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Worse off after five years of Harper? Depends how you slice the numbers

Michael Ignatieff wants Canadians to ask themselves if they're better off after five years of Stephen Harper at the helm.

The answer — despite Liberal assertions that Canadians are worse off now — is far from clear-cut, analysts say.

At the heart of Michael Ignatieff's attempt to frame the deciding issue for the next federal election is the statement that "Canadians' standard of living has fallen 1.3 per cent since the Harper government came to power."

It's the backbone of an 11-page campaign-style pamphlet released by Ignatieff's team recently, meant to question Prime Minister Harper's legacy after five years in power.

Close watchers of the numbers behind standard of living, however, say the calculations are a bit of a stretch.

"The Liberals' documents assert that the living standards of Canadians have declined over the 2005-2009 period. This is misleading," says Andrew Sharpe, executive director of the Ottawa-based Centre for the Study of Living Standards.

The Liberals base their calculations on gross domestic product — how much goods and services the country is producing — per person. And using that measure, it's accurate to say the standard of living in 2009 was lower than in 2005, Sharpe says.

But 2009 was Canada's worst year in a long time. 2010 was significantly better, and the economy made up all the ground it lost during the global recession that ravaged Canada's economy in 2009 and then some, he figures.

While final GDP numbers for 2010 are not yet available, many of its components are. Sharpe figures the standard of living rose 1.9 per cent last year, offsetting the small decline noted in 2008 and the sharper decline of 2009.

Economist Dale Orr, another keen watcher of standard of living, comes to a similar conclusion. He too has calculated the standard of living in 2010, and found it to be just about the same as it was in 2005 — even after taking rising prices into account.

In an interview, Liberal party officials agreed that if 2010 is included in the calculation, the standard of living has been "stagnant" during Harper's time in office. But they say they didn't include 2010 in their literature because the final data for the year is not available yet.

Still, Sharpe goes further in his criticism. Focusing on GDP per capita is not the best way to measure how well-off Canadians have been over the past five years, he says.

Rather, the Liberals should have been looking at how much money people had in their pockets, rather than simply focusing on what the economy actually produced. With commodity prices soaring before the global financial crisis, income was plentiful for Canadians and the living was easy, Sharpe says.

His figures show that personal disposable income per capita rose about 8.7 per cent between 2005 and 2009, adjusted for rising consumer prices.

Liberal officials defended their choice of measurement, saying GDP per capita is simple and well understood as an acceptable way to track living standards.

The Liberals also claim that if they come to power, they will raise the standard of living.

But they won't have to lift a finger to make that claim come true, analysts say.

Canada's economic growth is expected to chug along slowly at about two per cent a year for the next few years regardless of what any government does, according to the Bank of Canada.

Even with such moderate growth potential in store, standard of living will rise almost automatically. That's because the economy will be growing slightly faster than the population itself.

There are a few ways for the standard of living to soar, analysts say. Another surge in oil prices could do the trick, for example.

But the most proactive thing a government can do to boost living standards is to encourage a leap in productivity so they can expand the capabilities of the country's economy — something governments of both the Liberal and Conservative persuasion have long tried to do, with little success.

Alternatively, Orr says, they can run substantial deficits — putting extra, but borrowed, money in the pockets of Canadians. But that approach has already been claimed by the Conservatives.

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Tags: canada, stephen harper
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