Tax-free savings accounts, income splitting for families, middle-class tax cuts and $15-a-day daycare should all be on your mind when you factor your personal finances into how to vote today.
What you don't need to think about is how financial markets will regard any election outcome that leads to political uncertainty in Canada.
Our dollar and stock market are driven primarily by global events, not local politics. Strong economic growth in China is more important to stock market prosperity in Canada than a definitive election outcome.
We used to put huge importance on what the markets say, but that was because our finances as a country were a mess. In the mid-1990s, the International Monetary Fund warned Canada in a confidential report that the dollar could come under severe downward pressure unless the federal and provincial governments addressed the big deficits they were routinely running.
Governments did attack their deficits in the years to come, but the dollar fell through most of the decade and didn't stop until hitting an all-time low of 61.8 cents (U.S.) in early 2002. Blame low prices for resource exports and bouts of global financial instability that drew money to the safety of U.S. dollars.
This sounds a lot like today's world, but there's a difference in that government finances are in much better shape. True, many provinces are in deficit and the federal government is only just back in surplus after multiple years of deficits.
But these deficits have to be seen in the context of the global recession and its aftermath. Adjust for that, and Canada's financial condition is solid.
This would apply even if the Liberals form a government and begin to follow through on their pledge to run deficits of up to $10-billion for three years to jolt the economy. In the 1980s, $30-billion annual deficits were the norm. The problem with all that red ink is it sours foreign investors who buy government bonds. Governments have to offer better rates on their bonds, and that means higher borrowing costs for everyone.
That's not an issue today, though. Canada is regarded as a financially strong country today, so Ottawa and the provinces are able to borrow at very low interest rates. In October, 1995, a five-year Government of Canada bond yield was 7.5 per cent; today, it's 0.8 per cent. A minority or coalition government won't change that much, if at all.
There's another reason why you shouldn't worry about the markets, and it goes back to the global financial crisis that began in 2008 and still hasn't passed completely. Basically, the markets don't have a clue. We have this view of them as representing the aggregate wisdom of the financial world's best and brightest, but we saw that's not true when they utterly failed to anticipate the crisis and then overreacted after the fact.
The markets react in extreme ways to events, often wrongly. These days, there's a lot to react to. Greece's debt problems have died down, but we haven't heard the last of them. There are also questions about the U.S. economy – is it finally strong enough for interest rates to rise from the emergency lows they've been at for years? Maybe not. Lately, there's been speculation about whether deflation will prove to be a problem in the United States and Europe. Deflation, or falling prices, is a worrying sign of economic weakness.
And then there's the ongoing matter of whether the growth rate for China's economy is simply moderating or crashing. China's giant economy is like a traffic light for the prices of oil and metals, which together have a big influence on our stock market. China is flashing a yellow light right now and there's concern – though zero certainty – it will turn red. If that does happen, it doesn't matter who's running the country. Our stock market will suffer and our dollar will fall.
We may see a ripple in stocks and the dollar if the election results in a change of leadership. For example, Liberals and NDPers bargaining over the terms of one supporting the other's minority government might passingly concern the markets. But more than ever, we're affected by global events rather than local ones. Remember that if you're concerned about how the markets will view the election results.
The bottom line: It doesn't matter.