New Canadian Prime Minister Stephen Harper gives a thumbs-up during an official cabinet photo session after being sworn-in during a ceremony at Rideau Hall in Ottawa February 6, 2006.
Credits: REUTERS/J.P. MOCZULSKI
OTTAWA - No Canadian prime minister likely ever had it as good as Stephen Harper on their first day in office when it came to the state of the federal government's finances or the country's economy.
In the winter of 2006, as Harper was being sworn in at Rideau Hall, the Canadian economy was positively humming along, and would post an annual growth rate of nearly 4% in the quarter in which Harper became the country's 22nd prime minister.
Meanwhile, the federal government's coffers were overflowing with cash. The previous Liberal governments of Jean Chretien and Paul Martin had done the heavy lifting of cleaning up the balance sheet and left Harper with a whopping $13.2-billion budgetary surplus - a fact the Harper gang only rarely acknowledges and then only grudgingly. In his first year as prime minister, Harper continued the Liberal tradition and registered a $13.7-billion surplus.
And then the world turned upside down.
By the middle of 2009, our economy was shrinking at an annual rate of nearly 4% a year. A year later, the Harper government - having, by this time, cut the GST by two points which starved Ottawa of about $15 billion a year in revenue - posted a record deficit of more than $55 billion.
The narrative for Harper's political opponents (and even some small-c conservatives) quickly became something along the lines of "Harper has squandered the good fortune given him and run up the country's biggest-ever deficits."
And yet, by accident or design, Canada under Harper has done measurably better than any of its peers since 2006. Comparatively speaking, we remain a fortunate nation.
Don't take my word for it: that's the verdict of the International Monetary Fund, which illustrates the point nicely in a small colourful chart on page 69 of its most recent Global Economic Outlook, published late Monday.
The chart tracks changes in gross domestic product - the total output of an economy - for Canada, the US, the UK, Japan and the eurozone. Canada's line on the chart - the IMF did it in red which was a nice touch - trends higher than its peers from 2006 to the present.
This graph is one of the main reasons Conservatives can, with some justification, crow about their economic record.
That is not to say everything the Harper gang did was right, but they did enough things right and got lucky enough the rest of the way.
In its 250-page survey of the world's economic prospects - exceedingly gloomy, I might add - the IMF has relatively good things to say about Canada's economic position. High levels of consumer debt and a housing market that's a little too hot in some parts of the country are cause for some concern but that's about it and, compared to the basket cases in Europe and elsewhere, Canada is the least of the IMF's or the world's problems.
But the IMF does have this line in its outlook which should give us all cause for pause: "Risks for a Serious Global Slowdown Are Alarmingly High."
And if it happens, the next slowdown could be way worse than 2009.
Is the Harper government ready for that or will it hope to get a little lucky again?
Finance Minister Jim Flaherty should be prepared to answer that question within weeks in his annual fall economic update.