Economic benefits of election barely a blip, experts say
The federal election may be all about the economy, but that economy won’t benefit from the political campaign itself — despite the truckloads of cash being off- loaded to political parties and a jump in government- legislated spending limits.
And you might think campaign advertising and temporary hiring to support the voting process would also help juice the economy.
In fact, the Oct. 19 election will be seen as a blip, at the very most, on the country’s bottom line. Not to mention the distraction factor of elections in general and the inevitable delays in policy decisions over the newly extended politicking period in Canada.
Which begs the question: What are campaigns good for anyway? OK, the voters’ right to choose. But economically, if previous elections are any guide, absolutely nothing.
“We are talking about a $ 2- trillion economy. It takes a lot to move the needle on a national level,” said Douglas Porter, chief economist at BMO Capital Markets.
An election campaign would generate about a one- tenth of a per cent of gross domestic product. “In the specific months of the campaign, it can have a little bit of an impact,” he said. “Frankly, you’d have to squint pretty hard.” But lasting results? Nope. “Statistically, you will see parttime ( employment) numbers, for sure, get a pop. It’s just a spending boost. It’s just a government spending boost,” said Finn Poschmann, president and CEO of the Atlantic Provinces Economic Council. “It just comes, and it goes.” Still, this time around there are more federal ridings — 338, up from 308 in the 2011 election. Most of the new seats, 15, are in Ontario, while British Columbia and Alberta got six more apiece. Quebec gained three.
The campaign period has also been extended this time — 11 weeks compared to the usual five- week run — and, as a result, so was the amount of money political parties are allowed to spend.
The limit on spending by each political stripe has more than doubled for the 2015 vote: parties can now open their wallets to the tune of $ 54 million, a hefty increase from a cap of a little more than $ 21 million during the campaign leading up to the 2011 election.
And yes, there’s also a lot more money allowed for election spending by each candidate, in excess of $ 200,000, given the length of the current campaign.
But the results will still be small change.
“And we’re just talking about the very direct spending that’s carried on with a campaign — whether it’s advertising or some of the events they have. You know, some of the travel,” said BMO’s Porter.
“We’re talking very small dollars here,” he said.
And there are also economic downsides to an election.
“Irrespective of the length of an election, the biggest hit to the economy is the delay in decision making,” said Poschmann.
“In the typical case, nationally and provincially, you don’t really have any confident expectation as to the outcome. That means, whatever hesitance there might have been before in decision making, they are going to defer significant decision- making and budget allocation, rule and regulation writing and legislative activity to the other side of the election.
“The longer that break, the costlier those pauses will become.”