OTTAWA — The Harper Conservatives like to style themselves as shrewd managers of the economy, with the sturdiest hand at the helm, but that reputation has yet to be cemented after just 24 months in power.
Two years is insufficient time for analysts to gauge how well a government's decisions expanded the economic pie.
"Even a radically different policy course probably wouldn't have changed the outcome over the last two years because it doesn't have that big an impact over the short term," Toronto-Dominion Bank chief economist Don Drummond said.
Still, private-sector economists say the Tories appear to be on the right track today. But only, they note, after a rough start.
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After taking power in February, 2006, the Harper Conservatives boosted program spending by close to 14 per cent over two years after promising to restrain it. Instead of making deep cuts to high personal income-tax rates, they doled out selective tax cuts to politically favoured groups. They also spent $12-billion slashing the goods and services tax, a move economists loathed because they consider the GST among the least damaging of all economic taxes.
What has rescued the Tories' reputation among private-sector economists is last October's fall fiscal update, in which federal Finance Minister Jim Flaherty doled out what amounts to $6-billion in annual corporate income tax cuts - measures expected to spur growth.
Global Insight chief economist Dale Orr awards the Tories a "sort of C-plus" letter grade for their record in the first two years leading up to the 2008 budget.
"If you would have asked me this question last September, I'd have given them a C-minus," he said.
But it's not as if most of the Harper government's first two years were that economically challenging. Strong commodity prices for many resources that Canada sells, from metals to oil, helped push Ottawa's corporate and personal income-tax revenue to surprisingly high levels for 2006 and 2007.
Still, the Tories are getting high marks for unveiling $14.7-billion in tax-cut-heavy economic stimulus last fall, just as the economic outlook dimmed - even if the main motive was to deny the opposition Liberals fiscal room as they tried to assemble a campaign platform for a possible 2008 election.
"It was brilliantly timed. Just as the economy was running into serious heavy weather ... we had some serious fiscal stimulus," BMO Nesbitt Burns deputy chief economist Doug Porter said. "It may have been lucky. It may have been politically motivated, but it's better to be lucky than good."
The real test for the Tories - which will determine whether they outshine the deficit-slaying record of Liberal finance minister Paul Martin and prime minister Jean Chrétien, economists say - will be whether they can deregulate protected industries and slash personal income-tax rates.
So far, C.D. Howe research director Finn Poschmann says the Tories' economic stewardship has delivered an "incremental [improvement] rather than a marked improvement" over the 1993-2002 Chrétien government.
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