Forget the Senate scandal — it’s the economy, stupid: Walkom

The Senate scandal is great sport. It shows Stephen Harper’s governing Conservatives at their worst. It has even forced Canada’s notoriously aloof prime minister to explain himself on talk radio.

While Sen. Mike Duffy’s revelations and allegations may be self-serving, they have also cast light on the squalid mÉlange of deal-making, betrayal and bullying that characterizes politics at the highest level of government.

But in the end, this is a sideshow. When Harper says it’s the economy that matters to voters, he is correct.

What the prime minister doesn’t say — and what the fuss over the Senate obscures — is that the economy is not doing well.

The Great Recession is now five years old. There is no end in sight. Even the Bank of Canada is pessimistic. Central bank chief Stephen Poloz says he now thinks the economy won’t rebound until late 2015.

In practical terms, the Great Recession has affected almost everyone. Many, particularly in manufacturing, lost good jobs. Young people find it hard to get work that pays a living wage.

Jobs have been created. But, as Statistics Canada noted recently, this job growth has barely kept pace with population.

Too many of the new jobs are part time. Too many Canadians have simply given up looking for work.

The government has given business tax breaks to create jobs. The central bank has kept interest rates low in an effort to persuade corporations to invest.

Yet as the Bank of Canada admitted in its most recent monetary policy report, the game hasn’t worked. Businesses, quite rationally, don’t want to expand until they can be sure that they will be able to sell what they produce.

But to whom can they sell? The U.S. is in its own funk. Canadian consumers don’t have the cash. For a while, the central bank says, many consumers lived on credit. Now they are beginning to wind down their debts.

Federal Finance Minister Jim Flaherty brags that the federal deficit is coming down more quickly than expected. This should be good news. It is not.

If Ottawa’s fiscal shortfall were declining because the economy (and hence tax revenues) were stronger, the government would be right to crow. But that’s not the reason. The reason why the deficit is falling is that Ottawa is spending almost $5 billion less this year than Parliament told it to spend.

Exactly where these cutbacks have occurred is unclear. Even the watchdog Parliamentary Budget Office can’t figure it out. But Ottawa does provide a host of services that Canadians rely on, from meat inspection to sewer construction.

More to the point, excessive government cutbacks in mid-slump can sandbag the overall economy. That’s the lesson from Europe’s ill-considered flirtation with fiscal austerity.

The Conservatives insist that the economy is their strong suit. And for a while it was. In 2011, voters bought Harper’s pitch.

But voter patience can last only so long. For too many Canadians, life is not improving. Income gaps are becoming more blatant. Wages are sluggish. Students are taking on massive debts to prepare themselves for jobs that, in the end, fail to materialize.

Those lucky enough to have jobs — even good jobs — too often find their work being sent offshore to low-wage countries.

Other Canadians find themselves in competition with the tens of thousands of temporary foreign workers let in by Ottawa.

Latest immigration department figures show that, to date, more temporary foreign workers entered the country in 2013 than during the same period of 2012 — itself a record year for importing cheap labour.

These are the things that should worry Harper.

True, the Senate affair is juicy. The cover-ups in this affair do resemble those that characterized Richard Nixon’s Watergate scandal of the 1970s.

Yet the other elements of Watergate that combined to bring that U.S. president down do not exist in Canada — a legislature independent of the executive, a formal mechanism for impeachment, a secret White House taping system that dutifully recorded Nixon’s personal involvement in an illegal act.

Barring the unlikely possibility of a party revolt, Harper will almost certainly survive the Senate scandal. But can he survive the economy?

The Conservatives insist the economy is their strong suit. And for a while it was. In 2011, voters bought Stephen Harper’s pitch. But voter patience can last only so long. For too many Canadians, life is not improving, writes Thomas Walkom.