OTTAWA—A string of negative economic reports should jolt Prime Minister Stephen Harper out of his complacent approach to managing the economy, said Deputy Liberal Leader Ralph Goodale today.
“With the IMF downgrading growth forecasts in emerging economies like China and India, and the Bank of Canada reducing its growth forecast for Canada, it is clear that conditions have deteriorated since the Budget,” said Mr. Goodale. “If Mr. Harper does not pull his head out of the sand, Canada’s mediocre economic performance, a nationwide skills and training shortage, and rising household debt could spell serious trouble for hard-pressed middle-class families.”
The Bank of Canada report shows that with the second worst export performance in the OECD, Canada continues to rely primarily on domestic demand for its growth. And with the government implementing an austerity budget, domestic demand is being driven largely by consumer spending—a lot of it on borrowed money. Since Stephen Harper became Prime Minister, household debt has grown 59% an increase of over $600 billion. Yesterday, a report from the Canadian Institute of Chartered Accountants showed that nearly half of Canadians would be challenged to keep up with mortgage and debt payments following a significant interest rate hike.
“Stephen Harper’s plan for economic growth is for the government contribution to be negative while hoping that Canadian families will continue to borrow and spend in order to fill that hole,” said Goodale. “The government’s hands-off approach is putting increased pressure on Canadian families at a time when the Bank of Canada says household debt is the greatest threat to our economy. Mr. Harper must address the untenable situation he has created.”
Mr. Goodale called for a more balanced, inclusive and collaborative approach engaging provincial and territorial governments, with less federal unilateralism and less off-loading. He criticized the Conservatives for arbitrarily restricting Canadians’ access to Employment Insurance, which diminishes EI’s usefulness as an “automatic economic stabilizer,” and he attacked ongoing increases in EI premiums which are tantamount to an escalating tax on jobs.
Mr. Goodale also called for employment incentives aimed specifically at the hiring of students and youth, better access to post-secondary education and skills-training, a stronger commitment to support basic research and simplification of Canada’s tax code, which is one of the leading priorities of the Canadian Chamber of Commerce.