There are two interesting aspects to this debate. The first is the cross-party battles taking place across the country. In Ontario you have provincial Liberals walking hand in hand with federal Conservatives, while the provincial Conservatives are fighting back. In B.C., where the HST is also expected to pass, a former right wing premier has teamed up with the NDP leader to plan protests against the tax. It’s a little weird, and while some of this is just plain politics, the unusual alliances also show just how divisive this tax is. I wrote more about this in a Canadian Business story — you can read it here.

I’ve written about this other issue in the past, but MoneySense magazine does a great job covering what the HST will mean to investors. There’s been some talk that the Liberals will make investments HST exempt, but so far that hasn’t happened. Read more about this here.

There are a number of other interesting HST-related issues — hopefully I can get through some of them in the weeks ahead.

Really, there’s still no clear answer, but I’ve tried to at least lay out the relevant points and explain the differences (and similarities) between the two men. You can read the whole story here, but what struck me was just how troubled many of the people I spoke to were about the rising deficit. It seems as if that’s erased much of the pro-business moves Harper has done before the recession. It make sense — how can the PM cut taxes and make business friendly policies when he has a mounting debt to pay down — but it’s unlikely he’ll abandon his Conservative convictions all together if he stays in power. He also had to go into a deficit — all the G20 countries committed to spending 2% of their GDP on stimulus initiatives and right now Canada’s deficit is about 3% of the GDP. Does this mean Harper has abandoned his Reformist ideals? Maybe. His old self would likely be shocked at how much his new self is spending on buying car companies and propping up other failing industries.

Anyway, check out the story and please comment if you have anything to add.

I’m not sure what Ignatieff will say — maybe he’ll slam the Tories’ EI reforms, talk about trade with China — but he’ll likely largely stay away from anything controversial. With support for his party falling — the most recent Ekos poll has the Conservatives with 35.1% of the vote to the Liberals’ 29.9%  — he can’t afford to make any remarks that will raise the ire of Canadians. There will be no big Green Shift-like pronouncements and there’s no way he’ll explain how exactly he’s going to get this country out of a deficit.

But, considering Iggy has barely said anything when it comes to the economy, even a small morsel of policy-related news is welcomed. Whatever he says might give some insight into his future plans, which is a must for him, as more people seem to be regaining their confidence in Harper’s economic management.

Harper, Layton need a Doer
Catchy title to be sure, and as a former Winnipegger who lived through a few of the Gary Doer years before I moved east, I’m watching this ambassador appointment with great interest. The article mostly discusses how Harper and Jack Layton could get along, saying at the end, that Doer could bring them together.

It’s an interesting read, and I don’t usually feel like pontificating on these weekend reading posts, but there’s a bit of a misconception out there that Doer is as NDP as Layton. The NDP party in Manitoba is a lot more like the federal Liberals than Jack’s party. I can explain why at another point in time, but the fact is it’s been reported that Doer and Layton don’t get a long that well, and the province’s premier would never have been able to come to power if he ran on as out-of-touch a platform as the federal NDP do. (Federally, the province has been mostly Liberal or Conservative with some NDP spots in rural areas. But Doer has a huge following in Winnipeg, so take what you will from that.)

Can Harper play three chess games at once?
The Toronto Star’s Chantal Hébert says Harper has a lot on his plate. “But how many chess games can he actually play at the same time?” she asks. “As of now, there are three simultaneous ones underway, each involving the ruling Conservatives and one of the opposition parties in the House of Commons.”

Ignatieff’s Double Dare
Paul Wells says the biggest challenge for Ignatieff now is to win an election. He also explains that the Liberal leader had to call an election or risk looking like a pushover.

Ignatieff, however, must have calculated he had no choice. He has been delivering a succession of I-Really-Mean-It-Now ultimatums to Harper ever since he fell into the Liberal leadership from which the party had unceremoniously ejected Stéphane Dion in, approximately, January. The moment was fast approaching when his constant warnings to Harper would be revealed to mean either (a) nothing or (b) something.

Read more…

You’ll recall that the PM has said, on more than one occasion, that Canada would recover faster than any other developed nation. Well, the report, which came out today, claims that the country’s GDP will contract by 2% in Q3, and will only grow by 0.4% in Q4. That means we’re going to see slower short-term growth than the U.S, Japan, the “euro area”, Germany, France, Italy and the U.K. Oh wait, that’s everyone. (See all of their numbers on page 17 of the report.)

Now, as my fact-filled colleague Phil Froats points out, there’s plenty wrong with how the OECD’s numbers are being interpreted. But, that’s besides the point for the opposition, who will tout this survey as proof that Harper has no idea what he’s talking about.

As I’ve said before, Canada’s economic performance has very little to do with Harper — a stuffed bear could have been in office and the recession would still have come and gone — but when our top politician makes a statement regarding our GDP growth, he better make sure he’s right.

