10 Reasons Stephen Harper should ignore his own economic advice

September 9, 2015

Prime Minister Stephen Harper is campaigning to "stay the course" on Canada's economy. There are a lot of reasons why the PM should think again - and the fact that we have been officially in a recession (as of September 1's latest numbers) ranks right up there.

Here are 10 more reasons based on the research of economists Jim Stanford and Jordan Brennan in Rhetoric Versus Reality: Evaluating Canada's Economic Record Under The Harper Government. Their report assesses the economic performance of nine prime ministers going back to 1946. Spoiler alert: it concludes that the Harper government's is the worst in postwar Canadian history (uniforvotes.ca).

1. The incredible shrinking economy

Harper assumed office in 2006 at the height of a hot economic growth streak, but under his watch real GDP growth has been sluggish: on average, 1.6 per cent a year. That's the worst economic growth performance of any federal government since the Second World War. The latest news is that Canada has been in recession for the first half of 2015. Time to rethink the Harper government's austerity agenda. 

2. Melting surpluses, consecutive deficits 

Harper inherited a budget surplus of $13.8 billion, but that quickly melted into seven fiscal deficits in a row exacerbated by tax cuts on the order of billions of dollars. 

Deficits can be legitimate and worthwhile: those incurred during recessions to stimulate a tanking economy, for instance. But tax cuts are a terrible reason to get mired in deficit territory.

If federal taxes had been held at the same share of the economy as in 2000, there would be $50 billion more per year in the fiscal coffers.

3. Good jobs gap

It's been tougher for Canadians to find jobs in the Harper era than at any time since the Second World War. Canada is recording slower employment growth than the rate of population growth. 

4. The sidelining of Canada's youth 

Fewer young people between 15 and 24 have jobs today than when Harper was elected, even though the youth population grew during that time. Canada's youth employment rate was 55.5 per cent in 2014 under Harper, which is worse than when he took office.

5. Precarious work overload 

Quality full-time jobs are harder than ever to find - at a 25-year low, according to the CIBC's employment quality index. During the Harper era, we've lost a lot of good middle-class jobs, an estimated 400,000 in manufacturing alone over the last 10 years. The PM has boasted of growing job numbers, but many of those new jobs are part-time, temporary or in precarious self-employment. And most of those are in the low- or middle-income bracket.

6. Irresponsible tax cut agenda 

Harper's corporate tax cuts are costing the federal coffers $15 billion in lost revenue each year. His two-percentage-point cut to the GST went against Canadian economists' advice, depriving the treasury of another $14 billion a year in lost revenue. Thanks to regressive tax cuts, federal revenue as a share of the economy is now the smallest it's been in more than 70 years, since before Canada had universal health care, the Canada Pension Plan and Employment Insurance. The Harper government has taken tax cuts - such as the latest promise of a tax cut for service clubs - to a whole new level.

7. Corporations sitting on mountains of "dead money"

The PM claims corporate tax cuts create jobs, but the evidence shows corporations have been socking their hundreds of billions in profits in savings into bank accounts instead of investing the money to drive economic growth and create jobs. Former Bank of Canada governor Mark Carney called it sitting on "dead money." Stanford and Brennan point out that business investment grew more slowly during Harper's tenure than at any time since the Second World War, with the exception of the Diefenbaker era. 

8. Trade: from deals to deficit 

Despite the Harper government's bluster about trade deals, Canadian exports have stagnated, growing by just 0.3 per cent on average since 2006 - resulting in annual trade deficits.

9. Wage stagnation 

Still waiting for that pay raise? Average real incomes have grown by less than 0.9 per cent a year since Harper took office. They call that wage stagnation. But the richest 1 per cent are enjoying the highest share of income gains since the 1920s. The 2008-09 financial crisis took a little wind out of the stock market, but Canada's highest-paid CEOs have bounced back with a vengeance, making on average 195 times more than the average Canadian worker. Another reason income inequality should be a hot topic this election.

10. Recession repeat

Remember the 2008 federal election? All signs pointed to a global recession, but Harper insisted, "This country will not go into recession next year." The head-in-the-sand approach didn't prevent the global recession from spilling into Canada. Ignoring current signs of recession and slow growth would be equally disastrous. It's time to heed new economic advice.

Trish Hennessy is director of the Canadian Centre for Policy Alternatives' Ontario office. This piece was originally published at NOW magazine.