To Be Credible Poilievre Needs A Complete Restart On Economic Issues
Posted October 7, 2022
There is a long history in Canada of politicians saying one thing during campaigns and doing the opposite when elected. This has sometimes been true of Conservatives but has been more the province of Liberals in recent decades.
In 1974 inflation was getting out of control. The Conservatives under Robert Stanfield proposed a 90-day wage and price freeze. Pierre Trudeau ridiculed that as an impractical intervention into employer-employee negotiations with the catchy phrase “Zap! You’re frozen.”
That was a big factor in Trudeau’s ensuing majority government. Inflation at double digit levels continued into 1975, and Trudeau introduced his own wage and price control system, which had a modest and temporary impact. The inflation was eventually tamed by the Bank of Canada causing a brutal escalation of interest rates.
A comprehensive goods and services tax was introduced in the late years of the Mulroney government. It was controversial and opposed by the Liberals. They won a landslide victory in 1993 under Jean Chretien and then found a way to like and preserve the tax. Chretien and finance minister Paul Martin slashed a $43 billion deficit and produced five consecutive years of surplus.
Military procurement is a favourite whipping post. In 2015 Justin Trudeau promised to exclude Lockheed Martin’s F-35 from the competition to replace the CF-18 fighter plane. More recently they were admitted to the competition and this year were awarded the $19 billion contract.
Trudeau’s list of unfulfilled promises is lengthy (“This will be the last election using first past the post voting”, “We will have a balanced budget at the end of the mandate”, “We will fully implement the Calls to Action of the Truth and Reconciliation Commission, starting with the implementation of the United Nations Declaration on the Rights of Indigenous Peoples”, “We will not prorogue parliament to avoid scrutiny,” “We will help cut the cost of cell and wireless services by 25 per cent”, and many more), perhaps one of the reasons that Canadians are weary of him.
That should be a golden opportunity for the Conservatives, but new leader Pierre Poilievre has accumulated baggage that he needs to drop before the election happens.
Poilievre is an aggressive and able campaigner both in person and via social media. He is not a social conservative and has not felt compelled to cater to that constituency. His focus on smaller government is a clear change from years of Liberal largesse.
But Poilievre has looked out of his depth on economics. In early spring he staged an event for the press about cryptocurrencies. To make his point he paid for his lunch with some bitcoin, explaining that this was a way to “opt out of inflation,” which is entirely false.
Apart from that, the value of bitcoin and other cryptocurrencies have dropped by more than fifty percent since then. This topic has disappeared from Poilievre’s repertoire, and it is a safe bet that it will not appear in the Conservative platform. It will still endure as an embarrassment.
Next up was the Governor of the Bank of Canada. On May 11th Poilievre said he would remove Bank of Canada Governor Tiff Macklem if he forms government. He argued that by pumping liquidity into the economy Macklem made it possible for Trudeau to run big deficits. That is incorrect. Governments have often run big deficits when there was no quantitative easing by the central banks.
Perhaps more important, the proposal violates the independence of the bank. To understand what kind of a mess happens when politicians run the central bank, consider Argentina, whose currency is worth more than 30% less than a year ago, or Turkey, down more than 50%. This kind of comment can erode external confidence in Canada. Time to go silent on that one, too.
In September, Poilievre called for the government to forego scheduled increases in Canada Pension Plan payments. The CPP is entirely self-funding. Those payments are not taxes. They provide the funds needed to fund future pensions. Whatever payment is not made up will have to be repaid with interest in later years. Otherwise, benefit levels will have to be reduced, which the Liberals will pounce on.
Poilievre is skilled in the use of social media, both for attracting crowds to events and for staking out distinctive policy positions. Perhaps this works well with his base in the Twitterverse. But he is providing ammunition for the Liberals to make him look clueless on financial matters.
The struggles people are having with the spike in inflation, to which Trudeau’s excessive stimulative spending was a contributor, are a legitimate target for opposition politicians. Poilievre needs to distance himself from his gaffs and stake out positions that provide a credible alternative to Liberal policies.