Despite what the OECD says (or what other people are saying about their findings), it’s still too early to know whether or not we’ll come out of this stronger and faster than our G7 cohorts, but, hopefully for Harper, good news will come before it’s too late.

Ignatieff revealed his decision to “not support this government any further” in Sudbury today. You can read the full text of his speech below.

Bienvenue à Sudbury! Welcome to Sudbury!

Hier soir, nous étions 600.

Vous sentez l’énergie qu’il y a ici. Cette énergie, c’est celle du retour du Parti libéral du Canada à Sudbury!

Everywhere I’ve been this summer, I’ve seen the same enthusiasm—all while apparently remaining completely invisible.

Hundreds of people didn’t notice me out in Victoria back in June. Or in West Vancouver.  Or in Cape Breton.

I was perfectly invisible in front of nearly a thousand people at the Calgary Stampede. Ralph (Goodale) is still wondering how I pulled that off.

Same story at National Aboriginal Day at Crawford Lake.

Et pendant que nous y sommes, je ne suis jamais allé non plus fêter la Saint-Jean-Baptiste à Québec, je n’étais pas au Grand Tintamarre à Miramichi ni à Caraquet; et ne parlons pas d’Edmonton, de la Beauce ou de la Gaspésie.

Everywhere I went, across 8 provinces and the Northwest Territories, I found Liberals energized and set to work hard to put Stephen Harper out of a job.

We should be proud of the work we’ve done this year.

Nous avons fait grandir notre parti : avec de nouveaux membres, avec de nouvelles idées… et avec la meilleure campagne de financement des dernières années.

Nous sommes plus unis que nous l’avons été depuis une génération.

Nous sommes prêts à livrer bataille dans chaque comté du pays.

Et nous sommes prêts à ramener à Ottawa un gouvernement compétent, un gouvernement de compassion, un gouvernement de prospérité pour le bien de tout le Canada.

I know it can be frustrating at times.

We’re working against opponents who make politics personal—who distort and deny the truth and put partisan gain ahead of the national interest.

We’re working against a government that’s ready to sacrifice national unity to stay in power.

But we have a secret weapon on our side: Stephen Harper’s record.

The worst unemployment record in two decades

The worst deficit in our history

And last quarter, the worst performing economy in the G7.

Stephen Harper didn’t see a recession coming last fall.

Now he’s missing something bigger: what we’re going through is more than a recession—it’s a fundamental restructuring of the global economy.

Stephen Harper doesn’t get that.

He doesn’t get that Canada’s in a race—that we’ve got to position our country to compete in the twenty-first century. We’ve got to make Canada a world leader again, and we’ve got to do it now.

Il ne comprend pas ce que les travailleurs de la forêt du nord de l’Ontario, du Québec et de la Colombie-Britannique ont compris. C’est pourtant simple : on ne peut pas rester les bras croisés et attendre que la construction reprenne aux États-Unis. Il faut agir. Atteindre de nouveaux marchés et développer de nouveaux produits pour prendre notre place dans un monde nouveau.

He doesn’t get what autoworkers in Windsor and Oshawa know—that we’re not just going to have to win back customers; we’re going to have to re-invent the car, with brand new technologies and brand new environmental standards.

He doesn’t get what the people of Sudbury know—that when our workers and our industries are under threat—when the choice is between defending Canadian jobs and Canadian technology—we need a government that will defend our interests.

Stephen Harper doesn’t get it. We do.

For more than a century, we’ve built our prosperity on our natural resources. But if we’re to prosper in the next century, we have to turn our resources into products and technologies the whole world wants to buy.

We can’t get there unless we have the vision and ambition to build a competitive, compassionate future for Canada.

We can’t get there unless we open up new markets for Canadian exports in countries like China and India.

We can’t get there with Stephen Harper.

Stephen Harper has been prime minister for four years, and he’s never visited China. We’ll be there next week. After that, we’ll plan a trip to India.

That’s where we need to be as a country—if we want to secure markets for the next generation of our exports—if we want to compete with the best in the world—if we want to get out of the trade deficit the Conservatives have created, the first in thirty years.

We can do better.

Nous pouvons faire mieux.

L’été prochain, le Canada accueillera le Sommet du G8 à Huntsville.

Ce sera une occasion de démontrer le leadership canadien et de contribuer à définir les priorités mondiales. Paul Martin et Jean Chrétien représentaient ce leadership canadien capable d’influencer le monde.

Stephen Harper n’a même pas encore de liste d’invités.

A Liberal government would invite new members to that meeting.

We’d use Canada’s G8 Summit to begin the process of evolving the G8 to a G20, as the world’s steering committee.

We cannot make progress on global challenges without China or India at the table.

Le G8 a bien fait ce qu’il avait à faire. Mais le monde change.

