As election looms, economy lurches toward recession
With PM set to drop the writ, Ottawa appears unlikely to fulfil its promise of balancing the books
OTTAWA— With the economy looming large in an election campaign that is only days away, the likelihood that Canada has fallen into a recession deepened on Friday with news of below-zero growth for the fifth consecutive month in May.
It was the latest in a string of bad economic results for Prime Minister Stephen Harper, who will be asking Canadians to pass judgment on his record in a national vote on Oct. 19.
A recession is usually defined as six consecutive months of below-zero economic growth, and the NDP and Liberals have seized on the long stretch of recessionlike conditions to accuse the government of mismanaging its most important file: the economy.
“The economy is suffering and Stephen Harper’s government is more concerned about wasting taxpayers’ money with an early election call,” NDP finance critic Nathan Cullen said.
He was referring to expectations that on Sunday, Harper will officially launch the the Oct. 19 election, setting in motion a longer than usual campaign that will likely cost Canadians tens of millions of dollars more than the estimated $375 million.
“The Conservatives’ poor economic record is proof that their priorities aren’t in the right place,” Cullen added.
The Bank of Canada has halved its growth projection and Parliamentary Budget Officer (PBO) Jean-Denis Fréchette has concluded the federal government is unlikely to achieve its longpromised goal of balancing Ottawa’s books in 2015.
Harper has said Canada is in an economic “downturn” as a result of the slump in the global economy. But he has brushed aside the PBO conclusion about a likely budget deficit in 2015.
“Our budgeting is very conservative and we are well on track to realize a balanced budget this year,” Harper told reporters last week.
Harper has staked much of his political strategy this year on his government’s ability to bring an end to seven years of consecutive budget deficits.
The Conservatives say running a tight fiscal ship is crucial to achieving economic prosperity.
Harper’s party passed legislation in which a finance minister who records a budget deficit would be called on the carpet at a Commons committee to explain how to fix it.
And several recently announced tax breaks — including an increase in the children’s fitness tax credit, a $2-billion measure allowing income-splitting for tax purposes among couples, and the increase to $10,000 in the contribution limit for Tax Free Savings Accounts — had been made contingent on balancing Ottawa’s books when Harper first proposed them in the 2011election campaign.
Implementation had been postponed because of continuing budget deficits but Harper has said the measures could go ahead now because Ottawa had put its books in order.
Despite recent economic setbacks, Finance Minister Joe Oliver maintains the government will not run a deficit, and Conservative MPs on the Commons finance committee blocked an effort by the opposition parties to bring Oliver to Ottawa to answer questions on the economy in light of Fréchette’s gloomy prediction.
“It definitely would be interesting to hear the finance minister actually ex- plain how he can claim there will be a balanced budget,” New Democrat MP Guy Caron said after the committee’s July 27 decision not to invite Oliver.
“We’re going into an election this fall. I think Canadians are actually entitled to know exactly where we stand in terms of our economic situation, and right now it’s clear that the Conservatives aren’t interested in bringing the light to this.”
Liberal MP Scott Brison said “the Conservatives have gone from wanting to run on the economy to running from the economy.”
Responding to StatsCan’s report on Friday, the finance minister said in a statement: “The global economy re- mains fragile and is being dragged down by forces beyond our borders such as a significant decline in oil prices, the European debt crisis, and China’s economic slowdown.