OTTAWA — Even before plunging oil prices began to eat into the Canadian economy and government revenues, Canadians were worried about economic uncertainty, slow job growth, and an over-reliance on natural resources, according to opinion research done for the Conservative government.
The Privy Council Office, which functions as Prime Minister Stephen Harper’s central department, hired polling firm Harris Decima to do in-depth probing of Canadians’ views on the economy last spring. It polled 3,000 people, conducted a dozen focus groups, and reported while the economy was the most important issue for the government, participants “identified a number of perceived threats, including international economic stability, free trade, interest rates, and over-reliance on natural resources.”
The results, along with widespread concern now over oil’s nosedive, likely explain why Finance Minister Joe Oliver is fiercely talking up the “diversified” Canadian economy and the Conservative government’s determination to focus on “job growth.”
On Monday, hammered by the opposition over how he plans to deal with the oil price drop that prompted a surprise interest rate drop by the Bank of Canada last week, Oliver said Conservatives would not further cut any federal services or programs, would still deliver promised new tax cuts for families and small businesses, and increased transfers to provinces.
It was a formal rebuke to cabinet colleague Jason Kenney who said last week the Conservatives might reduce spending on the way to balancing the budget this year and might use a $3-billion rainy day “contingency fund” to do so.
Oliver said Monday he has not ruled out tapping that fund to keep the books in the black.
“The contingency fund is there for unexpected and unavoidable events, of which a precipitous decline in oil prices is. So we may or may not need to use the contingency fund but if we do it will be entirely consistent with government policy,” Oliver told reporters, adding if there was any left over it would go to pay down debt.
Oliver said Canadians are spooked because last week’s Bank of Canada rate cut was not reported “in a balanced way. What the (bank’s) governor has said is there’s been a setback but he is projecting a 2-per-cent growth in the Canadian economy this year.”
“We have a highly diversified economy. The manufacturing sector is something that we are proud of and will continue to be an important contributor to the Canadian economy,” Oliver told the Commons.
Like the prime minister, Oliver said that sector will be aided by the decline in energy prices “and the fact that more growth will come to the global economy, and particularly the U.S. economy.”
But he declined comment on the sliding value of the Canadian dollar. “We don’t get involved in determining the value of the dollar,” Oliver said. “The Canadian dollar is free floating.”
Nevertheless, it was clear the Conservative government is engaged in a delicate balancing act, having spent so much political capital on an agenda that long promoted free trade and development of the energy sector as key to Canada’s prosperity.
The survey for PCO found surprising ambivalence among Canadians for much of that agenda’s claims. It said participants, without prompting, raised questions about last spring’s recently signed free trade agreement with South Korea, and had “mixed” impressions about it, worrying about reports of a possible negative impact on the domestic auto industry.
They further worried about how sudden spikes in interest rates could hit overextended households and how rate hikes might affect the cost of servicing the national debt. And there were “mixed” feelings about balancing the federal budget too quickly.
“There was not a widespread push for the budget to be balanced within the next year. While most recognized the importance of balancing the books, some felt that the economy was not stable enough to move towards balancing the budget,” said Harris Decima.
Despite the report’s tepid findings last spring, Oliver rejected opposition criticism Monday, saying “Canadians have a more positive view of the economy,” than the government’s critics.
Harris Decima said many of Canadians’ concerns about the economy are “inextricably linked” to concern about jobs: “It wasn’t simply about finding a job, but having people sustainably employed, along with having Canadians find employment that matched their skill set.”
A number of people said finding a job was seen as “particularly difficult for recent post-secondary graduates, with some participants advocating that the federal government work with industry and post-secondary institutions to ensure that programs offered matched labour market requirements.”
And they wished more would be done “to change societal expectations regarding the desirability of certain career paths, which participants felt were being overlooked by many young people.”