Plutôt que de résister au changement, le Canada devrait inspirer le changement.

Nous pouvons convaincre nos partenaires d’avoir une gouvernance mondiale plus efficace, avec un forum plus représentatif du monde d’aujourd’hui. Nous devons reprendre ce leadership mondial qui a fait la réputation du Canada depuis Lester B. Pearson.

Nous devons être prêts à renforcer le G20 en finançant et en accueillant chez nous le Secrétariat permanent du G20.

A Huntsville, le Canada pourrait proposer des mesures concrètes pour créer un nouvel encadrement de la réglementation financière. Comme ça, le Canada pourrait assurer que l’effondrement de l’an passé ne se reproduise pas.

Canada can lead in a changing world, but only if we dare to act. Stephen Harper wants to keep us on the sidelines.

We can do better.

Stephen Harper hasn’t just failed to stand up for Canada—he’s also failed to stand up for Canadians.

Suaad Mohamud. Omar Khadr. Makhtal. Bahari. Mohamed. Abdelrazik.

Being a Canadian must mean the Canadian government will stand up for you—no matter where, no matter when. This is at the heart of what every Liberal believes: a Canadian is a Canadian is a Canadian.

A Liberal government would stand by the Charter of Rights and Freedoms.

We would stand by our citizens.

And we would bring forward legislation to protect Canadians abroad—to make it illegal for the government to pick and choose which citizens it protects—to make sure these abuses never happen again.

Stephen Harper leads a government that doesn’t care. A government that doesn’t believe in government. A government that refuses to govern—even in a crisis.

Let’s remember how we got here.

A year ago this month, Stephen Harper told Canadians there wouldn’t be a recession in this country. He said a slumping stock market meant “good buying opportunities,” but no cause for alarm.

Last November, he presented a partisan economic statement that triggered a political crisis.

And Stephen Harper escaped defeat only by shutting down Parliament.

In January, we put Stephen Harper on probation – and we’ve kept him on life support ever since.

We forced his government to accept the toughest accountability standards in the G8—with full budget reports to Parliament each quarter.

After a disappointing June report, we set out four simple benchmarks Stephen Harper would have to meet.

Premièrement, nous avons dit que nous étions prêts à travailler avec Stephen Harper pour rendre l’assurance-emploi équitable pour tous les Canadiens, où qu’ils vivent, et aussi longtemps que durerait la crise.

Pas une proposition n’est venue. Rien que des manigances politiques.

Second, we demanded straight answers about job creation and infrastructure stimulus.

Plutôt que de répondre, Stephen Harper a passé l’été à tenter de cacher son incompétence ; il a annoncé, annoncé et annoncé encore des projets qui auraient dû être en chantier depuis des mois.

In fact, only two hundred of the twelve hundred infrastructure projects that the Conservatives announced in Ontario have actually received the funding they were promised. Only Stephen Harper could count that as 80% underway.

Third, we demanded a credible plan to get Canada out of deficit.

Stephen Harper’s response has been: “Don’t worry, give it a few years, and the books will balance themselves.”

You can put that next to his promise not to run deficits in the first place.

Or his promise not to tax income trusts.

Or his promise not to appoint Senators.

Pendant une décennie, sous des gouvernements libéraux, le Canada menait le monde dans la réduction de sa dette nationale. Nous avions le meilleur bilan financier du G8.

Les Conservateurs nous ont fait replonger dans le rouge… avant même que la récession commence.

Maintenant, ils ne peuvent même pas nous dire la profondeur du trou dans lequel ils nous ont mis. Et encore moins comment ils vont nous en sortir.

Ça ne suffit pas.

We’ve had four years of this—four years of a government that mismanages our public finances, and a prime minister who divides the country to score political points.

You can’t count on a government that can’t count—and a prime minister who’s only good at division.

Finally, we demanded a plan to deal with the health care crisis.

Twice on Stephen Harper’s watch there’s been a breakdown in the supply of medical isotopes.

Instead of acting, what did Stephen Harper do? He fired the whistle-blower on isotopes. Then he cancelled the MAPLE reactors that would have guaranteed Canadian leadership in isotope supply.

Two years later, he finally revealed his plan: To get out of nuclear medicine and let the provinces pick up the difference.

That’s not good enough for the tens of thousands of Canadian families waiting for cardiac and cancer care for their loved ones.

And that’s not good enough for the millions around the world, who have relied on Canadian leadership for half a century.

It’s simply unacceptable to have the world ask: “Where’s Canada?”

We can do better and we will do better.

A Liberal government will restore Canadian leadership. We’ll stand up for Canadian research and Canadian families. We’ll stand up for Canadian know-how and ensure the world never asks again “Where’s Canada?”

