
COMMENT
Justin Trudeau pronounced himself “tremendously optimistic” about the Canadian economy.
He obviously hasn’t paid $7 for a bloody cauliflower in recent days.
The prime minister was in southern Ontario’s tech hub on Thursday, taking in the new Google office in Kitchener.
While there, he pulled a leaf from Ronald Reagan’s playbook. The late president’s sunny optimism was credited with raising national pride and collective spirits during troubled economic times. “We are creating a nation once again vibrant, robust and alive,” the Great Communicator said in his second inaugural address.
Trudeau was asked a fairly blunt question by a Reuters correspondent about spreading hope when the country is on the brink of an economic crisis, with the main engine of growth stalled.
“I’ve spoken with many Canadians who are going through very difficult times, particularly in Alberta, where worries about jobs and the economy are very real,” he said. “But at the same time, I’m tremendously optimistic about the Canadian economy. It’s not just standing in an amazing place like this that is demonstrating how much Canadians have to offer the world in terms of innovation and forward thinking, but also to understand that Canadians, as forward- thinking optimistic problem solvers, are always ready to create economic growth and success. The federal government will be a strong partner, making investments where we need to.”
Not a bad strategy, but the power of positive thinking does not compensate for the fact that the economy has lost $50 billion in annual income because of the commodity price slide.
What is apparent is the marked contrast to his predecessor, whose approach was more characterized by sullen than sunny ways. Stephen Harper’s dalliance with luminous cheer was brief after his advice that the 2008 market slide represented a “buying opportunity” was ridiculed. Harper came across as optimistic as the girl who mistakes a bulge for a curve, and the experience was not repeated.
Trudeau is much more comfortable in the role of economic cheerleader. But he is shouting into a strong economic headwind.
Consumers across the country are now feeling the impact of a sub-70- cent dollar in car showrooms and in supermarkets. One prediction has the loonie losing another 10 cents before it stabilizes. Jobs are being lost by the thousands in resource- rich provinces and oil prices still haven’t found a bottom. One commentary has the Canadian economy contracting in the final quarter of last year.
There’s some truth to the criticism that only the bad news is highlighted. As anyone who has filled up with gas in recent days knows, there is a benefit to the drop in energy prices. Elsewhere, Canadian exports may be picking up at long last.
But confidence is fragile. A study by Abacus Data a year ago suggested two- thirds of Canadians believed the economy was in good shape, with one-third saying it was poor. A new survey released Thursday said those numbers have been reversed.
The saving grace for the Liberals is that the worry is qualified — the decline is seen as mild, rather than severe.
Trudeau was asked about parallels with 2008, and said that we are still looking at growth, even if it’s anemic. “I think there are tremendous fundamentals that we can be proud of in Canada and I’m very, very optimistic about our capacity to get Canada moving in the right direction, after a time when we have put all our eggs in one basket,” he said.
But Trudeau will be judged on results, not intentions. He was asked whether the economy needs bigger dollops of fiscal stimulus than planned in the Liberal platform — a question he managed to sidestep.
“We got elected on a simple, straightforward premise that Canada needed a federal government that was ready to invest in the country. … The recent troublesome news is unfortunately not a surprise — we saw these trend lines coming. That’s why we put forward an ambitious agenda to invest in Canada,” he said.
As a reminder, that “ambitious agenda” is to spend $ 10 billion a year on infrastructure, compared to $5 billion put forward by the Conservatives. Of that extra $ 5 billion, just $1.7 billion is earmarked for roads, bridges and transit. It’s more, but Trudeau may decide that it’s not transformative enough to live up to his own hype.
In troubled times, Harper’s natural inclination was to resist more government action.
He would probably have sided with Stephen Poloz, the Bank of Canada governor, who said last week that the Canadian economy is going through a period of adjustment and those forces must play themselves out.
The suspicion is that Trudeau’s reaction will be to demand Ottawa leap into motion (not to be confused with action). It may prove a very expensive route to a sub-$ 5 cauliflower.