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Will Fixed Election Hurt Canada’s Economy? This Economist Thinks So

July 9, 2015

Will Fixed Election Hurt Canada’s Economy? This Economist Thinks So

On verge of recession, campaign might steamroll stimulus.

The first day of September will be a critical one for Canada, say economists.

That’s the day new economic data will determine whether or not Canada’s economy shrunk two quarters in a row. A second downturn will put the country in an official recession with fewer than two months until a federal election.

Canada’s gross domestic product fell one per cent in the first quarter of 2015 and signs show it could shrink another 0.6 per cent for the second quarter, with TD Bank blamingfalling oil prices.

Mowat Centre economist Mike Moffatt said economic turmoil in China isn’t helping, as Canada’s economy relies so heavily on commodity prices.

“This is not a good thing for the Canadian economy,” Moffatt said. “There’s a distinct possibility we’ll have three quarters of negative growth — something outside of the 2008 recession we haven’t seen in quite some time.”

Wednesday the Shanghai Composite closed having lost 5.9 per cent after plummeting 8.2 per cent when it first opened. China’s government-owned Securities Timesreported 700 companies asked to suspend trading of their shares in an attempt to dodge the market turmoil.

Fixed election drag?

According to Moffatt, Canada’s fixed election date of Oct. 19 will make responding to the downturn nearly impossible, as government will be dissolved during the six-week campaign period.

The Harper government passed legislation in 2007 mandating an October election every four years, but the law is not binding. Canada’s constitution still fixes a maximum term at five years.

Under Canada’s former election rules, Moffatt said he expects government would likely not hold an election and instead look to stimulate the economy. “I think this is showing one of the problems with fixed election dates,” he said. Prime Minister Stephen Harper could choose to ignore the fixed election date, but would pay a political cost.

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