À l’heure où les Américains veulent un système de soins de santé public, Stephen Harper ne lève pas le petit doigt pour protéger le nôtre.

Les libéraux sont fiers du système canadien de soins de santé et, contrairement aux conservateurs, nous allons le défendre et le protéger.

Liberals proudly support public health care in this country—and, unlike the Conservatives, we’re not afraid to defend it.

In June, we set out four tests for Stephen Harper.

Mr. Harper, you have failed all four.

You’ve failed to protect the most vulnerable. You’ve failed to create jobs. Failed to defend our health care. Failed to restore our public finances.

After four years of drift, four years of denial, four years of division and discord—

Mr. Harper, your time is up. Vous avez raté votre chance.

The Liberal Party cannot support this government any further.

We will hold it to account. We will oppose it in Parliament.

En juin, nous avons fixé quatre conditions pour que Stephen Harper conserve notre confiance.

Il n’en a respecté aucune. Son échec est complet.

Il n’a pas réussi à protéger les plus vulnérables. Il n’a pas réussi à créer des emplois. Il n’a pas réussi à défendre notre système de santé. Il n’a pas réussi à rétablir nos finances publiques.

Après quatre ans de dérapage, de déni, de division et de discorde… le temps de Stephen Harper est terminé.

Le Parti libéral du Canada ne peut plus soutenir ce gouvernement incompétent.

Stephen Harper doit rendre des comptes. Désormais, nous nous opposerons à lui.

Et si des élections ont lieu, nous serons prêts à offrir à notre pays un avenir meilleur.

Canadians deserve better.

Over the past days and weeks, I’ve heard from our caucus, and we’ve all heard from Canadians:  Our job as Liberals is to give them a choice.

A choice between two parties. Two sets of values. Two visions for Canada.

Un choix entre deux partis. Entre deux ensembles de valeurs. Deux visions du Canada.

We can choose a small Canada—a diminished, mean, and petty country. A Canada that lets down its citizens at home and fails them abroad. A Canada that’s absent on the world stage.

That’s Stephen Harper’s Canada.

Or we can choose a big Canada. A Canada that is generous and open. A Canada that inspires. That leads the world by example. That makes us all proud.

2017 will be our 150th birthday. We can be the smartest, healthiest, greenest, most open-minded country there is—but only if we choose to be.

We can build a Knowledge Society, from pre-school to post-secondary, with quality early learning and childcare for every Canadian child.

We can ensure that every Aboriginal Canadian gets a world-class, not a second-class education—with the opportunities to match.

Nous pouvons créer les emplois de demain en investissant plus, pas moins, dans la science et l’innovation.

Nous pouvons investir dans l’environnement et inventer les technologies vertes qui vont changer le monde.

We can invest in our environment—and invent the clean energy technologies that will have the world beat a path to our door.

That’s our Canada. A liberal Canada.

Le Canada dans lequel nous croyons. Le Canada qui nous attend. Mais seulement si nous osons. Seulement si nous faisons les bons choix.

Avec l’intelligence, la compassion et le leadership du Parti libéral du Canada, nous pouvons y arriver.

So let’s get started.

Allons-y. Notre pays nous attend.

It wasn’t long ago that Iggy was making some major waves about EI reform. He said, very vocally, that if Stephen Harper didn’t change the employment insurance program he could very well bring down the government. Well, in Friday’s Globe and Mail Liberal senator David Smith said this:

I don’t see an election being fought over unemployment insurance. It’s an important issue and it’s an issue that we want to address … but I don’t see that as the defining issue that would trigger an election.

And with that comment goes any significant EI reform and a fall election.

It’s not the first time Iggy’s talked big only to balk when it really mattered. In the summer, when he was raising a fuss over EI, he nearly called an election. Or at least he wanted us to think that he was minutes away from sending Canadians to the polls. Instead of pulling the trigger, he decided the Liberals and the Conservatives would talk about reforming EI together, like one big happy family. If things didn’t go Ignatieff’s way, he’d consider forcing an election in the fall.

Well, now that the fall is around the corner, and the EI joint panel continues to discuss changes (or are they? No one really knows), Ignatieff once again backs down.

Whether or not the Liberal leader should call an election or not is up for endless debate. But what Canadians don’t like is a leader who waffles (Paul Martin anyone?).

The economy remains fragile and people continue to lose jobs, so Ignatieff has a very small window where economic conditions may still be used against Harper. But, if he really wants to be the next PM he needs to make a plan already and stick to it.

Harper stresses social welfare, economy in northern spending

While many people think Stephen Harper’s interest in the north is purely military, he wants it known that he’s got the territories’ economic interests in mind too. To that end, the government announced a $36.5 million deal to help with skills training in the North.

Globe scribe Billy Curry writes:

To that end, he and the three territorial premiers announced a new $36.5-million labour agreement yesterday in Yellowknife. The deal will finance skills training for workers in the North, regardless of whether they qualify for employment insurance.

