MACLEAN'S/CBC POLL

To have and have not

ROSS LAVER December 28 1998
MACLEAN'S/CBC POLL

To have and have not

ROSS LAVER December 28 1998

To have and have not

MACLEAN'S/CBC POLL

ECONOMY

ROSS LAVER

It was the year the Asian financial crisis spilled over into North America, the loonie skidded to an all-time low and stock indexes around the world dropped sharply, raising fears of a global recession. A little pessimism would hardly seem out of place among Canadians as 1998 draws to a close. Yet respondents to the Maclean's/CBC poll seem to be shrugging off the bad economic news. “It’s only a gut feeling, but things seem to be picking up in other countries and that should help us,” says Michael McKinnon, 31, a forestry consultant in Quesnel, B.C. David Leblanc, a Cape Breton coal miner who spent most of the year laid off but was called back to work in November, is similarly hopeful. “What with the deficit gone, I think the country’s moving in the right direction,” he says. “So I just hope for the best.”

In the decade and a half since Maclean’s launched its annual yearend poll, the findings have tended to underscore Canadians’ readiness to view the economic glass as half full rather than half empty. That theme shows clearly in this year’s results. On a personal level, 67 per cent of respondents say their financial situation has stayed the same or improved over the past decade. Even more striking, only 17 per cent say they believe their economic future would be brighter if they lived in another country.

The picture appears cloudier when it comes to the outlook for the Canadian economy. Twenty-four per cent expect a modest improvement in the near future, and a small coterie of super-optimists—three per cent of all respondents—believes the economy is poised to become significantly stronger. In contrast, 43 per cent say they expect either a mild or a severe recession.

Yet the figures don’t seem as grim when compared with previous years’ responses. Twice before, the year-end poll asked respondents to predict the economy’s future course. In 1989, 58 per cent were bracing for a recession; two years later, an overwhelming 90 per cent believed that economic conditions were going to get worse. (The economy did, in fact, go into recession in the spring of 1990, but by early 1992 a recovery was under way.) Viewed in that context, this year’s results actually contain a fair degree of optimism. “There’s certainly less pessimism than in the past,” says pollster Allan Gregg, chairman of The Strategic Counsel. Over the years, he adds, “We have seen a consistent plurality who believe that on a personal level they are better off. But for the economy as a whole, there’s this hangover effect that goes right back to the recession of the early 1980s, when for the first time Canadians were really traumatized by the notion that maybe things aren’t always going to get better.”

In only one region of the country, economically battered British Columbia, is there a clear majority who expect the economy to get worse. Fifty-six per cent of B.C. respondents are anticipating a mild recession, while another 17 per cent say they believe a severe recession is imminent. In total, almost three out of four B.C. residents expect the economy to deteriorate, compared with the 43 per cent nationally.

That pessimism is easy to understand. British Columbia, where the dominant resource sector is heavily dependent on exports to the Far East, has suffered far more than any other region as a result of the collapse of Asian currencies and low commodity prices. According to the latest estimates from the Conference Board of Canada, the B.C. economy shrank by 0.8 per cent in 1998 and will likely expand only marginally in 1999. “The business mood at the moment is exceptionally gloomy,” says David Bond, a professor of finance at the University of British Columbia in Vancouver. In Bond’s view, the province’s interventionist New Democratic Party government is as much to blame for the economic malaise as the Asian downturn. “There is very little investment taking place in British Columbia right now. It ain’t a happy place to be.”

East of British Columbia, the mood appears to be one of cautious optimism—a feeling that things are likely to stay the same or perhaps improve slightly. Newfoundlanders (34 per cent) are most inclined to expect stronger growth, followed by Albertans (32 per cent) and residents of both Ontario and Quebec (29 per cent).

Almost as stark as those regional differences is the contrast between the expectations of men and women. Nationally, 50 per cent of female respondents, compared with 37 per cent of males, believe the economy is heading into a mild or severe recession. According to Gregg, those findings reflect women’s unease about the general direction of society. “We’re seeing a growing level of concern about social issues and a growing demand for more activist government,” he says, “and both of those trends are led by women.”

Surprisingly, there is little regional variation when respondents are asked if the Asian economic turmoil has affected them personally. Nationally, six in 10 of those interviewed say the crisis has had “not too much of an impact” or none at all. And in spite of the fact that the Asian turmoil was the main cause of last summer’s steep decline in the value of the Canadian dollar and the continued weakness in Canadian share prices, only eight per cent describe the impact on them as “very significant.”

Significantly more likely than other Canadians to say they have been affected by Asia’s financial troubles are university graduates and respondents with household incomes over $60,000. The same groups are less inclined than others to agree with the statement: “Things will worsen for the global economy, and we are heading for more difficult times.” Overall, 36 per cent of respondents endorse that view, while a mere eight per cent subscribe to the opposite opinion—that the turmoil is largely over and the global economy will grow. The largest group—a slim majority of 52 per cent—opts for the middle-of-theroad position, that the worst is probably over but things will not improve much for a while.

Beyond those broader economic issues, the poll explores the views of respondents on a series of questions about government spending, social programs and taxation. The results reveal something of a contradiction: although many Canadians are unhappy about the amount of taxes they pay, they are inclined to favour increased government spending so long as it benefits the needy.

THE TEMPTATION TO LEAVE CANADA

Back dians in to 1993, name Maclean’s the province asked in which, Canagiven the option, they would most like to live. The winner: British Columbia. Not only that, but British Columbians were significantly more likely than other Canadians to vote for their own province as the most desirable place in Canada to live.

