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At Issue

With Philip Shaw

There is No "Northern Tiger" in Chatham-Kent

Tuesday, February 25, 2003

Finance Minister John Manley likes to call the Canadian economy a "northern tiger". That's a play on the buzzword given to Southeast Asian countries like Malaysia, Singapore and Taiwan who in the late 1980's and early 1990's were called "Asian Tigers". They got that label because of there magnificent economic growth numbers.
Those growth numbers at times were in double figures. When the Asian flu struck in 1997, the tigers were exposed for what they really were. Their fragile economies suffered huge setbacks, only now getting back to the heady growth rates they once had grown used to. But at the time, those economies became the darling for mutual fund sales pitches.
At the time, our economy didn't seem to match up. In retrospect, our economic growth numbers were good but nothing like Asia's. We were in the middle of the 90's bull market and investors were no longer satisfied with single digits personal rates of returns. Now, after the market meltdown expectations are much more in sync with the reality of our times.
So is Manley right when he says we are truly a "Northern Tiger"? It certainly has that panache of sex appeal which many of my boring economist friends long for when describing economic activity. But the last time I checked there might be a few polar bears roaming through the frozen tundra, but no tigers. The closest thing we have to those big cats are a few western cougars hiding on the west coast.
Consequently, maybe "northern tiger" is our best bet. The economic numbers Manley is crowing about surely bear that out. Spending is up, but aside from the fiscal years ending in 2000 and 2001, when programs accounted for just over 11 per cent of GDP, this year's 12.2 per cent is the lowest since 1950. Still, we're nowhere even close to the big spending years of the 1970s, 1980s and the first half of the 1990s, when programs routinely
amounted to between 15 and 20 per cent of GDP.
GDP refers to the Gross Domestic Product which is the market value of all goods and services produced in a year within Canada’s borders. So when you think of last week's spending spree in the federal budget, you have to keep it in perspective. Even though it was the highest increase in spending since the Trudeau era, it nothing like those bad old days. Even though it might be hard to imagine here in Chatham-Kent, the Canadian economy is
thriving.
Interest payments on the debt now amount to 3.3 per cent of GDP, the lowest since 1980. In 1996, interest payments gobbled up 37 cents of every dollar Ottawa raised in revenue. The figure is now down to 21 cents, the lowest since 1980. Total spending is also down sharply from the 20 to 25-per-cent range that was common in the 1980s and early 1990s. At about 15 per cent of GDP, it is back to levels not seen since the early 1950s.
What does this all mean? It means whether you want to give them credit or not, the Liberal government has got the federal fiscal house in order. Many things might have been downloaded onto the provinces and then to the municipalities and then to the ratepayers like you and me. Putting aside the gun registry and Kyoto for a moment and what once resembled a fiscal ship in peril , is now steaming full speed ahead.
Unfortunately for us here in Chatham-Kent, this economic prosperity hasn't manifested itself within our local economy. With the Navastar closing coming this July, local businesses are bracing themselves for the inevitable fall out. People and money continue to move out of Chatham-Kent. With a provincial election in the offing, these local problems should become an election issue. It shouldn't be left up to local government to help solve our economic problems when the provincial and federal governments find themselves fiscally able to do something.
It has become reality into today's economy that auto makers look toward government to create cash incentives for plant construction initiatives. Our American friends in the deep south have become expert at that. If there ever was a place for this type of government gesture, it would be Chatham-Kent.
In the meantime, citizens of Chatham-Kent will have to bide their time. Collectively, as Canadians, we might be able to call ourselves "northern tigers." Canadian economic indicators continue to look good. The hard part will be getting some of that economic royal jelly to trickle down here



Philip Shaw, farms 830 acres near Dresden, Ontario. He holds a Masters of Agricultural Economics and Business Degree from the University of Guelph and is a well-known commentator on agricultural issues in print, on radio and over satellite in Canada and the United States. In the Chatham-Kent Times, Phil will use his frank and forthright writing style to address political and economic issues from the local to the international stage. He is a keen observer of political life at all levels, reads widely and has travelled the world to gather fodder for his column. See what's At Issue this week.