Mr. Harper said skills training will help in moving toward an environment in the North where aboriginals and northern residents are the first people hired when jobs become available.

Economic policy advice for the NDP

Stephen Gordon, a professor of economics at l’Université Laval in Quebec City, runs the Worthwhile Canadian Initiative blog. It deals mostly with Canadian-related economic issues, but recently he wrote a four part series titled “economic policy advice for the NDP.”

He says if the NDP wants to win more seats they’ll have to deal with issues such as inequality, “defending big government,” and taxes. Here are links to each post:

Economic policy advice for the NDP, Part I: Inequality
Economic policy advice for the NDP, Part II: Defending big government
Economic policy advice for the NDP, Part III: The GST
Economic policy advice for the NDP, Part IV: Corporate income taxes

The readable Ignatieff

It’s not economic or business related per say, but Maclean’s blogger Aaron Wherry compiled a list of Michael Ignatieff’s journal and newspaper articles. These pieces should keep you busy for the rest of the summer.

I’ve been on board with this idea for a long time — a Canadian province that’s hot year-round would be fantastic — but there’s more to consider than just warms temps.

Thanks to a corruption scandal on the island, the British government has been forced strip the tiny territory of its independence. Britain likely isn’t crazy about running this small Caribbean locale, but Canada might be.

For about four decades MPs have floated the idea of making the island part of this country, though it’s never been seriously considered. Now, with the TCI scandal, terrorism fears making it more difficult to enter the U.S., and a frustratingly cold summer, it might be time to welcome the island into this country.

Of course, there will be plenty of obstacles to overcome before this can happen. Steele writes:

Banking is perhaps the gravest challenge. TCI is an offshore banking centre, what was formerly called a “tax haven.” This is a place with a very low tax regime that allows large pools of capital to form, encouraging large investments and economic growth locally and internationally. However, offshore banking centres often have a bad reputation for lax regulation, even money laundering.

It would be very difficult to get TCI to join Canada without maintaining some elements of that low tax regime, as financial services is almost one-third of their GDP. This would likely require either a consciously two-tier banking regime that would create a real pressure on Toronto and Montreal based financial institutions to seek lower tax regimes in the new province.

He cites other challenges — they’re more socially conservative, tourism dollars could shift from Canadian destinations to the tropical island, and there’s the potential for the current residents to move north (but seriously, after one winter they’d all move back) — but if this happened, says Steele, the biggest change for Canadians would be that the idea of Canada would likely be forever altered, which isn’t necessarily a bad thing.

It’s an interesting read.

Scene 1 — The bank and an insurance product are in a dark hallway where they can’t be seen. They’re about to embrace, but the insurance product stops short.

Bank: Please don’t. I can’t live without you anymore.

Insurance: But you know we can’t. What if someone sees us?

Bank: Who? The Insurance Brokers Association of Canada?

Insurance: Well, yes. The insurance industry is mighty powerful and I don’t want to be turned into some lowly mutual fund product.

Bank: Forget them! If we’re going to compete with the really big banks one day, the government will have to  let us sell insurance, not to mention merge with other banks. So it’s no use to resist.

Insurance: I want to, but I can’t.

Banks: Fine. I’ll just build an insurance office under a different name, right next to my regular branch and then I’ll show your industry who’s boss. Don’t come crawling back to me when you have a change of heart!

End scene.

Oh the glorious drama. OK, so it’s hard to make banks and insurance sexy, but, for those who are into this sort of thing, the ongoing battle between the two financial sectors is as gripping as any episode of The Young and The Restless.

Right now the government won’t allow banks to sell insurance products. Of course, the big five want to sell insurance as it is a multi-billion dollar industry. Because the industry makes so much dough, they’ve got a lot of pull in Ottawa, which means banks won’t be selling insurance any time soon.

But you can’t stop a financial institution from doing what it wants, so, instead of waiting until the rules change, some banks have found a loophole in the law — they’ve set up insurance offices, under a subsidiary, right next to their regular branches.

The latest outfit to do this is Scotiabank. Under the new ScotiaLife Financial moniker, which was revealed yesterday, the bank is able to sell home, auto, life and health insurance products. RBC has also gone this route, and it’s been very successful — its insurance business rose by 53% last quarter and the bank is planning to build about 100  insurance offices next to existing branches.

Seems strange, huh? Why the no-insurance rule for banks, when it’s not illegal to sell products through a subsidiary? To make things a bit more confusing, banks are allowed to use the Internet to market and sell insurance products. In June, financial regulators ruled that websites aren’t the same thing as a branch, and therefore the ban on banks from selling insurance doesn’t apply. So now Canadians can purchase insurance from their bank’s website. (And this might be what really hurts the insurance industry. The Canadian Bankers Association reports that 445.7 million transactions were made online last year, up from 13.2% in 2007. ABM transactions dropped 3.8% to 954.7 million. The web could soon — and already is for many people — becoming the banking method of choice.)

