Canadians Better Off, Even If They Don’t Feel It

Comment – Politics aside, we are coming off of the worst economic recession of our lifetimes. Numbers below show us back to where we were before the recession started. Governments debt loads are supposed to be high, government spending was supposed to kick in to keep us going – and it did.

Canadians Better Off, Even If They Don’t Feel It

John Ivison, National Post ·

Jan. 23 marks the fifth anniversary of Stephen Harper’s 2006 election victory and in early February, he will pass Lester B. Pearson’s time in office to become Canada’s 11th longest-serving prime minister. As Mr. Harper told Postmedia News this week, it has been a roller-coaster ride: “Some days it feels like five months, and other days it seems like 50 years.”

The five-year milestone has presented the Liberal leader, Michael Ignatieff, with his latest electoral gambit — to ask middle-class Canadian families whether they are better off after half a decade of the Harper government?

In fact, by almost every pocketbook metric, Canadian families are better off than they were five years ago –even if they don’t feel it.

The new strategy emerged from research carried out by the Liberals’ pollster, Michael Marzolini, as part of his firm Pollara’s annual nationwide poll of Canadians’ personal financial expectations. He found a new sense of caution and retrenchment, after optimistic expectations for 2010 were not met.

According to the Pollara poll, middle-class Canadians feel themselves under siege, with four in 10 claiming their incomes are failing to keep pace with the cost of living. They are anxious about their retirement, family debt and the value of their investments. Many Canadians believe every step forward they make is being hampered by assaults on their incomes such as new taxes and user fees. Ominously for the government, they appear less than impressed about claims Canada is doing better than its international competitors — the economy may be improving but they feel their own situation is not.

Mr. Ignatieff has leapt on the survey’s findings on his current 20-event, 11-ridings winter tour, making the claim that Canadians are worse off and the economy is weaker.

He is gambling that voters look at their own situation and calculate whether they have done well over the past five years. If the answer is yes, they will vote for the party they voted for before but, if not, he hopes they can be persuaded to switch.

Mr. Ignatieff’s central contention is that Canadians’ standard of living — as measured by GDP per person–has fallen 1.3% since the Harper government came to power.

The only problem with this for the Liberal leader is that it isn’t true — real GDP per capita did fall between 2005 and 2009, the trough of the recession, but has since recovered. If you annualize the first three quarters of 2010, the numbers show real GDP per capita is up

0.2% over the 2005 figure.

Other indicators are similarly positive.

Average hourly wages have outpaced inflation, especially for men, who now earn $4 an hour more than they did at the end of 2005.

The fiscal and monetary response to the recession has created one very real problem identified by Mr. Ignatieff — an extremely high level of indebtedness. Encouraged by cheap interest rates, Canadians now owe $1.50 for every dollar of disposable income, up from $1.08 in 2006.

Yet, national net worth per capita, which measures the health of assets like homes and investments, stood at a record high of $179,000 in the third quarter of 2010, up from $155,000 five years ago. Even at the bottom end of the socioeconomic ladder, the number of children living in low-income families fell by 250,000 between 2003 and 2008.

Retirement income is another leading concern raised by the Liberals but many more Canadians are now members of registered retirement plans than in 2005.

And the feeling that the tax burden is growing is also illusory, at least according to the Fraser Institute’s Tax Freedom Day, the day on which the average Canadian family has earned enough money to pay all taxes imposed on them by three layers of government. It advanced to June 5 in 2010, from June 23 in 2005.

These bald statistics don’t tell the whole story, of course. In the intervening years, there was a painful recession that saw unemployment spike at 8.7% in August 2009 (it is now sitting at 7.6%, still higher than the 6.8% in 2005).

Canadians remain anxious. According to Mr. Marzolini’s research, two-thirds of the population thinks we’re still in recession.

Yet, crucially, voters do not seem to blame the federal government, perhaps accepting that, if things are not noticeably better than they were five years ago, they could have been immeasurably worse.

Non-Conservatives can claim with some justification that the Harper government’s record of achievement is pretty penny ante when compared with other five-year-old administrations.

But the picture improves when you consider what didn’t happen. Mr. Harper is an incrementalist who agrees with Canada’s longest-serving prime minister, William Lyon Mackenzie King, that “it’s what we prevent, rather than what we do, that counts in government.”

The pressures of power have forced Mr. Harper, by his own admission, to make compromises he never thought he would have to make. “We spent the first three years of our government in a situation where people were saying, ‘Why don’t you take more risks? Why don’t you make more grandiose commitments? Why don’t you have a bigger more ambitious agenda on anything?’ And then all of a sudden, we’re spending the next two years dealing with a crash in the global economy and trying to operate a situation where we’re trying to protect what everybody has. So things just change constantly and you do have to be adaptable,” he told Postmedia’s Mark Kennedy this week.

There appears to be some appreciation that the Conservatives have provided solid, if stolid, government through the recession.

An Ipsos Reid poll before Christmas suggested six in 10 Canadians believe the political process is operating well and there is no need for an election. They may not vote Conservative, but they are not so disgruntled they are demanding change — at least not to the extent they have coalesced around Mr. Ignatieff or any of the other opposition leaders. This bodes well for Mr. Harper, sincegovernmentstraditionally find themselves in real trouble when the time-for-change number rises above 60%.

“Every election comes down to that — continuity or change,” said Darrell Bricker, president of Ipsos Public Affairs. “Mr. Ignatieff is trying to increase the desire for change that is a pre-condition [for a Liberal government]. But Canadians are not overwhelmingly concerned about the economy and even if they become more concerned, his opponent is leading him on the issue by 20 points.”

The Liberals insist that stress about the future has created enough volatility to give them a fighting chance. “Perceived reality is often a self-fulfilling prophesy,” said Mr. Marzolini, the Liberal pollster, as he unveiled his New Year’s poll to the Economic Club of Canada.

Mr. Ignatieff had best hope so, otherwise Mr. Harper will pass both R.B. Bennett (five years and 77 days) and John Diefenbaker (five years and 305 days) to become Canada’s ninth-longest serving prime minister before the end of this year.