Just because they love their province, however, doesn’t mean B.C. residents are immune to the siren song of opportunities beyond Canada’s borders. This year’s poll asks respondents if they believe their economic prospects would be brighter in another country. Twenty-two per cent of British Columbians say yes, the highest proportion in any province. Quebecers are close behind at 20 per cent, followed by residents of Ontario (18 per cent), the Prairies (11 per cent) and Atlantic Canada (nine per cent). If British Columbians do pull up stakes, there are probably plenty of other Canadians willing to move west to take their place.

Which way is the economy heading?

Improvement: 27% Recession: 43%

Percentage saying the government can do nothing to affect the gap between the rich and poor because "the rich deserve to be rich and the poor deserve to be poor": Women: 21 Men: 27

DEGREES OF FRUSTRATION

Do you expect to get more or less back from the Canada (or Quebec) Pension Plan than you paid in?

For example, poll participants were asked how the federal and provincial governments should respond if the economy stops growing and Canada enters a recession. Thirty-seven per cent would support higher government spending to create jobs, while 35 per cent would approve of increased outlays on social programs and retraining schemes to assist the unemployed. Only 22 per cent agree with the statement that “the government can’t make any difference anyway and we should just let market forces run their course.” Support for that laissezfaire approach is strongest in the Prairies (26 per cent), among those with household incomes over $80,000 (30 per cent) and among supporters of the Reform party (32 per cent). Men are almost twice as likely as women to oppose increased spending—29 per cent to 15 per cent.

A high degree of concern for society’s less fortunate is also reflected in the answers to another question. Fully 71 per cent of those polled say the gap between the rich and the poor in Canada is increasing. Only five per cent think it is shrinking, while 21 per cent detect no significant change. The results are fairly consistent across all regions and demographic groups, although the youngest respondents, aged 18 to 24, and those with household incomes under $20,000—a group that includes many students and young people—are less inclined than older or more affluent Canadians to say the rich and poor are growing further apart. “It just seems to me it’s always been that way, and there’s not really a lot that can be done about it,” says Mandy Hanes, 19, a student at Humber College in Toronto.

Poll participants were also asked what, if anything, should be done about the gulf between the haves and have-nots. Half be-

lieve the government should intervene more actively in the economy, while 24 per cent firmly reject that notion, agreeing with the statement that “the rich deserve to be rich and the poor deserve to be poor” and nothing the government does will ever change that.

Partly offsetting the widespread sympathy for the less well-off is an overwhelming belief that taxes in Canada are too high. A total of 77 per cent are “somewhat” or “very” upset about the taxes they pay; only eight per cent say they are not upset. The results are fairly consistent across regions and demographic groups, although Prairie residents are disproportionately less likely than other Canadians to say they are very upset, and Quebecers more likely. (Paradoxically, Quebecers are also more inclined than others to favour government intervention to reduce the gap between the rich and the poor.)

Based on those responses, it’s tempting to conclude that Canadians are clamouring for tax cuts. But the poll suggests otherwise.

Asked how the federal government should spend this year’s budgetary surplus, the respondents rate tax cuts as the lowest of three priorities. The more popular options are to pay down the national debt and to increase spending on social programs; men tend to lean towards the former, while women favour the latter. Moreover, those who do object to the level of taxation are more likely to identify the GST and sales taxes generally as the most annoying forms of taxation, followed by personal income taxes and, in third place, property and municipal taxes.

The lesson for Ottawa? Finance Minister Paul Martin, who has spent much of the past year fending off opposition demands for across-the-board tax cuts, appears to have caught the country’s mood with uncanny accuracy. Caught between their concern for the less fortunate and their belief that taxes are out of control, Canadians seem undecided on what action, if any, Ottawa should take.

SUPPORTING THE OLD

Judging by this year’s Maclean’s/CBC poll, Canadian taxpayers are unlikely to rise up in mass revolt anytime soon. By the same token, Ottawa does not appear to be encountering much of a backlash over its efforts that began in 1998 to overhaul the Canada Pension Plan. The government’s objective is to ensure the plan’s financial viability by hiking the premiums paid by today’s workers and investing some of that money in a special fund earmarked to assist future retirees. The downside: many of today’s workers, particularly those under age 30, may end up paying more into the fund than they can ever hope to collect in benefits.

The final tally of what any individuals contribute and collect will depend not only on their age and income levels now, but ultimately the length of their retirement and a variety of other factors. Still, 44 per cent of respondents in this year’s poll say they expect to receive less back from the CPP (or its Quebec equivalent) than they will pay in. Twenty-eight per cent expect to break even, while 22 per cent believe they will come out ahead by collecting more in benefits than they will have put in.

Younger people are significantly more inclined to believe they will receive less than they contribute. But how deep is their discontent? Perhaps not quite as deep as some might expect. Of those who expect to pay out more than they collect, a surprisingly large number—almost four in 10—are comfortable with that arrangement. The six in 10 who do find it unfair are -N disproportionately young people and supporters of the Conservative and Reform parties. The bottom line? Roughly two out of three respondents either believe they will not be hurt by the pension plan reform, or—even if they might be hurt—do not mind paying extra to provide for tomorrow’s seniors. “There are already a lot of elderly people struggling to get by,” says Cindy Lalonde, 39, a poll respondent and homemaker in Cornwall, Ont., “and from everything I’ve heard it’s going to get worse. If everybody pumps in more money now, maybe the plan will still be around when people like my husband and I are at retirement age.”

ROSS LAVER