Clearly, the banks are making a mockery out of this rule, and in turn the Canadian government. Can they sell insurance or can’t they? (Obviously it’s the latter, even though they’re technically not supposed to.)

It’s time the Conservatives change the regulations and allow banks to sell insurance through their branches. This would give consumers even more choice and allow the banks to compete globally. In fact, it’s really only a matter of time until the rules change, because if they don’t there’s a risk that Canada’s banking sector will fall behind.  Banks are getting bigger, even as many crumble in the U.S., and if our financial institutions can’t merge or sell insurance outright they won’t be able to compete on the world’s stage.

The Conservatives have said they won’t loosen the restrictions, so until that happens (and if the Cons don’t do it, who will?) the banks will be forced to get more creative, ultimately making an even greater farce out of this now out-of-date rule.

As more countries say the recession is over — Japan just revealed their worst recession in decades has come to an end — a new Canadian Press Harris-Decima survey shows that most Canadians are optimistic about this country’s economic recovery.

According to the survey, six in 10 Canucks think the economy will bounce back twice as strongly as it will down south.

It’s nice to know that people are feeling more confident these days (which hopefully means they’ll start eating more), but it bears repeating that we won’t feel the full effects of an economic upswing until the U.S. starts seeing meaningful growth.

The survey’s respondents understand the connectivity between Canada and America, they just don’t think it’s a big deal. Here’s an expert from the Canadian Press story:

The state of the American economy is another roadblock to a solid bounceback in Canada.

The world’s biggest economy’s housing market has been battered in recent years, and weak consumer spending and massive government deficits threaten to keep the U.S. on the skids for a while longer.

That will weaken growth prospects in all of America’s trading partners, particularly its largest, Canada.

But the poll suggests most Canadians aren’t put off by any of that.

“There’s a sense, number one, that there’s demand for what we’ve got, maybe that’s greater than demand for what (the) Americans’ got,” says Jeff Walker, Harris-Decima’s vice-president.

“The other thing that people say when we talk to them about this is … we were in solid economic position going into this in terms of our debt and deficit situation.”

Another interesting stat from the poll: Conservative supporters were more confident than people who identify with other parties that our economy would fare better than America’s.

Seventy per cent of Tory backers thought Canada’s economy would outperform the United States’, compared to 65 per cent for the Liberals, 62 per cent for the Bloc Quebecois and 48 per cent for the NDP.

You could have just chalked this up to downplaying, which is smart considering much trouble Stephen Harper has previously gotten into for being optimistic on the economy. But then International Trade Minister  Stockwell Day wrote in the Penticton Western News, “I’m not kidding. The recession is over.”

Clearly, the Conservatives need to get on message, but this also points to just how confusing things are right now. As I wrote in an earlier post, while the recession may technically be over, to declare it dead really depends on how you look at it. Expect plenty more contradictory messages from all sides of our government, at least until people stop losing their jobs. (If you missed it more people were receiving EI benefits in May then at any point in the last 12 years.)

At a press conference Carney said “growth in Canada should resume this quarter” with an annualized rate of 1.3%. Still, the economy will shrink this year, but will grow by 3.0% in 2010 and 3.5% in 2011.

Sounds pretty great, right? Cue the celebrations! Pop open the champagne! Umm… not so fast.

In the past Carney has looked maybe a bit to much on the bright side, most notably in February, when he said we’d see 3.8% growth in 2010. While he’s been relatively cautious since then, his latest announcement is a tough one to swallow, especially as layoffs continue.

Now, there’s no doubt the economy is improving. Markets are up, consumer confidence is stable, bidding wars have become the norm again (at least in Toronto and, as a friend told me last night, in Ottawa), but that doesn’t mean the recession is over quite yet.

TD economist Richard Kelly isn’t prepared to say Canada is recession-free. He told me this morning that while we’ll likely see some growth in Q3, Carney’s “growth rates seem optimistic in term of what they have planned for 2010.”

“Even given their own forecasting,” he continues, “we still have a very weak U.S. economy, a weak global economy, and yet they have the Canadian economy outperforming all the typical relationships. [The BoC] is building up the decoupling of Canada from the rest of the world.”

Kelly points out that you can’t only look at the baseline GDP number to get a sense of a recovery, and while that stat will likely improve, you have to “see what’s happening in the unemployment market and business investment to get a sense of the broader issue.”

Derek Holt, vice-president of Scotia Capital Economics, agrees. He says that in a very narrow and technical sense the recession is over, because the cycle of quarterly declines will have ended with Q3’s positive growth, but the BoC has “removed from the picture a lot of the risks that are front and centre.”

