Mr. Speaker, I have listened to a number of the speeches given by other members.
As I join this debate, I must note, with some amusement, the positively apocalyptic terms in which my friends across the way have described the kind of country we had between January 2006 and October 19, 2015. I thought we were getting on rather well, but to listen to the way in which our country was described during that period, it is as if we narrowly avoided the introduction of some kind of Hunger Games.
Now to be sure, the odds were not always in our favour, and we did go through a significant global financial crisis. However, our performance, when it comes to growth, and inclusive growth, was very strong. The record needs to be corrected, because a poor understanding of the past can set us up for ineffective efforts to shape the future. Indeed, the game-makers of this budget seem to be proceeding as if we were in an alternate reality.
Over the last 10 years, a Conservative government managed Canada through the worst global recession since the Great Depression. The record is well known. There were no bank failures and no tax hikes. Through these years, we had the best economic growth in the G7, the best job creation record, with 1.3 million net new jobs created, and by far the lowest federal debt-to-GDP ratio at the end of it.
We were able to implement a stimulus program, one that was timely, targeted, and temporary. As well, the government delivered a balanced budget one year ahead of schedule.
Now, although the new government wishes to paint a drab picture of Canadian life over the last 10 years, most of these facts are quite beyond dispute. Instead of disputing them, our friends on the other side have sought to claim that this growth has not been inclusive. However, even on that score, the facts do not add up to their assertions.
Here is what Hillary Clinton said about the Canadian middle class in 2014. I know some Liberals may find her too right wing for their liking, but she is the presumptive Democrat nominee. Secretary Clinton said:
Canadian middle class incomes are now higher than in the United States. They are working fewer hours for more pay, enjoying a stronger safety net, living longer on average, and facing less income inequality.
It is no surprise that even while Donald Trump is modelling his economic policy on Panem, Secretary Clinton is looking to Canada.
There are two principal ways of evaluating the performance of the middle class: median net worth and median income, median being a better measure than average in this case, because it prevents the numbers from being skewed upwards by a small percentage of high performers.
Between 1999 and 2012, the median net worth of Canadian families rose by 78%. That translated to more than 50% growth in net worth for every single income quintile, except the lowest which still grew, though by not as much. This is no district 12.
What about median income? According to analysis from the far-right New York Times, a noted supporter of the previous government, Canada had the richest middle class in the world in 2014. Real, or inflation-adjusted median income, in fact, went up more than 20% since the beginning of the last decade, while real median income in the U.S. remained stagnant.
Tracking real economic changes, as opposed to nominal change, is fundamental to a sound description of the economic picture. Nominal indicators always go up, regardless of other factors, because of inflation. Real figures adjust to look at non-inflationary effects. This rather elementary distinction is important but it is something that the game-makers of budget 2016 seem to have missed, and it seems rathe, intentionally.
I read the whole budget after it came out, even though it was not exactly as gripping as The Hunger Games. I know my colleague from Calgary Shepard suggested nominating this book for the Giller Prize in fiction, but I would respond that even good fiction has to be believable.
It was obvious to me already, on page 11 and 12 of this budget, that there was some active and intentional sleight of hand. On page 11 is a graph purporting to show real median wage income of Canadians from 1976-2015. This particular graph paints a rather positive picture, especially of the last 15 years. Although with an increasing number of Canadians self-employed and doing very well, it is sort of strange that this budget focuses on wage income only, instead of overall income.
Then, on page 12, we have a graph that shows increasing household costs. The increases appear to be alarmingly steep, until we realize that the graph is titled “Nominal Increase in Household Costs, Selected Items”.
Aside from the whole selected items issue, the nominal costs of things always go up because of inflation, which is precisely why economists almost always use real or inflation-adjusted numbers. However, this budget document uses real numbers on page 11 when it is talking about wages, and then nominal numbers on page 12 when it is talking about increasing costs, which I think is a transparent attempt to suggest the illusion that costs have grown faster than wages. This is a trick that might catch a lot of people. However, anyone with training in economics would spot the problem right away. Therefore, however riveting the entire document may be, we only have to get to page 12 to see these efforts as sleight of hand, to see the intentional writing of what is respectfully a bit of fiction.
The budget game-makers clearly felt it was important to obscure the performance of the Canadian middle class. Why? Because those who get the past wrong often find it easier to get the future wrong as a result. When we have a well-performing economy, we need to focus on preserving and playing to our strengths. However, if the economy is doing poorly, then we are in a stronger position to justify a radical shift.
To justify a politically motivated radical shift, the Liberal government had to paint this absurdly drab picture of the last 10 years in an effort to explain its decision to blow up hard-won fiscal gains. For the Liberal government, destroying things is much easier than making them.
During the last election, Donald Sutherland came out as a Keynesian, and therefore a New Democrat supporter. In this respect, he is at least consistent with his character. I am sure Katniss Everdeen is more Hayekian, at least in her skepticism about big government. Sutherland's simultaneous endorsement of Keynesianism and the NDP platform perhaps undercut his point that an American resident could be just as up on Canadian politics. I do not recommend taking political advice from American residents named Donald. However, here is the important point about Keynesian stimulus.
Keynes himself saw this policy as a response to only a particular set of circumstances. He thought the economy could be boosted during a short-term economic downturn if the resulting debt was paid off via surpluses during good years. We stimulate the economy during tough years, we pay off our debts during good years, and we balance our budget over the long term. There is obviously some logic to this, but it does require us to correctly diagnose where the peaks and valleys are. If we outspend our revenue during good years as well as bad years, then we will run out of money fairly quickly.
I think Canadians accept that we can and should run budget deficits at certain times, but only at certain times, and only modestly, because we obviously cannot run deficits in perpetuity. Again, we eventually run out of other people's money. Keynes understood that the right policy becomes the wrong policy in the wrong circumstances. The Liberal government promised to run short-term deficits on the basis of their talked-down version of the Canadian economy. However, that $10 billion projected deficit has ballooned to more than double its projected size. Reading this budget, I imagine Canadian voters feel sort of like Gale did during the Quarter Quell. I might call this a betrayal, but for there to be betrayal, there would have to have been trust first place.
Our children will have to pay the price for this profligate spending. They will be forced to scrounge with less because of the government's capricious fiscal game. They did not volunteer for this.
One of the most important insights of The Hunger Games is that politics becomes pernicious when pageantry is elevated over policy. The Liberal government is all about pageantry, and this budget is all about pageantry. However, it tells a story that simply does not accord with the facts on the ground, not in present-day Canada anyway.
The basic claims about the situation which the budget seeks to confront are incorrect and therefore its proposals for radical new deficit spending are out of step, even with the Keynesian philosophy on which it is supposed to be based. I am sorry to say that there is no philosophy to this, but there is an overabundance of pageantry. When the global economy catches fire, we may not have the cushion to weather the storm the next time around because the odds will not always be in our favour.
