Harper’s an Economic Nightmare

By Elizabeth May

I imagine that you just read that headline as “an economic nightmare impacting Stephen Harper’s economic plans.” But my intention was not that Stephen Harper faces an economic nightmare; it is that his policies are an economic nightmare.

True, Canada rode out the 2008 financial melt-down better than most. Our prime minister was quick to take credit, but the credit should have gone to the previous administration that rejected the banking industry’s demands for de-regulation. Ironically, had Harper’s party succeeded in persuading the government of the day to accede in the banks’ demands, he would have had a much rougher ride. He was lucky; lucky that our banks were regulated and unable to join in the high-risk global derivatives market -- and lucky that he had inherited large surpluses. Even before the financial crisis hit, Harper shifted our budget from surplus to deficit. That’s bound to happen if you slash revenues and spend more. Our first quarter in deficit was before we had spent a cent in the stimulus investments forced by the economic melt-down.

While the media, pundits and politicians now focus on the relatively minor question of whether we will have a small surplus or small budgetary deficit, the national debt is ignored. Stephen Harper, self- described as a fiscal conservative, has increased the national debt to its highest level ever. Our debt is now over $600 billion. Twenty-four per cent of that debt was accumulated by Stephen Harper as he borrowed money to give out economically foolish boutique tax cuts. It’s one thing to bribe voters with their own money. It’s a step more shameless to borrow money to do it. The interest payments on the debt will cost Canadians $29 billion this year.

One might imagine that Harper’s high-spending ways came to an end in tough times. But not so. The current size of the federal civil service is larger than it’s ever been before. While spending for environmental science and support for veterans were slashed, more bureaucrats were hired to audit environmental groups, work in Corrections Canada and Canadian Border Services. A big winner for federal government job opportunities has been for Information Officers. They are up by 15% as they work to control and limit our access to information.

Since Harper became prime minister, productivity is falling, innovation is stagnant and our exports have tilted back to what previous industrial strategies sought to avoid. For years successive governments sought to move us away from relying on raw resource exports, to create wealth through value-added production. To use a Conservative branded turn of phrase, his “laser-like focus” on putting all our eggs in the bitumen basket did not include processing the bitumen before shipping it out. And now, it seems his luck has run out.

Maybe he didn’t see Saudi Arabia coming. The OPEC oil shock of the early ‘70’s was not that long ago. Of all global commodities, oil is the one that is most open to manipulation, creates the most security threats and launches the most wars.

Anyone who understands an economy knows it is more resilient to nasty shocks when it is diversified.

Truth is Canada was never all that dependent on the oil sands. It is only 2% of GDP. It is not that large a contributor to our national revenue. And many sectors of the Canadian economy will benefit from the lower dollar.

If I were prime minister right now, I would be finding every policy tool available to give those sectors that benefit from an 80 cent dollar a boost for rapid ramping up to expand their workforces. One prime example is tourism. For some inexplicable reason, Harper appears to hate tourism. Policy after policy has hurt the sector – from eliminating the GST-HST rebate for foreign visitors (a cheap goodwill gesture) to more visa requirements, to slashing the budget for tourism ads, to undermining seasonal employment through the EI system. For the last few years, not one penny was spent to promote Canada as a dream vacation in the US market. Where ten years ago Canada was in the top seven of world tourism destinations, we are now 18th.

The only spectacular photographs of Canadian wilderness paid for by the Government of Canada in the US were to promote the Keystone pipeline. One single Keystone ad in the New Yorker last year cost over $200,000. Still, tourism employs over 600,000 Canadians and contributes over $30 billion to our economy.

It was recently announced that Harper is prepared to spend over $20 million for a major ad campaign targeting Europe, the US and Asia. The international PR firm FleishmanHillard has won the contract.

And the ads will promote the oil sands.

When will someone stand up to say “the economist is naked?”

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