In fact, says Holt, we may see a “double dip risk” in the latter part of 2010. What he’s saying is that the last couple quarters of next year may actually be negative. “We could be having one or two single quarters that pop GDP growth higher, but next year at some point we might be back in the soup,” he explains. “The GDP pop is what happens when you go from total shutdown mode and then flick the switch back on on production, giving a one time life to growth. To sustain this you need a backdrop of business investment a [more active] consumer. But we’re going to have a cautious global consumer next year.”

To be fair to Carney, he did warn Canadians that just because the recession is over doesn’t mean we’re all going to be living the good life again. “We are on track for the recovery both in Canada and globally,” he said. “But it’s early days. It’s a long road.”

But still, Kelly thinks his projections are off. TD estimates that Canada’s growth will be about 1.5% in 2010, while Q3 will look “marginally negative or flat.” He does say that Canada and the U.S. will come out of the recession by the end of the year, we’re just not there yet.

Stewart Hall, a CIBC economist, however, does think the recession is over. “We’re going to put a pin in the recession this quarter,” he told me. “We’re beginning to bottom out in a lot of the economic metrics as well.”

However, he too thinks Carney’s 2010 projection is far too optimistic, with CIBC predicting 1.1% growth next year. “His forecast seems fairly robust, even though his comments suggest we’re on a long road to recovery,” says Hall. “While the recession wasn’t nearly as deep in Canada, externally it was brutal — we’ve had the worst downturn of global economic growth since WWII and that means we’ll see a more protracted process.”

While it’s clear the economy is recovering, there is a danger in saying the recession is over when there are still serious economic issues wreaking havoc on the globe. If people believe that we’re out of the woods, they might get too overconfident. If that happens we could be in for another rude awakening.

“The number one risk to all of this is doing too much cheerleading to the point the markets get convinced it’s all over,” says Holt. “Then people dump bonds, which push up yield costs, that spills over into household borrowing costs, commodities get carried away and energy and gas goes upwards and this all happens very prematurely. If you talk that up too aggressively you only serve to raise the double dip risks going off next year.”

Well, the time has come for the Liberals and the Conservatives to finally discuss those changes. This week the two sides will meet to figure out how the EI program can be improved. Unfortunately, it’s unlikely much will change, and it’s unclear if Canadians will even find out much about the meeting.

According to a Canadian Press article, “no one is saying much about the EI panel, even off the record.”

Liberals received a departmental briefing on the Employment Insurance system last week and the full group is supposed to sit down sometime this week. No word when or where.

“The contents of the EI working group are confidential,” Ryan Sparrow, the newly installed spokesman for Human Resources Minister Diane Finley, said in a brief interview.

“We hope the Liberal party maintains that confidentiality as well.”

There are, however, subterranean Tory rumblings that the Liberals appear to be offering no ideas on how the panel process should work or what they want out of it. Liberal observers, meanwhile, grumble that the choice of MP Pierre Poilievre – one of Harper’s most loyal and partisan hit men – and the secondment of Sparrow from party HQ does not inspire confidence in a collegial negotiation.

“You try to make it work and, who knows, it might, right?” shrugged one Liberal.

That’s a very low bar to clear for a panel that was portrayed as the deal-breaker on a national election call barely three weeks ago.

We haven’t heard much from Ignatieff this summer on EI reform (or on anything else for that matter), so if this report is correct you have to question what exactly the Liberals are trying to do.  Harper has made it clear that he doesn’t want to make changes to the EI program, so it’s up to the Liberals to press this issue and keep it on the agenda. (They pushed this hard after Ignatieff became the official leader of the opposition, but they’ve been pretty much silent on the issue since the threat to bring down the government was averted.)

I still don’t think EI reform will be the catalyst for an Iggy win, whenever an election does happen, but abandoning their only policy idea (whether you agree with it or not), can’t be good for the party, which is now looking far less powerful than it did a month ago.

It’s a remarkable statement from Canada’s leader — he doesn’t think any taxes are good taxes??

No matter how much you hate handing over a portion of your paycheque to Ottawa,  thinking zero taxes is a good thing is a ridiculous comment to make, especially coming from a leader who gets paid by Canadians and runs programs built on the dollars we make. But instead of getting into this myself, I’ll direct you to a blog post by Globe writer Adam Radwanski, who takes the PM to task in a great piece titled Stephen Harper: anarchist?

In the post Radwanski writes:

If taken to its logical conclusion, that would also mean that all government spending is bad. Not just equalization and grants and other things that Harper would have taken offence to back in his National Citizens Coalition days. We’re also talking about defence, and law enforcement, and any public infrastructure whatsoever – stuff that even the most libertarian members of Harper’s party would concede that we need.

Canadian Business: Yesterday, I wrote a post about how Stephen Harper wanted the nations to avoid a second stimulus, but in the end no promises were made.

