Election 2011: Federal parties MIA on economic vision

The federal election campaign is entering the homestretch and there has been virtually nothing said about fostering productivity, innovation and international competitiveness, says Canada West economist Michael Holden.

April 27, 2011   by MICHAEL HOLDEN

The federal election campaign is entering the homestretch and the battleground is clear: all three of the major national parties are fighting for the support of the seemingly ubiquitous, hard-working, middle-class Canadian family.

The Conservatives are offering a steady hand at the fiscal wheel: a modest series of boutique tax credits and other targeted measures, the centre piece of which is a $2.5-billion income-splitting plan for families with children that will take effect once the deficit has been eliminated. To pay for these and other promises, the Conservatives are counting on as-yet-unspecified cuts to federal program spending.

The Liberals and the NDP have more ambitious plans. Liberal promises include direct assistance for post-secondary students and money for early learning and child care spaces. The NDP is offering a cap on credit card interest rates and lower taxes and hiring incentives for small businesses. Both parties promise assistance for family caregivers, increased financial support for seniors and more money for health care. And both plan to finance their spending promises largely by rolling back planned corporate tax cuts and possibly cancelling the purchase of new F-35 fighter jets.

As much as it is refreshing to see an actual debate on policy direction in Canada, the problem in this campaign is that the broader question – how we as a country are going to generate the wealth we need to afford these types of programs in the long term – is being largely ignored. As it stands now, all three parties are promising little more than a reallocation of existing funds and some tinkering at the margins of economic policy.


The conversation in this campaign needs to be about how to create a more dynamic and prosperous Canada. This goal can only be accomplished by improving on our relatively poor record to date of fostering productivity, innovation and international competitiveness – subjects about which the parties have been virtually silent.

To be sure, some of the promises made in this campaign relate indirectly to this issue. Maintaining a competitive tax environment is important to the economy, as is access to high-quality post-secondary education. But these are half measures, incomplete substitutes for policies directly aimed at improving long-term economic prosperity.

In a rare display of unity, economists from across the ideological spectrum are virtually unanimous about the importance of productivity to achieving this prosperity. A more productive and innovative workforce is more competitive internationally. It’s better able to adapt to changing economic conditions. It commands higher wages. And in the process, it also provides more tax revenues to governments.

Unfortunately, politicians have historically been reluctant even to utter the word “productivity,” lest it be seen as an implicit criticism of Canadians’ present level of effort in the workplace. Either that or there are politicians out there who believe productivity is the silent killer of jobs in this country.

Closely related to the productivity and competitiveness issue, a discussion on foreign economic policy would also be welcome in this campaign. Canada needs a plan to build up its existing economic relationships; to establish itself in new markets; to break down barriers to trade and investment; and to give Canadian companies the tools they need to be competitive in world markets. We live in an integrated global economy. We need a strategy to be successful in that environment.

Sadly, the silence from the federal campaign on this issue has been deafening. Apart from a few small measures contained in the now-dead 2011 Budget, there has been virtually no mention of foreign policy from any of the political parties and even less on international economic policy.

To be fair, this silence is partly because of the nature of election campaigns themselves. In a country where the political perspective can be parochial at the best of times, campaigns bring out the worst in that tendency. And international issues can be a tough sell on the hustings.

What we need is a party with the political courage to look beyond small half measures and offer a vision of how to build Canada into a dynamic, innovative society that is productive and able to compete with the best in the world. Such a society might even be able to afford tax cuts, day care spaces AND fighter jets.

Michael Holden is senior economist with the Calgary-based Canada West Foundation, a non-profit, non-partisan public policy organization focusing on western Canadian perspectives of national issues.

Print this page

Related Stories