A week ago Brian Mulroney stood in front of a national audience and stated that Canada's debt was in the process of doubling -- a strange and troubling exaggeration.
Far from being in the process of doubling, the national debt is actually edging downward. So why would the former prime minister say such a thing? And why didn't anyone call him on it?
Let's be charitable and assume that Mr. Mulroney got carried away in front of an appreciative audience and it just slipped out. As for the media, they were focused on the political story, not the economic numbers Mr. Mulroney was dishing out.
But given the speech was also about setting straight his legacy, it's worth examining exactly what he said. Conservatives reading this should relax. This is not a partisan attack. Some of what follows may surprise you.
The former prime minister's error on the debt was his most egregious (a nice Mulroney word). His comments on the deficit were more a statistical sleight of hand. He said the deficit in 1984 of $38.5-billion, or 8.7 per cent of GDP, was the largest in history. This is true if you are looking at the deficit as a percentage of GDP.
But in dollar terms, the deficit hit a peak of $42-billion in 1993-94, the last fiscal year in which the Tories presented a budget. The 1993-94 shortfall is lower as a percentage of GDP only because the economy had grown since 1984.
There was more fun with figures in his discussion of public debt charges, which he said increased 1,100 per cent under the Liberals. On the face of it, this is an enormous amount. Yet if you look at it in dollar terms, the increase in the Liberal years -- 1963-1984 -- is roughly equal to what the Conservatives added to public debt charges between 1984 and 1993.
The total is rough because Joe Clark's interregnum in 1979-80 has to be taken into account, as do years split between two governments. The growth under the Conservatives just looks much smaller in percentage terms because the measurement starts from a higher base.
What really stuck in the craw of some Liberals last week was when Mr. Mulroney said that when it comes to the fiscal dividend, Finance Minister Paul Martin is picking the flowers planted by his Conservative predecessors Michael Wilson and Don Mazankowski. The Liberals are proud, justifiably so, of their fiscal achievements and unwilling to share the glory.
But here the figures show that Mr. Mulroney is telling the truth, although he may not want to remind Canadians of everything the Conservatives did. He owned up to the goods and services tax, which has turned into a real money-making machine for successive governments.
In 1990-91, the year it was introduced, the GST raised $2.5-billion net for the government. By last year those net revenues had risen to $20-billion (gross was $50-billion). It has been such a good revenue-raiser that Prime Minister Jean Chrétien decided not to discard it, despite earlier promises to do so.
It was also under the Tories that the Bank of Canada introduced inflation targets that have proved wildly successful. As inflation dropped, so could interest rates. That meant public debt charges were lower than they might otherwise have been and the economy was stronger. Both boosted government revenues.
But the third plank in the Tory economic legacy was the partial deindexation of the tax system in 1985, which provided the federal and provincial governments with huge windfalls. Mr. Mulroney didn't emphasize this point given the unpopularity of the move, which was only reversed in the last budget.
And he certainly did not admit that deindexation played a part in the fall in Canadian living standards that he decried. Deindexation meant taxes kept rising even when wages were falling or flat, as was the case in the early 1990s. If Canadian living standards fell, it was in part because of what the Conservatives had done.
Whether you would describe the Conservative moves on inflation, the GST and deindexation as planting the seeds or tilling the soil -- they helped produce the healthy fiscal situation Canada enjoys today. But ultimately it was the Liberal moves to cut program spending and boost revenues that brought credibility to the entire effort and turned the budget deficit into a surplus.
Mr. Mulroney loses points in this reality check for his comments on the debt and for using some misleading comparisons. Yet on the whole, his economic legacy is not nearly as bad as is popularly believed. If he just stuck to the facts, Canadians might come to that conclusion themselves.