Bread-and-butter issues at forefront of election

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THE CANADIAN PRESS

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OTTAWA - Suddenly, it's the economy stupid, again.

After several federal elections when the bread-and-butter issue took a back seat to everything from health to corruption, the battle over which party can best assure Canadians they will have a job after the Oct. 14 vote has emerged as No. 1 consideration of the electorate.

After more than 17 years of growth and growing prosperity and a decade of balanced budgets, voters realize a strong economy is no longer a given in Canada and they are nervous.

In fact, the country is a minor recalibration by Statistics Canada away from a technical recession defined as two consecutive negative quarters.

The uncannily agile economy that balanced job and wage growth with tepid inflation is wobbling -- every week comes news of plant closures in the voter-rich manufacturing heartland of Ontario, wage improvements are slowing, more people are losing than finding jobs, and Canadians can feel the pinching effect of inflation with each gas fill-up.

It may not get better any time soon. The OECD (the Paris-based Organization for Economic Co-operation and Development) last week downgraded Canada's expected growth for the year to 0.8 per cent -- which is near the bottom of Group of Seven industrialized countries.

That should spell trouble for the minority Conservatives, who inherited an economy growing at an annual rate of 3.1 per cent.

Their record? A growth rate of 2.8 per cent the first year, 2.7 per cent their second, and according Statistics Canada, and actual contraction so far this year.

There are mitigation circumstances -- the crisis began with loose lending practices in the U.S. -- but voters usually just look at the bottom line, says Allan Lichtman, professor of history at American University in Washington.

"A good economy is no guarantee of victory, but a bad economy always leads to defeat," he says of every presidential election since independence and he sees no reason why Canadian politics should be very different.

Stephane Dion would like to believe the mantra. In a speech to the caucus last week, the Liberal leader pointed out that the last time the Canadian economy had done so badly was in 1991, when Brian Mulroney was prime minister.

"Tory times are tough times," he said. "There is a pattern here. Every time Canada is government by a Conservative government, the economy stalls, jobs are lost and deficits appear on the horizon."

But something strange has been happening in Canada in the lead-up to this fall election.

Rather than blaming the Tories for killing the goose that kept laying golden eggs, national polls suggest voters have more confidence in the government than the Liberal opposition on the economy.

In the latest Harris/Decima poll, the Tories get the nod over the Liberals by a 34-29 per cent margin on who is best to manage the economy.

"I think we're getting credit for being realistic for recognizing what was coming," Finance Minister Jim Flaherty said in an interview, referring to the government tax reductions, including a one-point cut in the GST, introduced last October.

"We saw the economic slowdown coming and we acted. Had we not created that large stimulus, I think people recognize that things would be significantly slower than they are right now in Canada, including Ontario."

Pollster Bruce Anderson said part of the reason may also be that Canadians have qualms the Liberal pledge to introduce carbon taxes.

"A lot of people might think their economic plan is centred on the Green Shift and people aren't sure yet that's the right economic plan for the country," he said.

That may explain why rather than running away from the worsening economic news, the Tories are embracing the prospect.

They've been polishing their defence and attack points for months.

Throughout the winter and spring, Finance Minister Jim Flaherty had been reassuring Canadians that the Tories represent a "steady hand on the tiller" in troubled times, while describing the Liberals as risky spenders.

And Flaherty went out of his way to pick a fight with the government of Ontario -- ground zero of the economic slum -- accusing Liberal Premier Dalton McGuinty of leading his province into an era of "mediocrity" with higher unemployment and lower productivity.

Harper has conceded that "all is not rosy in the economy," but cautioned that it was a "crazy time for the country to take risks" on new carbon taxes proposed by Dion.

Anderson says its a strategy of necessity, since there is no way of avoiding a debate on the economy at a time of growing apprehension, but it also may be the government's best option.

"They don't want to have an election Afghanistan or the environment because those are not good issues for them," he explained. "So if you're forced to have an election about the economy, you don't want to be seen being dragged kicking and screaming into the debate. You want to look like you are enthusiastic about your economic record."

Whether a good offence will prove a good defence for the government will partly depend on how badly Canadians feel the pain, and which leader -- Harper or Dion -- they most trust, said Anderson.