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Eight Ways the Harper Economy Is a Bust

These reality check truths are bound to dog Tories on election trail. Fourth in a series.

Mel Hurtig 11 Jun 2015TheTyee.ca

Vancouver-based Mel Hurtig is the bookseller, publisher and creator of The Canadian Encyclopedia who became a political activist and published many bestselling books including The Betrayal of Canada. His latest book is The Arrogant Autocrat: Stephen Harper's Takeover of Canada, excerpted five times this week in The Tyee with the author's permission. To read the entire series, go here.

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Why you're hurting: By many measures, Canada's economy under Stephen Harper has slipped versus our peer nations. Throat photo via Shutterstock.

[Editor's note: This is the fourth of five excerpts this week from The Arrogant Autocrat: Stephen Harper's Takeover of Canada by noted Canadian nationalist Mel Hurtig. For an interview with Hurtig about his just published book, click here. To find the whole series, click here.]

The Harper government makes many claims but the numbers don't lie: on a wide range of economic indicators, Canada's performance is declining. Below are a number of statistics and comparisons, many from the OECD Factbook 2014, that provide an overview of our economic status and the overall fiscal health of the country.

1. Lousy jobs record. As I noted in yesterday's piece focusing on Harper's jobs record, Canada's unemployment rate is higher than it was before the 2008–11 recession. At the end of 2014, the participation rate in Canada's labour market hit a 13-year low at 66 per cent, more than a percentage point below 2008 levels. Eleven ECD countries have a higher proportion of persons of working age in employment. Canada has one of the highest rates of part-time employment in the OECD. Nineteen OECD countries have lower rates of unemployment in a recent three year average.

2. From trade surplus to deficit. Whereas once Canada was among the world's leading exporters, we're now ranked 28th in exports of goods and services as a percentage of GDP. Canada's share of world exports has been declining for more than a decade. In the eight years before the Harper government took office, Canada had a cumulative trade surplus with other countries of $410 billion. However, during Harper's first nine years in office, that trade surplus fell to a deficit of $56 billion.

The broadest measure we have of trade health is our current account balance. It is the sum of the balance of trade (exports minus imports of goods and services) and net investment income (such as interest and dividends). Today we have one of the highest current account deficits in the world.

3. Drooping GDP. For almost 30 years, Canada enjoyed an average annual GDP growth rate of 2.275 per cent, but in 2015 the latest OECD forecast says we'll be lucky to hit 1.5 per cent. In dollar terms, that drop represents a huge difference.

In terms of GDP per capita, Canada ranks 12th amongst OECD countries. All of the following countries have a higher GDP per person income than we do: Luxembourg, Norway, Switzerland, the U.S., Australia, Austria, Ireland, the Netherlands, Sweden, Denmark, and Germany.

If we look at GDP per hours worked, Canada falls even further to 15th place in the OECD survey, outranked by Norway, Luxembourg, Ireland, the U.S., Belgium, the Netherlands, France, Denmark, Germany, Switzerland, Sweden, Austria, Australia, and well below the G7 average.

4. Big, fat debt. According to the International Monetary Fund, government debt as a percentage of GDP in 2013 put Canada in 13th place amongst the 30 most advanced economies, worse than Austria, the Netherlands, Israel, Germany, Finland, Sweden, Norway, Australia and many others.

5. Too little tech. In terms of exports of technology, 14 countries export more, measured in millions of dollars, than we do.

6. Brain power slippage. Turning to education: in mathematics, reading and science test scores, Canada is in 7th place; not so long ago, we ranked 3rd.

Looking at research workers, 14 countries have more per 1,000 of full-time researchers. One bright spot is found in the percentage of the population that has attained tertiary (higher or post-secondary) education: we're the third highest in the world, suggesting that individual Canadians continue to excel but in a country that is losing its standing in many other areas. Where will our new graduates find meaningful employment in a nation with sluggish growth and diminished prospects?

7. Foresight fail. The Harper government is acting as if the oil price plummet came out of the blue and not even the best economic minds could have prepared for it. Don't believe it.

In 2012, in different times, Andrew Hepburn wrote in Maclean's that our "export deterioration is, amazingly, worse than it may first appear. Unsurprisingly, data from National Bank shows a sharp rise in the value of Canadian energy exports since 2004 alongside the oil boom (these exports are included in the merchandise trade statistics). At the same time, though, net non-energy exports have plunged from approximately $30 billion in 2000 to about negative $60 billion by 2011. That's a swing of roughly $90 billion... the divergent paths of energy and non-energy exports (aside from other commodities) is startling... It is in this context that Canada has recently experienced a vibrant debate about whether the flourishing of the commodity sector is indeed causing other manufacturers to suffer."

And then he asks prophetically, "What happens if resource prices fall significantly from current levels?"

The answer to that question is emerging in early 2015 with a hamstrung government and a postponed budget.

8. Scrooged. The campaigning Harper is likely to claim further cuts to social spending are needed to offset dropping resource revenues. But already, an astonishing 24 OECD countries spend more on social programs than Canada as a percentage of GDP, contrary to the claims of our right-wing commentators.

We have one of the lowest rates of practicing physicians per 1,000 inhabitants and, unbelievably, 28 OECD countries have lower infant mortality rates than Canada.

Finally, then, let's look at our total tax revenue as a percentage of GDP. The myth among Chamber of Commerce types and a few pundits is that we're a high-tax, over-taxed country. In fact, 24 OECD countries have a higher percentage of total tax revenue as a percentage of GDP than does Canada.

Take back the country

Canadians have been hearing Stephen Harper's inflated spin on his government's fiscal track record for years and they will hear it again, repeatedly, in this election year.

Economist Jim Stanford wrote a succinct rebuttal last year in The Globe and Mail:

"Ever since the global meltdown of 2008, it's been an article of faith in Canadian economics that we somehow managed the whole mess better than the rest of the world... Our recession, while painful, was not nearly as bad as America's. Our deficits were smaller, and will disappear sooner. Not surprisingly, there's a strong political aspect to that smug mindset. Federal Conservatives never tire of claiming credit for this supposedly superior performance.

"The argument that Canada outperformed the rest of the world was overstated at the best of times. Even in the early years of recovery several other countries (including Germany, South Korea, Australia) did much better at protecting employment and rebuilding incomes. But with the rest of the world now gaining serious economic momentum, Canada's boastful claims are increasingly far-fetched."

Far from leading, we now lag behind many other countries on significant economic and social indicators, and our relative under-performance is only getting worse. We must take back the country and ensure that we protect our citizens and our values.

Tomorrow, I wrap up by debunking one of Harper's favourite boasts -- that he and his Tories are the best to entrust with the government's balance sheet.  [Tyee]

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