Economic Action Plan 2014 Bill, No. 2 -Third Reading
Hon. Art Eggleton:
Honourable colleagues, last Friday, and again today, I listened to the remarks of Senator Larry Smith, first moving adoption of second reading and, today, third reading. I noticed a new vigour in his speech-making. In fact, for a while there I thought I was listening to Senator Gerstein. But the only problem with Senator Smith’s remarks was that the government fed him bad information. I’d like to comment on a couple of things that were said that I find to be myths that come out of those remarks.
The first myth is that the government’s economic action plan has been stellar at creating jobs. He said that last Friday and he said it again today.
The facts of the situation are this: A Canadian Chamber of Commerce report looking at 2013’s job creation said that Canada’s job market sputtered — their word. It’s not a left-wing think tank; it’s the Canadian Chamber of Commerce. It sputtered, they said. Canada created only 99,000 net new jobs in 2013, which was the slowest job growth, excluding the recession, in over a decade. Also, 96 per cent of the net jobs created were part time, raising concerns about the quality of jobs being created. This type of employment is called “precarious employment”: It lacks sufficient pay, benefits, pensions or job security.
That mediocre trend continued into 2014. From August 2013 to August 2014, the labour market created only 81,000 new jobs, which is the smallest growth since 1990. September and October posted decent job gains, but in November, we lost 11,000 jobs.
It’s up and down. The unemployment rate is up and down, and it also doesn’t take into consideration that some people just drop out of the job market. Some people get discouraged. We’ve known that for years.
Let’s look at this from the other angle. Let’s look at it from the perspective of the employment rate, not the unemployment rate. The employment rate was 61.6 per cent in November 2014, and that represents the ratio of employment to working-age population. It’s not near the pre-recession height of 63.5 per cent, which was reached before the crash in 2008. So we’ve gone from pre-2008, from 63.5 per cent, down to a current 61.6 per cent in terms of the employment rate in this country.
Internationally, if you look at the OECD, the Organisation for Economic Co-operation and Development, where did Canada rank out of the 34 OECD countries? It ranked twentieth in net job creation since the recession. Countries such as the U.S., Germany and Australia have been better at creating jobs. We still have 1.3 million unemployed Canadians, with persistently high 13 to 14 per cent youth unemployment, not to mention the 4.8 million people who live in poverty, who don’t have enough income for a decent standard of living.
So that’s myth number one.
As for myth number two, the senator said in his remarks that the New York Times said Canada has the most affluent middle class in the world. First of all, the story wasn’t one of Canada doing well but of the United States doing poorly. Much of the data in that particular study did not include European countries, like Norway and Switzerland, which rank higher in OECD pre-tax data.
Recent research also shows that if we look at the median after-tax income of all Canadian families in 2011, it was $50,700, up only very slightly from $49,500 more than 30 years ago, in 1980, if you take out the inflation factor. So the middle class has been stagnant for 30 years.
Also, the gains that have been made in our economy have not been equally shared. This is the issue of income inequality. Research shows that if you look at the distribution of after-tax income between Canadian families, we find that the share of the middle class fell from 18.3 per cent in 1980 to 16.3 per cent in 2011. But the share of the top 20 per cent rose from 40 per cent in 1980 to 44.3 per cent in 2011.
Add to that the rising cost of living that has led to record debt levels. Again, we saw reports about that today. The Bank of Canada has indicated a lot of concern because it’s now 162 per cent of after-tax disposable income. This is how the middle class is keeping up; they’re borrowing and borrowing, so much so that a recent study by the Canadian Payroll Association showed that 51 per cent of Canadians are living paycheque to paycheque. That’s half the population. If an emergency comes along, they can easily fall into very difficult times, maybe even into the ranks of the low-income people in this country.
We also have a generational gap that’s worth noting. With housing prices being up to 30 per cent overvalued, as the Bank of Canada has recently found, we see that the younger generation is struggling to get ahead. Professor Paul Kershaw of the University of British Columbia has pointed out that the typical full-time young worker has to save for 10 years to put a 20 per cent down payment on a home. That’s twice as long as a generation ago.
So, colleagues, it turns out that Canada’s Economic Action Plan, as they call it, is more myth than fact.