Data from 1984 after Pierre Elliott Trudeau and Jean Chrétien left the cupboard bare:
- The Liberals had run up a federal deficit of $38.5 billion, nearly nine per cent of GDP—the largest Canadian deficit ever, in terms of percentage of GDP.
- The federal debt had increased by 1,100 per cent under the Liberals (ouch).
- Interest rates had reached double digits, and at 22.75 per cent they were devastating to those on fixed incomes.
- The Liberal government had been spending $1.23 for every $1.00 collected in tax, a disaster waiting to happen.
However, by the time the Liberals regained office in 1993, there had been a tremendous turnaround. Look at what a difference the eight years of Brian Mulroney and his conservative government had made:
- GST replaced the terribly destructive Federal Sales Tax (FST)—a manufacturing sales tax that for years had been condemned by economists.
- Free Trade between Canada and the US had been negotiated. The Liberals understood this to be of significant benefit to Canada, and broke their own campaign promise to scrap it.
- The federal government had an operating surplus (before interest paid on the national debt created by the Liberals).
- The deficit as a percentage of GDP had been reduced by one-third, despite the worldwide recession of 1990-91.
- Given that the Tories had an operating surplus, were it not for the interest payments on the debt the Liberals had created up to them leaving office in 1984, the Tories would most likely have been able to leave a balanced budget.
- The Mulroney government had cut program spending so that instead of spending $1.23 for every one dollar collected in taxes like the Liberals did, they were spending 97 cents for every dollar of tax taken in.
- Interest rates fell from a peak of 22.75 per cent to six per cent, the lowest in 20 years.
- The annual inflation rate was 1.5 per cent, the lowest in 30 years. In 1980, this rate hit a high of 13.58 per cent and was still at an unacceptable 4.30 per cent in 1984. And remember that the Liberals had ruled for most of the previous decade.
June 2, 2000, McGill University’s North American Studies Institute published an updated a 1993 study in which economist Tom Velk and historian A.R. Riggs concluded that Jean Chrétien’s economic record ranked worst of any prime minister since the Second World War. And that “[Brian] Mulroney's numbers were the best since Louis St. Laurent presided over the post-war economic boom…” (Source)
The researchers based their conclusions on a composite score of 18 components of the “misery index,” as devised by left-wing economist Arthur Okun, and later elaborated by right-wing economist Robert Barro.
The expanded misery index is the sum of several outcome rates, including inflation, unemployment, interest and exchange rates, taxes and deficits, income distribution, growth and productivity.
The authors explain:
“Our benchmarking is based, in part, on how a Prime Minister does given a situation he inherited, on the direction of change during his term, how well he does in comparison with contemporaneous American leaders, and whether his successful policies mark a lasting departure from those of the past.”
Mr. Chrétien, they contend,
“inherited an economy whose fundamentals were sound—low inflation, low interest rates, a shrinking government share of the overall economy, a relatively strong dollar and expanding trade.”
One of the tests of economic leadership, Velk and Riggs write, is whether
“a leader improves the situation he inherited from the previous government, and outperforms contemporaries in other nations.”
These are the sort of facts Stéphane Dion hopes the Canadian people won’t find out before Oct. 14.