spending

Tuesday June 21, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday June 21, 2022

Freeland defends budget after Scotiabank accuses feds of ‘doing nothing’ on inflation

A cut in planned government spending could help tame rampant inflation and reduce pressure on the Bank of Canada to hike interest rates, according to a report from Scotiabank.

June 17, 2022

The report from the bank’s chief economist Jean-Francois Perrault and modelling director René Lalonde claims that Canadian fiscal policymakers are “doing nothing of any significance to slow inflation at the moment.”

The authors argue that cutting government spending will take some of the burden to cool inflation off of the Bank of Canada and the private sector.

Scotiabank’s analysis came as Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland is met with the head of the U.S. Treasury Janet Yellen in Toronto on Monday to discuss cooperation between the nations and the global inflation concerns.

January 27, 2022

The report cites the Bank of Canada’s renewed mandate from December of last year, which said tackling inflation is a “joint responsibility” between the feds and the central bank.

While the war in Ukraine and ongoing supply chain pains tied to the COVID-19 recovery have been cited as major causes of higher-than-expected inflation so far in 2022, Perrault told Global News in an interview Monday that prices were on the rise before Russia’s invasion.

That was tied to stimulating fiscal policies from governments around the world, which sought to protect households from the pandemic’s downturns, he said.

Though he said efforts to trim the government’s deficit in the spring’s federal budget were “going in the right direction,” Perrault said the latest Liberal spending plan is still contributing to the economy and fuelling demand.

May 10, 2022

“In normal circumstances, that’s fine. The challenge in the current circumstance is we have inflation that is a huge issue from the perspective of Canadians. It’s well outside what the Bank of Canada wants. It’s exceptional, there’s no question about it,” he said.

In this context, he said he believes the Bank of Canada “could benefit from a little help” in the form of cooling government spending.

Scotiabank projects that if the feds plan to increase their spending 2.5 per cent by the end of 2024, instead of today’s planned 4.8 per cent increase, the Bank of Canada could top out its interest rate hike cycle at 2.25 per cent, 75 basis points lower than where Scotiabank forecasts rates will hit by the end of this year.

But Freeland, speaking alongside Yellen on Monday afternoon, said she felt the feds’ latest budget does go far enough to limit government spending.

She said the rate of fiscal consolidation — the rate at which Canada is paying down its debts — is tied for the fastest in the G7, on par with the United States.

While Freeland reiterated that tamping down inflation is “chiefly the job” of the Bank of Canada, she said her 2022 spending plan was already a “very fiscally responsible budget.” (Global News) 

June 14, 2022

Meanwhile, Mr. Poilievre made headlines when he praised the controversial digital-money system. It was the answer for Canadians who wanted to “opt out of inflation,” he claimed. After all, he was a bitcoin investor himself.

The presumptive favourite to win the CPC leadership has been much quieter about cryptocurrency these days.

Perhaps it’s because the crypto world is imploding, just as Warren Buffett and his partner, Charlie Munger, had suggested it might. Two of the history’s greatest and most profitable investors have been down on bitcoin and the cryptocurrency industry almost from its inception. Mr. Buffett famously said he wouldn’t pay US$25 for all the bitcoin in the world. Mr. Munger was even more condemning, saying that in his life he tried to avoid doing anything that was evil, stupid and made him look bad in comparison to others: “Bitcoin does all three,” he said. (Continued: The Globe & Mail) 

 

Friday June 17, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday June 17, 2022

Chrystia Freeland can do more to fight inflation

Canada’s annual inflation rate currently stands at 6.8 per cent — the highest since January 1991. This means the loonies in your pocket are losing nearly seven per cent of their purchasing power every 12 months.

May 10, 2022

With each passing day, it seems more like Canada has slipped out of the COVID-19 fire only to tumble into an inflationary frying pan. And with each passing day, millions of Canadians who were shepherded through the worst health crisis in a century by a responsive federal government are increasingly looking to the same government to spare them from economic disaster.

Those people received some, but only some, reassurance this is happening from federal Finance Minister Chrystia Freeland on Thursday. In a speech to Toronto’s Empire Club, the deputy prime minister revealed how the federal Liberals intend to collar, if not slay, the inflationary dragon. Considering this was Freeland’s first economic update since April’s budget and considering the costs of food, gasoline and a host of other consumer goods have only soared higher since then, her speech was both timely and necessary. But considering the almost total absence of new measures directly aimed at fighting inflation in her presentation, what Freeland said should represent her government’s starting point, not its finishing line. We’ve heard the words. We need more action.

