Conservatives are distancing themselves from their own definition of a recession on the eve of a key Statistics Canada report that will show whether the country's economy shrank for a second consecutive quarter.
Stephen Harper sidestepped questions Monday about how to define a recession as the Conservative Leader noted that broader factors should be taken into account when looking at the economy.
"It's more important to describe the realities of the situation, rather than have labels," said Mr. Harper in French on Monday after a rally in Ottawa. Mr. Harper argued that most of the contraction in the economy is focused around the energy sector and that other sectors are growing.
Yet just over two months ago, the Conservative government approved the Federal Balanced Budget Act, which put into law what is commonly referred to as the technical definition of a recession. The act defines a recession as "a period of at least two consecutive quarters of negative growth in real gross domestic product for Canada..." The law, which was passed as part of an omnibus budget bill, is meant to encourage future governments to balance the books every year. It allows deficits to occur due to a recession, but triggers a set of actions including a freeze on operational spending.
On Tuesday, Statistics Canada will report the GDP figures for June, which will show whether Canada did in fact meet that legislated definition. Statistics Canada has previously reported that the Canadian economy shrank in each of the five months from January to May. Tuesday's report is sure to generate significant spin from the political parties as they fit the data to meet their own messaging.
Opposition parties, however, signalled Monday they are ready to attack the government's record regardless of what the figures show.
"Whatever is in that report, it's not going to change the fact that Stephen Harper's plan is not working," NDP Leader Thomas Mulcair told reporters Monday.
Liberal candidate John McCallum, a former bank economist, said Canadians feel as though the country is in recession and a weak economy requires government action.
"I think Mr. Harper's trying to get himself off the hook. His own legislation defined a recession as two consecutive quarters [of negative growth]," said Mr. McCallum.
There is a broader definition of a recession created in 2012 by the Business Cycle Council, a committee of eight economists organized by the private, non-partisan C.D. Howe Institute. But those economists now find themselves in the middle of an election campaign feud over whether there was a 2015 recession in Canada.
The council issued its first report in Oct. of 2012, defining the start and end of all Canadian recessions going back to 1926. The council did not issue another statement until July 28 of this year, after a July 22 meeting.
"The council defines a recession as a pronounced, pervasive and persistent decline in aggregate economic activity," said the council in July. "The Business Cycle Council therefore determined that as of July 22, data did not provide evidence that Canada had entered an economic downturn. The council may review its position in fall 2015."
At the time, only the first four months of GDP data had been released. The figures for May would be released three days later, showing a fifth consecutive month of negative growth.
Data from the second quarter has so far been worse than what the council expected in July. The council ranks recessions from one to five, or mild to severe. A category-one recession is defined as "a short, mild drop in GDP and no decline in quarterly employment."
Incoming council co-chair and economist Craig Alexander said if Tuesday's data shows a second consecutive quarter of negative growth, that would likely meet the council's definition of a category-one recession. However, he also said the council will need to wait until at least December – after the Oct. 19 election – to review third-quarter data and second-quarter revisions before issuing a further update.
"There's a lot of emotion that gets caught up in the word recession," said Mr. Alexander, noting the point of the committee is to provide an accurate historical record.
Bill Robson, the president and CEO of the C.D. Howe Institute, said he did not expect in July that the definition of a recession would become such an issue.
"I'm glad to have put something out that I think is helpful for thinking about economic upturns and downturns," he said of the July report. "I regret that it has become as politically charged as it has."