Halloween is just around the corner and, if past occurrences are any guide, Canadians will spend upward of $1 billion on pumpkins, decorations and treats for the kids - and cash registers will be ringing in retail stores across the country.
Of course, this year may not be like seasons past, because the sub-prime mortgage mess in the United States has unleashed some real demons and they have caused a financial catastrophe south of the border. Those toxic assets - hundreds of thousands of shaky mortgages that were packaged and resold around the world and which have since gone bad - have poisoned the financial system and now threaten the wider economy.
These are uncertain times - some would say downright scary - and not just for the high flyers of Wall Street and Bay Street. "We're very concerned about the economy," says Perrin Beatty, president and chief executive officer of the Canadian Chamber of Commerce. "What we're witnessing is the most serious international financial crisis in a long, long time."
Some experts contend that the U.S. economy is already in recession. If so, the small and medium-sized enterprises (SMEs) for which Beatty speaks can expect to find themselves squeezed from above and below. The banks will impose new restrictions on the credit that allows many modest-sized businesses to breathe. Consumers will tighten their belts or stop spending on discretionary items altogether.
At the same time, higher energy prices are pushing up the cost of doing business and running a household.
"If we see a new round of inflation," says Beatty, "it could have a major impact as well. There are a whole range of things that could affect small and medium-sized businesses."
This crisis has unfolded in the midst of national elections in both Canada and the U.S. and Beatty was struck by the lack of discussion of economic issues in the Canadian economy. "The political parties were dealing with everything but the economy," he said prior to Canada's vote Oct.14. "It's almost like they live in a parallel universe."
The Greens inhabit an economic fantasyland. The Bloc Quebecois is so deeply burrowed into the bowels of its own small domain that it wouldn't notice if a nuclear war were occurring just beyond its border. The New Democrats would like to raise corporate taxes so they could splurge on new and unnecessary social programs.
Liberal Stephane Dion, who would blow a bundle on infrastructure and child care as well as impose punishing new carbon taxes, belatedly began shilling a five-point plan to address the state of economy. Unfortunately, he was proposing talk - a first ministers' meeting, a fiscal and economic update from the Finance Department and equally tepid measures - rather than real medicine.
The Conservatives promised nothing of significance. There was nothing in their platform to scare anybody and, having committed themselves to so little, they would have a virtual carte blanche to pursue whatever they choose if re-elected.
From Beatty's perspective, whoever forms the next government needs to put the economy front and centre when Parliament reconvenes. "The Speech from the Throne should be built around it," he says. "We need to get to work on it rapidly. Every indication is that the economy will get worse before it gets better."
His prescription calls for a five-year plan to reduce taxes on individuals. He believes that the federal government should encourage the provinces to reduce corporate taxes and phase out levies on capital more quickly. "We also believe that provincial sales taxes should be integrated with the goods and services tax to improve the competitiveness of the system," concludes Beatty.
The chamber intends to push Ottawa to adopt the recommendations of the Smart Regulation Task Force in order to eliminate rules and procedures which increase costs without adding value. The organization also advocates the elimination of inter-provincial trade barriers that drive up the price of doing business and balkanize the Canadian economy.
The provincial premiers, sitting as the Council of the Federation, have drafted an Agreement on Internal Trade, which is supposed to enhance the free flow of workers, products and capital within our borders, but Beatty doesn't have much faith in the work of this political chat group. "Historically, more has been said than done," he says. "We need concrete action."
There's not much chance of that happening if we wind up with a third straight minority government. If the voters give Stephen Harper's Conservatives a majority, we can only hope that he uses it wisely.
The economy should be his No. 1 priority. Creating new wealth, rather than merely redistributing what we have, should be the objective. He should put the resources of the federal government to work and call upon the citizenry to participate in this noble and necessary cause.
(D'Arcy Jenish can be reached at jenish@businessedge.ca)
