Trust us on the economy, Conservatives plead: Chris Hall

Federal Finance Minister Joe Oliver wants Canadians to take the long view on the economy, that it is going to pick up steam by the end of the year. Trouble is, Chris Hall writes, the country could technically be in recession at the time the election is called.

Canada could technically be in recession by time fall election rolls around

Minister of Finance Joe Oliver prepares to speak at the Canada-China Finance Summit in Toronto on Wednesday, where he reiterated his view that Canada's economy will pick up later in the year. (Darren Calabrese/Canadian Press)

Joe Oliver wants Canadians to take the long view.

The economy will show positive growth over the whole year, the federal finance minister has been saying all this week. Consumers are optimistic. Manufacturers are expecting more robust demand, especially as the U.S. economy picks up steam.

"We're not in a recession," he insisted last week, a statement Oliver softened on Tuesday, telling reporters he's waiting to see more economic indicators before commenting further.

The problem is that most economists are taking a shorter view. The economy didn't grow in the first quarter, it shrank.

It also shrank in April and many observers now predict the Canadian economy will contract over the entire second quarter, meaning Canada will be in a recession by the end of the summer just as the Conservatives ask voters for a fourth straight mandate.

Theirs is a pitch that will be based largely on what the party calls a record of solid economic management over the past decade.

"This is not the time for raising taxes or high-spending," Oliver said in Vancouver on Tuesday, a political shot at the Conservative's rivals that he repeated again in Toronto on Wednesday.

He insisted that only a re-elected Conservative government stands in the way of Canada becoming the North American version of indebted, insolvent Greece.

"The debt crisis in Greece further demonstrates the now, more than ever, we must stay the course with Prime Minister Stephen Harper's plans for jobs and growth."

A different portrait

The Conservatives have spent years warning that global economic instability is "lapping at our shores," and that changing the government's approach, let alone the government itself, would be disastrous.

It is a strategy that worked well in the 2011 election when Canada's economic turnaround was clear, especially compared to other industrialized nations.

Now, the idea of change is emerging as a key election theme and a possible vote driver in October.

The man in the white hat, NDP Leader Tom Mulcair, is promising to ride into town with a new economic agenda. (Jeff McIntosh/Canadian Press)

Both the New Democrats and Liberals are trying to sell voters on the idea that the economy is a failure, rather than the success story painted by the Conservatives.

They're arguing that a different approach is needed.

"We know $15-a-day child care is just one election away," NDP Leader Tom Mulcair said last week. "We know that a fair, $15-an-hour federal minimum wage is just an election way. Canadians are watching that."

Liberal Leader Justin Trudeau would cut taxes for the middle class, and send more child-care benefits to lower-income families.

Both parties are calling for more strategic investments in infrastructure.

Will Bank of Canada intervene again?

There's little question that the economic challenges in the first half of 2015 make the Conservatives' management of the economy a tougher sell than Oliver expected.

Just a few months ago he and the prime minister trumpeted an end to years of budget deficits. They also unveiled the Family Tax Cut, a form of income-splitting for couples with children. Payments for the newly-boosted Universal Child Care Benefit conveniently arrive in just a week or two.

Conservative MPs, too, are ready to announce a new round of community infrastructure spending.

All these things are carefully positioned, heading into an election, to tell Canadians that they are reaping the benefits of the Conservatives' handling of the public purse.

But oil prices plummeted and remain low. Energy companies delayed or canceled work in Alberta, Saskatchewan and Newfoundland. Jobs were shed in the most important sector of the economy, and the impact didn't stop there.

Retail and manufacturing show continuing signs of weakness. Unemployment, while better, remains stubbornly high.

Add these numbers up and they subtract from the Conservatives' fiscal management brand for the 2015 campaign.

Canada's GDP fell in each of the first four months of 2015. Factory sales declined in three of the past four months.

And this week Statistics Canada reported Canada's trade deficit grew to $3.4 billion, prompting a new round of speculation that Bank of Canada Governor Stephen Poloz will need to perform more "life-saving surgery'' next week by lowering the bank's key lending rate for a second time this year.

Liberal Leader Justin Trudeau, shown here receiving a gift of sweetgrass and a canoe from Assembly of First Nations National Chief Perry Bellegarde, is also unimpressed with Conservative tax policies. (Ryan Remiorz/Canadian Press)

Even so, Oliver remains confident of better news beckoning somewhere in the distance.

He blames the country's current economic woes on factors outside Canada's control: the eurozone crisis precipitated by Greece. Low oil prices. Slower than expected growth in the U.S.

He maintains the Conservatives' low-tax and low-spending plan will inject billions of dollars back into the economy.

"Virtually all the economists I talk to see positive growth for the Canadian economy for the year overall,'' he said Tuesday in Vancouver.

So Oliver's sticking with the long view, telling voters better days are ahead, even if they come after October's election.


Chris Hall

National Affairs Editor

Chris Hall is the CBC's National Affairs Editor and host of The House on CBC Radio, based in the Parliamentary Bureau in Ottawa. He began his reporting career with the Ottawa Citizen, before moving to CBC Radio in 1992, where he worked as a national radio reporter in Toronto, Halifax and St. John's. He returned to Ottawa and the Hill in 1998. Follow him on Twitter: @chrishallcbc


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