Campaigning as a New Democrat in Toronto, Peggy Nash remembers questions about her party’s economic policies and promises. And they were pretty routine, even what would happen to the federal deficit.

But that was under normal circumstances.

Nash, now a distinguished visiting professor at Toronto’s Ryerson University, believes the conversation about the economy during this campaign will change because “no one really knows how things will play out.”

The economy has been on a roller coaster ride since a historic downturn in March and April 2020 when businesses closed and workers were ordered to stay home to limit the spread of COVID-19. Since then, the rally has seen setbacks, but the recovery is finally expected to pick up steam during the second half of 2021.

Experts say that when the economy is good or is perceived to be heading in the right direction, voters are inclined to reward the incumbent government. If voters feel otherwise, they are inclined to punish the incumbent.

Perceptions of the economy boil down to what people see in their everyday lives, such as whether businesses in their community are opening or closing, and how their peers are doing financially, and their uncertainty now about the future.

“People may think, ‘Well, it looks like it’s getting better. But I don’t know for how long and there are a lot of things we don’t know, ”said Melanee Thomas, associate professor of political science at the University of Calgary.

“Like all problems, these individual-level perceptions of the economy will move individual voters quite a bit, but they don’t necessarily influence the overall election outcome.”

So liberals may not be able to convince enough voters to give them a majority based on goodwill from past actions, said Elliot Hughes, senior adviser at Summa Strategies. Instead, they and other parties must articulate economic policies in a tangible way so that Canadians can see what the future might look like.

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“It is difficult to plan what a future economy should be and what shape it should take as you are still struggling through some troubled waters due to COVID,” said Hughes, a former adviser to former finance minister Bill Morneau.

“The election will be an interesting opportunity to see what kind of future economy each of the different parties wants Canada to have as it rebuilds.”

There are some topics that experts say parties may want to talk about, including increasing productivity to lower the cost of producing goods, and which would also mean Canadians might not need to work longer hours on average to achieve high incomes. relative to their peers. countries.

There is also a labor shortage for some in-demand jobs, such as tech experts, as highlighted in a recent Bank of Canada business survey, and workforce concerns for those who have been out of work for a year. or more, as well as women. newcomers and young people who have suffered the brunt of job losses.

On the first full day of the campaign, Liberals walked out of the gates promising to extend aid to help create jobs, Conservatives presented their entire platform with a similar focus on recovering lost jobs, and New Democrats outlined a plan to Invest in social services by recovering federal aid paid to businesses that may not have needed it.

The Liberals ran a historic $ 354.2 billion deficit last year to combat economic pain for businesses and workers, and committed billions in new spending for years to come as part of their recovery plan to get it all back. the lost. Deficits seem to be on the menu for the foreseeable future, as even the Conservatives don’t promise a balanced budget for about a decade.

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“The pandemic shattered the myth that ‘the government can’t’ because it can’t spend money,” said Nash, who served as the NDP’s financial critic while in opposition. “Suddenly we saw that ‘the government can’ and they did.”

The most recent Parliamentary Budget Officer analysis of the long-term prospects for federal spending estimated that the government could increase spending or cut taxes by about $ 18 billion over the next several decades and keep federal debt at about 37 billion. , 7 percent of the overall economy.

A paper in late July from the CD Howe Institute suggested otherwise, predicting that the debt-to-GDP ratio, as it is known, will rise as economic growth is likely to lag behind the spring budget outlook. Overall, the authors cautioned that there is little room for new spending in the future.

“There is a decision that society and therefore governments must make: who should pay for COVID relief?” said Don Drummond, a former senior Finance Department official who co-wrote the report.

There is a limit to the amount of taxes Canadians are willing to pay, said Roslyn Kunin, a former British Columbia regional economist for the federal government. The government’s revenue ceiling also means that the Treasury could struggle to cover debt payments in the future, he said.

“If a larger proportion of our tax dollars goes away now, or we have to pay off government debt instead of providing ourselves with the goods and services that we would like from our government, that is not a stable situation,” Kunin said. Director of Roslyn Kunin and Associates.

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