The G8 nations are saying two things. The first is that they’re committed to seeing the first round of stimulus spending through to the end. And the second is that they’ll spend more money if they need to.

Globe and Mail: At the end of the summit Harper pressed his cohorts to follow through with their promises. (The article also points out how he slagged Ignatieff in the process.)

‘It’s not just a moral question,’ Mr. Harper said after referencing issues from climate change to African aid. ‘When we as the G8 make commitments and we don’t fulfill them, this undercuts the credibility of our process. And that is a serious problem.’

Canada.com: The economy wasn’t the only thing on the G8 agenda; climate change was a hot topic too. On Thursday the countries pledged to cut greenhouse gases over the next 40 years.

Developed countries will take the lead with cuts of “80% or more,” according to the G8 pledge that one environmental group said will put enormous pressure on Canada to develop more aggressive targets.

One non G8 story worth reading comes from the Toronto Star, about how Kevin Page, Canada’s parliamentary watchdog,  thinks Harper’s economic projections are wrong. He says the unemployment numbers will be much worse than the Conservatives think and the government will continue to run budget deficits for longer than they had hoped.

He says that in 2013-14, instead of balancing its books, Ottawa will still run a $16.7 billion deficit, according to those who have seen the independent budget officer’s latest findings.

Page’s report says unemployment, currently at 8.4 per cent, will average 8.7 per cent this year, compared with Flaherty’s estimate of 7.5 per cent for 2009. Page sees the jobless rate going as high as 9.4 per cent in 2010.

Thanks to Aaron Wherry at Maclean’s for blogging about this first.

While there was no explicit declaration that the G8 nations will, or should, spend more, there wasn’t anything close to a definitive statement that the countries will hold back additional stimulus.

Here’s what the declaration said, with the important parts bolded:

We note some signs of stabilisation in our economies and we believe that the turnaround will be reinforced as our measures reach their full effect on economic activity and contribute to improving confidence and expectations. However the economic situation remains uncertain and significant risks remain to economic and financial stability. We will take, individually and collectively, the necessary steps to return the global economy to a strong, stable and sustainable growth path, including continuing to provide macroeconomic stimulus consistent with price stability and medium-term fiscal sustainability, and addressing liquidity and capital needs of banks and taking all necessary actions to ensure the soundness of systemically important institutions.

The G8 nations are saying two things. The first is that they’re committed to seeing the first round of stimulus spending through to the end. And the second is that they’ll spend more money if they need to. Of course, it’s the U.S., Britain and Japan who will be the ones to spend more money, while Canada, Russia and Germany have said that their original rescue package will be the only bailout their countries will get.

Whether or not you think that more spending is the right way to go, we can all agree that the G8 countries need to start developing an exit strategy. Fortunately, the nations at the summit want to figure a way out of this mess too.

Point 13 of their deceleration states:

We agreed on the need to prepare appropriate strategies for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured. These “exit strategies” will vary from country to country depending on domestic economic conditions and public finances, and must ensure a sustainable recovery over the long term. We welcome the analytical work of the IMF which will assist us with this process.

Clearly, there’s still a long road ahead before the G8 nations can curb spending and pay down their deficits, but at least talking about turning on that light at the end of the tunnel.

Harper said this morning that he will urge his fellow diplomats to see their first round of stimulus spending through before they offer more rescue aid.

“Before there’s talk of additional stimulus, I would urge all leaders to focus first on making sure the stimulus that’s been announced actually gets delivered,” Harper told a reporters today. “That’s been our focus in Canada and I would encourage the same priority elsewhere.”

The PM is right — it’s best to let the billions in funds start working before countries cough up more cash — but what Harper’s not saying is that it’s still going to be a long time before Canada’s own stimulus package really gets going.

A couple weeks ago I spoke to Don Drummond, TD Financial’s vice-president and chief economist (check out the video), and he said Canada’s stimulus initiatives won’t kick in until after the economy has recovered, sometime in late 2010 or 2011.

In other words those billions of bailout funds the Conservatives have promised, and the other parties pushed for, are essentially useless in the short-term.

“We’ve had a collective memory failure,” says Drummond. “Fiscal policy always takes a long time before it hits the economy and that was why for a quite a long period of time it wasn’t believed to be an effective tool in the midst of a recession. I think we just overlooked that and what we really would have liked is for stimulus to come in 2009 and we don’t think much of it will.

“As the government said in its report card, a lot of money has been allocated, but that doesn’t mean its flowing,” he adds. “In many cases the infrastructure that was delivered in the budget has to be tri-partied funded — you have to get federal provincial and municipal governments together and that will take a long time.”

So, while Harper should caution his cohorts to hold off on more stimulus funding, he might also want to figure out how to get his own dollars working faster.