When a war room fails a leader: Trudeau, truthiness and the economy
David Akin - September 14th, 2015
Last Friday, every newsroom and, one would assume, every campaign war room in the country, would have seen the following advisory from the Department of Finance:
The Department of Finance will release the Annual Financial Report of the Government of Canada at 9:00 a.m. ET on Monday, September 14, 2015.
The Annual Financial Report summarizes the Government’s financial results for the fiscal year ending March 31, 2015, including the budgetary balance. The Department is also
releasing updated Fiscal Reference Tables, which provide annual data on the financial position of the federal, provincial-territorial and local governments.
And everyone who saw that would have immediately understood its importance. This Annual Financial Report (AFR), with numbers verified by the Auditor General of Canada, would tell us once and for all whether the Stephen Harper Conservatives ran their 7th consecutive deficit for the 12-month period ending on March 31, 2015 (known for the rest of this post as fiscal 2015 or FY15) or broke free and ran a surplus.
In Budget 2015, the Conservatives themselves said FY15 would be the last of a string of deficit budgets and did not commit to being out of deficit until the current fiscal year, which ends on March 31, 2016 (and shall be referred to as fiscal 2016 or FY16). Their political opponents have been saying all campaign long that FY15 would be a deficit. But many independent observers thought that FY15 would show a small surplus.
So everyone knows this scorecard is to be made public at 9 ET. Every major newsroom in the country (including mine) was offered a chance to get a copy of the report at 8 ET on the condition we would not broadcast or publish details until 9 ET. I was one of those journalists that agreed to this routine embargo condition and accepted the report.
Nonetheless, the Liberal campaign — which did not get an embargoed copy — scheduled its leader, Justin Trudeau to make an announcement on support for seniors at 8:30 ET on Monday morning, 30 minutes before the release of the Annual Financial Report (AFR). Trudeau’s announcement was made in Toronto in front of a seniors advocacy group. The announcement itself took only a few minutes but then, rather than immediately take questions from reporters, Trudeau played host to a town hall-style Q & A from the assembled seniors. The clock, meanwhile, ticked toward 9 ET.
At 9 ET, Trudeau was still talking to the seniors. A few minutes after 9, he invited questions from the media. The very first question, not surprisingly, was about the information that every reporter had had in front of them for an hour but which neither Trudeau nor any of his advisors had seen:
REPORTER: "You spent a lot of time attacking Mr. Harper on his economic record. Numbers just released by the Department of Finance about 15 minutes ago show that there was a $1.9 billion surplus posted in 2014-2015. So that basically balances the books a full year ahead of schedule. Given these new numbers, can you still say that Mr. Harper is a poor money manager and how do these numbers affect your own timeline? Because you have said that you won’t balance the books until 2019?"
Trudeau should never have been put in this position. His first media availability Monday should have been scheduled until later in the day so that he could have read and been briefed on the report. Or Trudeau should have finished with reporters questions before the 9 ET release of the “surprise surplus.” Or he should have simply told reporters he would answer questions about this major budget document which he had not yet read later in the day.
Instead, he plunged right in — with disastrous results, considering he’ll be in a leaders’ debate on the economy in three days.
TRUDEAU: "First of all, let’s remind everyone accord to the Parliamentary Budget Officer, according to a wide range of experts, we are in deficit right now …"
Trudeau here is referring to a July 2015 report from the Parliamentary Budget Office. The PBO report is about the cvrrent fiscal year, FY16, but Trudeau was asked about FY15 and the fact that the government was in surplus in 2015. In any event, the PBO report from July 2015 is an estimate, an estimate based on a series of assumptions about future GDP growth, about future oil prices. Since it is an estimate it is, by definition, not fact. And some of those GDP and oil price estimates have changed since that PBO report was prepared. In any event, the Budget 2015 numbers from the Department of Finance predicted a surplus for FY16. In PBO vs Finance Canada, it’s certainly not a slam dunk that PBO is always right.
"… Mr. Harper has put us in deficit this year…"
Absolutely false. So far this year — FY16 — we have data from three months or the first quarter. After three months, we are in surplus to the tune of $5 billion. A good chunk of that surplus — $2.1 billion — is the result of a one-time gain Canada made when it sold its stake in General Motors. But the rest is the result, as Finance said when it released the numbers for June, of increased revenues. We still have a ways to go but, at least so far, we are in surplus, not deficit. Trudeau continued …
"As for last year’s numbers, we know—and we saw Mr. Harper under-spending and making cuts to veterans affairs…"
Nope. Wrong. Look to the table at page 16 of the Consolidated Financial Statements of the Government of Canada [PDF] — a document which the Auditor General has verified — and you’ll see that the Department of Veterans Affairs spent $121 million more in FY15 than FY14, an increase of 13.5%.
"…to aboriginal affairs…"
Wrong again. Page 16 again. Aboriginal Affairs spent a whopping $1.986 billion — billion, with a ‘b’ — more in FY15 than it spent in FY14. That was an increase of nearly 30%.
"… to seniors…"
Strike three. I’ll quote from the AFR (p. 19): “Elderly benefits consist of Old Age Security and Guaranteed Income Supplement and Allowance payments. Total benefits were up $2.3 billion, or 5.5 per cent, in 2014–15, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. The increase in elderly benefits also reflects the accrual of retroactive payments.”
"… in the billions of dollars to that he could balance the books in time for his election. it was a political goal that actually has helped us slide into the recession…"
There is no economist anywhere that has concluded the actions or inactions of the federal government caused two successive quarters of negative GDP growth, the narrowest of definitions of recession. Moreover, as consumer demand remained strong in the first half of the year and employment growth was also strong in the first half, the consensus view of most economists is that Canada was never in a recession. In any event: A sitting prime minister puts the country in recession so he can get credit for balancing the budget? After running six deficits that were incurred to pull us out of recession? Does that even make sense?
"… that Canada is the only G7 country in [recession] right now …"
Let’s call this one a “Likely Wrong” again. I don’t know how every other G7 country is doing but Canada was in that narrow technical recession from January through to May. In June, the month for which we have the most recent data, the economy grew 0.5%. There is no economist I am aware of predicting negative growth for the current quarter or for the rest of the year. Now, most are predicting “sluggish” growth but growth is growth. The Bank of Canada said in July growth should be about 1 % this year. So while only a handful would say we were in a shallow technical recession earlier this year, there ain’t any I know of to say we’re still in recession.
"… but our economic platform to invest in canada, to invest in the future is not based on the past few bad months that Mr. Harper has had. it’s about the past bad ten years that Mr. harper has put forward. Canadians I’ve talked to across this country recognize that we need investment in housing, in public transit. in growing the economy. Because Mr. Harper has been unable to create that growth. and we are committed to balancing the budget in 2019 —"
The budget is balanced right now. And two of his political opponents believe it should stay balanced.
"… and we will do that be being fiscally responsible and by growing the economy to the kind of investments in jobs and in Canadians that we need. We are the party that is telling Canadians the truth about the economy."
Truth about the economy? The truth is we a) ran a surplus in FY15 b) are in surplus after the first quarter of FY16 and c) spending by Ottawa on veterans, aboriginal affairs, and seniors increased in 2015 in absolute and relative terms compared to 2015.
A war room forewarned — as it was on Friday — should be forearmed. On a day when everyone and their uncle knew the big deal would be surplus or deficit, the Liberals sent their leader unprepared. And then it failed to follow up later in the day in any substantive way to challenge the numbers or the economic record of the incumbent they’re trying to beat.