Canada’s annual inflation rate currently stands at 6.8 per cent — the highest since January 1991. This means the loonies in your pocket are losing nearly seven per cent of their purchasing power every 12 months. It means a Canadian earning a median income of $55,700 a year potentially faces an annual inflationary loss of $3,787.60. Thankfully, for many low-income Canadians, some help is coming.

April 8, 2022

As Freeland explained, Ottawa has earmarked $8.9 billion to boost supports for people receiving Old Age Security, the Canada Child Benefit, the Canada Workers Benefit as well as the Canada Housing Benefit. That money will definitely make life more affordable for many people currently struggling to pay their bills and put food on the table. But it’s not indexed to match future increases in inflation. And virtually all of that money was committed in the last two federal budgets. It’s not new ammunition aimed at inflation.

On that front, Freeland offered precious little. The big guns in this fight are being fired by the Bank of Canada. The interest hikes it has introduced so far this year as well as the ones on the way will rein some of the demand driving inflation by making borrowing more expensive. It is a crude, blunt weapon. But it works, as evidenced by the recent cooling of the country’s overheated housing market. Freeland has vowed to respect the Bank of Canada’s efforts and not interfere with it with her government’s fiscal policy.

On that count, she’s correct. At its heart, inflation is a problem of too much money chasing too few goods. The Liberals can’t spend Canada out of inflation. Pumping new money into the economy, putting more money into everyone’s wallets today will drive the inflation rate higher tomorrow — to the point it is eventually uncontrollable and living standards plummet. That’s why the government is right to reject the demands of some federal Conservatives to cut the Goods and Service Tax or carbon tax.

April 1, 2022

To be fair to Freeland, inflation is for the most part a widespread, complex global problem — not one unique to Canada. For more than two years, the pandemic has repeatedly snarled supply chains and made it harder for consumers and businesses everywhere to buy what they needed. Russia’s illegal invasion of Ukraine further exacerbated the situation by disrupting shipments of oil, natural gas and, most frighteningly of all, food. Freeland can try to shield Canada in some ways from these storms; she can’t stop them.

But rehashing old budgetary commitments or trying to take credit for previously announced plans to train more workers aren’t the specific answers we need for the inflation conundrum. The government should use its considerable leverage to clear some of those supply chain hurdles. One suggestion we haven’t heard but deserves consideration would be to reduce the interprovincial trade barriers that continue to be a drag on our economy. If successful, such an initiative could offer relief to consumers and businesses without driving up the inflation rate. In addition, the Liberals should continue to hold the line on new spending and, if it is deemed necessary, confine it to a targeted segment of the population — those most vulnerable and in greatest need. (Hamilton Spectator Editorial) 

 

Friday April 8, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday April 8, 2022

Budget doesn’t address lessons learned during the pandemic, health groups say

March 23, 2022

After a pandemic that has left Canada’s health-care system buckling under the strain of staffing shortages and surgical backlogs, Thursday’s federal budget drew criticism from health groups, while committing billions to a national dental plan.

Dental care, a pillar of the governing agreement struck between the Liberals and New Democrats two weeks ago, emerged as the centrepiece of the federal government’s health-care spending. The government committed $5.3 billion over the next five years to launch the national program.

But urgency around the plight facing health-care workers in this country was absent from the budget, experts said.

“The big miss in this budget was providing care for Canadians. Everything from health care to long-term care to home care is in crisis,” said Armine Yalnizyan, an economist and an Atkinson Fellow on the Future of Workers. “There’s just no reference to the people that provide the care that are burning out and dropping out.”

December 24, 2021

The Canadian Federation of Nurses Unions (CFNU) has argued that COVID-19 exacerbated long-standing issues already slamming the health-care system. According to Statistics Canada, 70 per cent of health-care workers reported their mental health worsened during the public health crisis, with about 32,000 regulated nurse positions needing to be filled.

The federal government has estimated that the pandemic delayed approximately 700,000 surgeries and other medical procedures, leading to wait-lists and backlogs for medical care.

CFNU president Linda Silas said the budget largely ignores health-care workers, something she said came as a “surprise” given assurances from Ottawa that retaining and recruiting talent is a priority.

“We’ve been having meetings with every politician of every stripe, at every level of government, and everyone understands that we’re dealing with a health human resource crisis in this country,” Silas told the Star. “Those words and actions weren’t part of budget 2022.”

December 21, 2016

The budget also doesn’t offer additional top-ups in health-care transfer payments to provinces and territories.

