One chief economist says the next Prime Minister should pledge to be more accountable on improving economic outcomes for Canadians, floating gross domestic product (GPD) per capita as a measure of success.
Jean-François Perrault, senior vice-president and chief economist at Scotiabank, released a report last week saying that as a potential federal election looms, leaders should be challenged to present a “long-term vision for the country,” despite the threat of a trade war. In an interview with BNN Bloomberg Monday, Perrault said there needs to be a “solid accountability framework” surrounding government decisions.
“One of the things we recommended was for whoever wins or whoever campaigns to perhaps campaign on a promise of generating an increase in GDP per capita of say two per cent a year for the life of their mandate,” he said.
“That would obviously address some of the weaknesses that we’ve seen in Canada over the last number of years where GDP per capita has fallen.”
Perrault said GDP per capita is an imperfect measurement, but it is a tangible metric that could be used similar to how corporations commit to certain outcomes for shareholders with built in accountability mechanisms.
Committing to raising GDP per capita at that level would provide a real-time check on how a government is performing on raising living standards and improving the lives of Canadians, he said.
On March 9, the Liberal Party will elect a new leader.
Tariff uncertainty
Perrault’s comments come as Canada braces to see if U.S. President Donald Trump follows through on threats to impose sweeping tariffs. U.S. Commerce Secretary Howard Lutnick has said tariffs would be levied against Canada and Mexico on Tuesday, according to The Canadian Press, but the levels remain to be seen.
Despite the looming threat of tariffs, Perrault said “we don’t really know that much” beyond the fact that “in principle tariffs are coming on tomorrow.” He added that additional measures, not specific to Canada, will come into effect, namely steel and aluminum tariffs on March 12.
Tariff uncertainty is likely to weigh on Canada’s economy going forward, Perrault said, after fourth quarter GDP figures released last week showed better than expected growth.
“So long as we don’t have clarity on what may or may not happen on the tariff side…this weight of uncertainty is going to impact businesses, it’s going to impact households, at least we expect it to impact households. We know that businesses are more cautious,” he said.
“You look at the measures of confidence on the business side they’ve come down a little bit. Same on the household side.”
‘Bright side’
The federal election comes with a potential “bright side,” Perrault said, where politicians appear to be more cognizant of the challenges Canada is facing and “seem to be willing to take pretty aggressive steps to change the course on which we’re on.”
“There’s a fair amount to be optimistic about with respect to the election, regardless of who wins,” he said.
“Because we will have a government, I think that is more inclined to act on, in particular the physical, the capital investment side of the economy in relation to the outgoing Trudeau government which focused more on the human capital side of the economy.”
With files from The Canadian Press
