Joe Oliver is meeting with his provincial counterparts today. Kevin Page writes that, given Canada's and the world's economic outlook, it's time to ask some tough questions:
Some of these issues cannot be ignored any longer. For instance, will any provincial or territorial finance minister confront Joe Oliver, their federal counterpart, about income stagnation? Data on Human Resources and Social Development Canada’s site shows that median after-tax incomes for all families (or real GDP per capita) has been virtually flat since 2007. Debt feels very heavy when incomes are stagnating.
Or what about income inequality? The New Canadian Income Survey on the Statistics Canada website shows that 4.7 million people or 13.8 per cent of our population lived with low income in 2012 (income less than half of the median of all households). That is a troubling number that should worry all Canadian political leaders.
It's not that our finance ministers lack brains. Page gives credit where credit is due:
Our finance ministers are smart. They know that faster growth is going to require higher investment rates and sustainable public finances. But the reality is that Canada is falling down on capital investments in both the private and public sectors.
That's because the ruling orthodoxy these days dictates that the only way to encourage investment is to cut taxes:
Why do we continue to pursue an approach that stunts growth now and for the future? Is this public sector mismanagement? Or, is this an effort to achieve a balanced budget that allows for spending on current goods or services (for my generation that votes) at the cost of capital goods for future generations (our children and grandchildren that do not yet vote)?
And what about infrastructure spending? Will the ministers confront Oliver about the 2013-14 Public Accounts for Infrastructure Canada, which show the federal government is not getting planned transfers on infrastructure out the door. Last year, $640 million was left unspent on a range of infrastructure programs. What will this mean for future Canadians?
The austerity approach set out in the 2012 federal budget will succeed in generating a balanced budget, but at a cost: slower growth and degraded public services like support for veterans. Meanwhile, the government is responding to its improved fiscal situation not by raising the investment rate, but by cutting taxes further.
Page got into trouble because he questioned the Harper government's orthodoxy. Time has proven, however, that Kevin Page knows a lot more about economics than Stephen Harper does.