The document instead repeats the commitment of a one-time top-up of $2 billion to the Canada Health Transfer to clear surgical backlogs. That falls short of the $6 billion the Liberals promised in their election platform to “immediately invest” in eliminating health system wait-lists.

Premiers have repeatedly called on Ottawa to increase its share of health-care costs from 22 per cent to 35 per cent — an additional $28 billion per year — with no strings attached.

The budget primarily addresses the crisis facing health-care workers by pledging $26.2 million over four years, starting in 2023, to increase the amount of forgivable student loans by 50 per cent. That would result in up to $30,000 in loan forgiveness for nurses and up to $60,000 for doctors working in rural or remote communities.

March 31, 2021

There is also a promise to give $115 million over five years to Canada’s foreign credential recognition program to allow up to 11,000 health-care professionals trained abroad to find work here.

Canadian Medical Association president Dr. Katharine Smart said Thursday’s budget signals that Ottawa has similar priorities to the health sector, “but it’s very clear that much, much more needs to be done to actually bring about that change, and the deep investments that are going to be needed.”

The Mental Health Commission of Canada, meanwhile, had hoped to see movement on the Liberals’$4.5 billion campaign pledge to set up permanent transfer payments to the provinces and territories for mental health. (The Toronto Star) 

 

Friday April 1, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday April 1, 2022

Minister of Everything must tell Liberals they can’t have it all

December 30, 2021

Ms. Freeland is now tasked with delivering a budget at a critical time for Canada: when the country is in the early yet unstable stages of pandemic recovery, when a war is being fought in Ukraine, when drought caused by climate change has affected domestic and global yields and when inflation in Canada and abroad is surging. Indeed, the country is now at a precarious financial moment, when it could use the steady hand of that minister it saw on Feb. 24, speaking with genuine conviction about a policy she believes in deeply. What it doesn’t need is a minister dressed in Liberal garb, selling a politically advantageous budget when Canada can’t endure any more risk.

Next week, Ms. Freeland will produce a budget that accounts for her government’s many spending promises – and the new spending promises inherited through the supply-and-confidence agreement with the NDP, plus a likely increase in defence spending – while somehow also reassuring capital markets and stimulating long-term growth. This government has never been shy about spending beyond its means, and it has done so every year far beyond projections, while citing low interest rates and an ill-defined need to “invest” in the economy. The pandemic, of course, necessitated emergency spending on a record scale, although Canada’s trillion-dollar debt and projected deficits over the coming years now mean the country is staring down hefty financing costs: $43.5-billion in 2025-26, to cite one figure from a recent Parliamentary Budget Officer report. For context, the government is spending less than that to settle a years-long dispute over compensation for Indigenous children.

September 22, 2021

With the economy now recovering (GDP growth in the fourth quarter of 2021 exceeded the forecast rate, and the unemployment rate is down to prepandemic levels), the time for runaway, short-term spending is over, and indeed it risks exacerbating inflationary pressures. Interest rates are going up, and Canada’s debt-to-GDP ratio is projected to be 48 per cent for 2021-22 (up from 31.2 per cent in 2019-20), which means the government has far less room to manoeuvre should it get hit with another crisis. The Liberal Party’s impulse may be to continue to promise everything – Child care! Dental care! Fighter jets! Green retrofits! Rapid housing! – and to leave the bill for some future government to sort out, which is why Canada depends on Ms. Freeland now to make some tough calls and bring the budget down to earth. (The Globe & Mail) 

 

Wednesday March 23, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday March 23, 2022

What the Liberal-NDP deal could mean for ‘aggressive options’ on defence spending

September 23, 2021

The prospects for a significant increase in Canadian defence spending in the coming federal budget looked a little less likely as Prime Minister Justin Trudeau was set to head to Europe after announcing a stunning political deal with the New Democrats.

The Liberal government had been hinting that it was looking at aggressive options for injecting more money into the Canadian military in response to Russia’s invasion of Ukraine.

Canada has been under heavy pressure to meet the NATO military alliance’s target, set in 2006, of spending at least two per cent of its national gross domestic product on defence, as a growing number of allies have since promised to do.

Trudeau was largely noncommittal on Tuesday as he announced the new confidence and supply agreement with the NDP, which will see the fourth-place party support the Liberal minority government through to 2025 in exchange for new investments in other areas.

Those include the creation of a dental-care program for lower-income Canadians, national pharmacare, affordable housing and phasing out subsides for fossil fuels, among others.