By Matthew Lau
The federal election is shaping up to be about many things: silly subsidies for camping trips, climate change protests, and Justin Trudeau’s misbehaviour during his days as a schoolteacher, to name a few. But if the most important issue to voters is the economy, then one thing is for certain: the Liberals deserve to lose.
During Stephen Harper’s decade as prime minister, Canada’s real GDP per capita growth tracked closely with the United States. Not so, unfortunately for Canadians, under Justin Trudeau. From 2015-Q3 to 2019-Q2, real GDP per capita increased only 2.7 per cent in Canada, compared with 6.3 per cent in the United States.
Even the Liberals themselves tacitly concede that the economy has not performed well on their watch. One of their campaign announcements promising to “make life more affordable for Canadian families” noted that “middle-class families are feeling stretched. Taxes, fees, and bills pile up while wages are not keeping up.” The Liberals have no one to blame for this but themselves.
Some might argue that they were dealt a bad hand, as the Canadian economy began slowing down in 2015-Q1 following the oil price drop in late 2014. But this is a poor excuse. The price of oil has been recovering since 2016-Q1, shortly after the Liberals took office, and the divergence in economic growth between the United States and Canada has been most pronounced since 2017-Q2.
For all the griping in progressive circles about Donald Trump’s policies, Trudeau’s economic agenda has been far worse and is one of the main reasons that the Canadian economy has underperformed for the past few years.
To be sure, Trump’s policies are no model of sound economics. Government spending is far too high, Trump’s restrictive approach to immigration is harmful, and his trade policies are disastrous. But these errors have at least been offset by some economically beneficial measures, including a significant corporate tax cut and a decrease in the growth of federal regulation.
By contrast, Trudeau’s economic policies are almost uniformly bad. While the Liberals complain of taxes piling up, they were the ones who added the carbon tax, made the payroll tax more expensive, pushed the top marginal income tax rate four percentage points higher, eliminated the income-splitting tax credit, and raised taxes on small business investments — with little in the way of compensating tax relief except a small reduction of 1.5 percentage points to the second-lowest income tax bracket.
On top of these tax hikes, the Liberals also piled on an additional $75 billion or so in deferred taxes: that is, the increase in public debt for which they are responsible so far and which will show up in future tax bills. The Liberals layered bad regulatory policy on top of their bad fiscal policy, most notably with environmental regulations impeding natural resource development.
The economic damage done by the Liberals was exacerbated by similarly bad policies under Alberta’s former NDP government. Higher taxes and stricter labour regulations, including a significant minimum wage hike, were key planks in the NDP’s anti-business agenda, which ultimately ended up hurting workers.
The evidence of all this is not only in the GDP growth statistics, but also in the business investment numbers. According to a recent study from the C.D. Howe Institute, from 2015 to 2019 business investment per worker grew by only five per cent in Canada, compared with 19 per cent in the United States and 15 per cent in OECD countries with comparable data.
The full Liberal platform brings more of the same interventionist policies that have stunted economic growth and business investment for four years. Canadians whose ballot question is the economy ought to look elsewhere.
Matthew Lau is a Toronto writer.
