There’s a strong possibility that a federal election will be held this fall, and if so you can bet on it that candidates will try their very hardest to avoid the elephant in the room: the state of Canada’s economy.
During the 1993 federal election campaign, Progressive Conservative leader Kim Campbell infamously told a reporter that “an election is no time to discuss serious issues,” and she was castigated for it. Ironically, Campbell was being candid about how political parties treat elections. They do not want to take deep dives into complicated and important issues during a campaign period. They want to keep the subject matter short, basic, and feel-good in order to foster goodwill with voters. The electorate didn’t appreciate Campbell’s honesty and it was considered one of the worst campaign gaffes in Canadian electoral history. Voters often don’t like hard truths.
While the COVID-19 pandemic appears to be finally fading into the rear-view mirror, an economic catastrophe is approaching us. Lockdowns and restrictions have wreaked havoc on our economy. It is going to take some solid, targeted economic planning to pull us out of this hole. We will need to demand that our elected officials offer real policies rather than platitudes in the next election even if neither the electorate nor the candidates want to talk about it.
Unemployment in Canada remains high. Governments at all levels have been increasing spending in an effort to address this, but it has only led to an unsustainable imbalance between public sector and private sector jobs. According to the Canadian Taxpayers Federation, 520,400 jobs were lost in the private sector during the pandemic while 180,000 government jobs were gained.
Taxation and regulation need to be reduced in order to let the private sector recover from the pandemic. This will be impossible to do if we have an ever-growing bureaucracy consuming tax dollars that are no longer coming in. Politicians will keep up the spending as long as we keep demanding it, and it is going to lead to a terrible crash.
The federal debt has now surpassed a staggering one trillion dollars. The burden of that debt will take generations to reduce—if we ever actually get to the point of surplus budgets again. In carrying such a massive public debt, inflation is inevitable. As inflation rises, the central bank will be pressured to raise interest rates. This will lead to increases in the cost of living for all Canadians, and it will push many businesses and individuals into insolvency.
The crunch of inflation is already being felt as fuel and food prices rise. According to Canada’s Food Price Report 2021, families could be paying as much as $695 more for food in 2021 compared to last year. Rents and mortgages will rise as interest rates climb, while energy costs add to monthly bills. The situation looks bleak for people on low or fixed incomes.
Small businesses have taken on massive debt as they tried to weather the pandemic challenges. According to a Canadian Federation of Independent Business report released in February, 7 in 10 small business owners have taken on debt due to COVID-19, with the average now reaching almost $170,000 per business. Businesses don’t need more loans; they need economic recovery. Canada’s small businesses employ millions of people, and we can’t afford to let them fail.
Our economic future does not have to be all doom and gloom. Many sectors are prime for recovery if the government would simply get out of the way. World demand for petrochemical products is rising and Canada would be well placed to benefit from that if we could only stop hindering our export capabilities with pipeline blockages and tanker bans. The inflation rate can be kept under control if spending can be brought under control. The hard part is finding the political will to do these things.
Politicians never listen more closely to the people than during election campaigns. If we speak up and demand fiscal restraint, they will respond. The responsibility is ours, however. We can’t let candidates woo us with platitudes and spending promises. Hard economic truths must be faced and we have to make our elected officials face those truths. An election can be the ideal time to discuss important issues, but it is on us to make this happen. We can’t afford to let the economy be forgotten in the next campaign.
