Within a couple of hours of Andrew Scheer delivering a key speech on economic policy last week, Finance Minister Bill Morneau popped up on Twitter and Facebook with a highly scripted critique of the plan — complete with the requisite students forming a human backdrop behind him.
An ad by any other name, the two-minute clip was ostensibly a response to a reporter’s question about Scheer’s proposal to end oil imports. Journalists had been invited to question the minister for his reaction to Scheer, although Morneau’s response did not make a single mention of oil imports.
Rather, Morneau sought to obfuscate.
The Conservatives, he said, would have to chop $55 billion out of the federal budget in order to keep all their promises. Scheer would cause the economy to shrink, kill jobs and cut programs. According to a Liberal party press release, he would likely hit seniors, students and rural Canadians.
Scheer has been a good match for the obfuscation. In his speech, even before he got to the new ideas that will form the basis of his election platform, he took repeated aim at the Liberals. Under Trudeau, he said, the government has raised taxes on the middle class, is spending recklessly and has squandered all the good things left to Canada by the previous Conservative government.
For a degree of clarity in the midst of pre-election posturing, the International Monetary Fund came out with a fairly independent assessment of Canada’s economy on Tuesday morning. In its annual summary of Canada’s fiscal policy, the IMF says Canada’s economy — and the management of it — is basically fine right now, as it was under the Conservatives before.
Growth is solid and business confidence is returning now that the new NAFTA as been negotiated. Financial institutions are robust, and our taxation levels make us competitive enough.
There are, however, some risks that need to be better managed.
For the housing market, all levels of government have taken measures to ensure the bubbles don’t burst, and the IMF says they are generally working. But don’t let up, the IMF says, regardless of public pressure. (On that front, the Liberals have ignored pleas to soften the stress test for home buyers, but Scheer said last week that he would reconsider.)
On debts and deficits, the IMF has no complaint about the federal path although it chastises Ottawa for having no clear fiscal goal. (Scheer has said he would balance the budget but the path to get there is very unclear. Trudeau has said that he would keep the debt burden on a downward track). The fund’s main concern is for the provinces, where any fiscal windfalls should be put towards paying down debt and gradual moves made towards balanced budgets by first carefully determining what is causing the imbalance in the first place.
And slow growth is stubborn. The Canadian economy is not really capable of growing quickly at this point, and one of the culprits is provincial trade barriers. The IMF figures that removal of those barriers would raise the gross domestic product by a whopping 4 per cent. It’s a perennial challenge.
Where the IMF doesn’t go is into the inner workings of the Canadian economy — the gap between the rich and the poor, the ability of millennials to make their way, the anxiety about future prosperity that plagues the middle class.
And that’s where the two parties have a chance to make a difference — if they can move past their obfuscating.
They are both keenly sensitive to voters’ anxiety and are edging towards competing proposals to address it. For the Conservatives, it means smaller government that allows individuals and the private sector more leeway to control their economic destiny. The Liberals are more interventionist, aiming to solidify the social safety net, enhance skills and training for the workforce of the future, and bolster business where they see opportunity.
But whether either party could implement their vision and still receive the blessings of the IMF is another question.
Scheer’s path to balance could well be rapid, which implies serious cuts to services even if government spending is reined in and rises at a low pace. That’s because so many big programs in government have fixed costs or are tied to inflation.
And Trudeau’s path risks placing bets on the wrong winner, or integrating government benefits into people’s lives at an unsustainable pace just as an aging population demands more and more.
Rather than obfuscation, voters would benefit from a clear choice.
Heather Scoffield is an economics columnist based in Ottawa. Follow her on Twitter: @hscoffield