Economic management draws failing grade from observers

Harper has repeatedly choosen politics over sound management - retired Finance official.

by Ish Theilheimer

OTTAWA, January 9, 2009, HarperIndex.ca: Stephen Harper says Canadians should trust him to lead Canada through hard times for his economic competence. His claim, observers say, is contradicted by his record as prime minister.

The list of concerns includes day-to-day management issues like forgoing $36 million in late penalty fees connected to helicopters purchases, or disposal of crown assets at fire sale prices.

It also includes fundamental concerns that, for Harper, politics trumps management and competence. His lateness in recognizing the extent of the financial crisis, the November economic update with its hard-to-swallow predictions of budget surpluses, and inconsistent public pronouncements from him and finance minister Jim Flaherty, should be setting off alarm bells, according to a retired senior executive at Finance Canada.

Economist Mike McCracken of Informetrica hooted at the notion that Harper has shown any economic prowess "in spite of the fact he has a graduate degree in economics. You could be a fishmonger and put yourself forward as a strong economist too."

"Look at what you have here," McCracken told HarperIndex.ca in a phone interview. "You have an economy in a recession, and the actions [detailed] in the economic statement were to make it worse." He fears that the upcoming budget will have little of the kind of stimulus and investment needed to get Canada through a big downturn.

"Whatever we get will be reluctantly given," said McCracken. "It appears he wants to do the least he possibly has to so he can hold onto power. Fortunately for him he has a Liberal leader who doesn't want to do anything, so I suspect he will be able to triumph again. I don't think the Canadian public will be well served."

McCracken says that instead of managing the economy, Harper "has been focused on a strategic view that what he wants to do is cut taxes, hamper future governments, downsize governments, and essentially get out of as many areas of government as he can. It's very much a Conservative orthodoxy that government has no role in the economy," and Harper is doing all he can "to cause it to be the case."

"For a guy who claims to be an economist, he's been pretty disappointing," said a former senior executive at Finance Canada, who spoke to HarperIndex.ca on condition of anonymity. "Up to now, I would have to give him a failing grade," on economic management. "Harper has put politics ahead of sound management for quite some time."

The former Finance executive is worried about how Harper has changed tone on the economy from month to month since October. "I'm worried about this budget," he said. "Are they going to pull another economic statement or come clean? Coming clean would involve quite a sea change." He fears the Conservatives will bring in a harsh budget the opposition parties will be forced to vote down, in hopes of provoking an election.

He says Harper's record is, at best, mixed. "With respect to the Harper government, on the fiscal side, what they introduced in their budgets, there were not a lot of things that were economy-enhancing." While supporting some of Harper's income tax cuts, he criticized the GST cut, which deprived the government "of money that should have gone to addressing structural issues, rather than a ploy to get votes."

The Harper government introduced "boutique tax measures for political reasons rather than good economic reasons," citing the fitness tax credit and transit tax credits as political give-aways that helped those who don't need help at the expense of the broad masses who don't have access to fitness activities or transit, for instance. "There was a lot of money that they wasted... to try to get elected."

Harper, he said, is caught in a bind that is affecting how candid he is willing to be with Canadians about the economic situation. "The last thing a Conservative government wants to do is be the first to run a deficit after nine consecutive surpluses. They're supposed to have that reputation as sound fiscal managers."

"They tried to hide the reality of the seriousnsess of the situation," which is what led to the November economic statement. "They came out with numbers that were not credible at all," partly as a result of relying too heavily on private-sector forecasters in preference to the government's own experts. "That economic statement was a major disappointment. It lacked all credibility."

The statement referred to revenue that would be generated by the sale of assets. "I don't believe those numbers at all," said the former Finance executive, saying they weren't based on any kind of plan."

Related individuals, organizations and significant events
Fiscal update shows there is no new Harper
Privatizing federal buildings a "sweet deal" for new owners

Harper Conservative vs. Public Values Frame
  Competent manager / Politics trumps economy
  Making government incapable of helping / Public leadership

Links and sources
  Ottawa backtracks on penalties as maritime helicopter deadline missed, David Pugliese, Canwest News Service, December 28, 2008
  Harper's economic record, CUPE
  DND projects worth billions lack oversight, Ottawa Citizen, January 12, 2009

Posted: January 09, 2009

Harper Index (HarperIndex.ca) is a project of the Golden Lake Institute and the online publication StraightGoods.ca