The Niagara Independent, August 4 & 11, 2023 – Now eight years into his tenure as Prime Minister, it has become abundantly clear that Justin Trudeau’s promise of “sunny days” has failed to materialize. An ever-growing number of Canadians are financially strained and finding themselves caught in impossible living situations. There are numerous economic reports and studies suggesting matters will worsen in this country – and Canadians will not be waking anytime soon from this midsummer night’s nightmare.
Nik Nanos of Nanos Research recently completed a deep data dive for the Globe and Mail into Canadians’ feelings about their future well-being. He found we harbour grave concerns. Nanos reports that Canucks are “more pessimistic about their future standard of living than they have been in more than a decade.” He assessed, “Many Canadians, and especially young people, are struggling to pay for housing and basic necessities… The unspoken truth is that the pandemic will have a long-term impact on the behaviour of people.”
Today, 65 per cent of Canadians feel that the next generation will have a lower standard of living than what we have now. Only 10 per cent feel living standards will improve, which is a huge drop in optimism from 26 per cent who felt positive about their future only a decade ago. When future historians look back at Canadians living through the 2020s, Nanos suggests they will refer to “a scarred generation” where “lives were disrupted, personal values were challenged, and what emerged was a hard-nosed questioning of self and society.”
This rather dismal gut-feel of Canadians’ fortunes is supported in the findings of the Organization for Economic Co-operation and Development (OECD), which recently conducted an in depth statistical review of its member counties. The OECD has projected that growth in living standards in Canada will rank 38th of the 38 developed member-countries over the next 40 years. We are expected to do the worst of all countries. The primary reason for this gloomy projection is that, during the 2020-21 pandemic year, Canada outspent all countries in the world to post an overall debt burden equivalent to 352 per cent of its GDP.
The Trudeau government not only outspent all countries with is pandemic spending, it has more than doubled the debt load of the country, and Canadians now are burdened with over one trillion dollars of federal debt. A new CD Howe Institute report calculated federal spending jumped in the 2020-21 fiscal year by more than 70 per cent. The report reveals this massive spending occurred with no financial controls, little accountability and oversight, and a lack of transparency of the public accounts. The Institute suggests, with the accumulated deficit spending and current debt load, the federal government may well have impaired its capacity to deliver basic services in the future.
Commenting on the hundreds of billions of dollars spent by the Trudeau government during the pandemic, Bill Robson, chief executive at CD Howe states, “The decisions that got made that are going to affect our future for years and decades to come, were really made on the fly without appropriate deliberation. We need more transparency from our governments about how they’re spending our money, especially when something like COVID happens.”
In a Financial Post interview Robson observed that most Canadians are unaware of the scale of the debt governments amassed and the fact that present and future working-Canadians will be required to pay for servicing this debt for years to come. Robson said, “It’s a bit unsettling that so many questions just never got answered … The information is so patchy…. We have a few lean years ahead.”
For the record, in 2022-23, Canadians paid an unprecedented $34.7 billion on interest charges to service the federal debt. With interest rates rising, this figure is expected to rise accordingly.
Two recent economic reports reveal that Canada is now an outlier among advanced economies around the world. Unlike all its comparable national economies, Canada has yet to rebound to its pre-pandemic standard of living as measured by real gross domestic product (GDP) per capita. Most disturbing is the TD Economic forecast that predicts the Canadian economy will continue to shrink through 2024.
The OECD factors that Canada will be a laggard in real GDP per capita growth through the next 35 years, until 2060. Major factors for our lackluster economic performance is a waning business confidence, and decreasing domestic and foreign investment in Canadian businesses and projects.
TD economist Marc Ercolao explained in a recent interview with Financial Post: “Over the last 20 years, Canadian R&D investment has been in perpetual decline, while all other G7 countries have seen increases to varying degrees.” In Canada, this has created a serious “innovation gap” with the country falling behind the rest of the advanced world. So, as Ercolao sees it, the prospects are not promising: “Unfortunately, for Canadians, little turnaround in Canadian living standards appears to be on the horizon.”
In an editorial comment on the financial pages of the Globe and Mail, economists Jake Fuss and Tegan Hill at the Fraser Institute echo the TD outlook and commented, “Despite any claims by Minister Freeland and the Trudeau government, Canada faces serious and long-term economic challenges. The government’s policies have sought to grow the country’s economy almost exclusively by boosting the population and increasing the role of government, but this plan has failed to deliver prosperity for Canadians.”
For Fuss and Hill, the Trudeau government has compounded a difficult situation and has caused a “worrying” stagnation in living standards for Canadians. “Without a change in economic strategy, Canada is destined for more calamity in the coming decades,” they concluded.
Still, denying the facts and stats, the Trudeau government maintains its “sunny days” narrative. A lead editorial in the Globe and Mail entitled “The economy according to Justin Trudeau” calls out the PM on his rhetoric. It concluded, “Mr. Trudeau, understandably one supposes, would rather dwell on the largely mythical shortcomings of the Harper government than face the fact that his economic program has been in fact a formula for declining prosperity – the very sin for which he wrongly excoriates his predecessor.”
So, by all accounts, Canadians are in for a very rough ride for years – and the younger generations may never experience the standard of living the boomer generation enjoyed while working and raising their families in Canada. No bromides from PM Justin Trudeau or Finance Minister Chrystia Freeland will be able to whistle pass this sad reality.
For many Canadians, their financial situation has reached a tipping point. Whether it is mothers dreading their weekly grocery trips, homeowners losing sleep over their next mortgage renewal, or families visiting food banks to make ends meet, Canadians are becoming more aware of the Trudeau government’s part in their dire economic prospects.
A majority of Canadians (55 per cent) believe the Trudeau government spends far too much according to a recent Ipsos poll for the Montreal Economic Institute (MEI). Two in three Canadians (64 per cent) do not think the government is “allocating funds to the most important issues facing Canada today.”
Renaud Brossard of the MEI comments on the findings, “Not only do Canadians find that the Trudeau government spends too much, but they also find that it spends unwisely. This seems to indicate a disconnect between the Department of Finance and the people whose money is entrusted in its care.”
MEI reports that 60 per cent of Canadians believe that the Trudeau government spending lacks transparency – and that it contributes to Canada’s inflation. Canadians also believe that it has resulted in higher personal income taxes, with three in four believing they are spending too much in income taxes.
Brossard summed up the MEI findings with the observation, “The message Canadians are sending Ottawa is unequivocal. They are asking Ottawa to cut its spending, review its priorities, and reduce their tax burden.”
PM Justin Trudeau and his cabinet heard a similar cry of help from its own Privy Council Office survey that found “almost all” Canadians were “not happy” with the government’s fiscal record and its management of the economy. The report to cabinet stated, “Several felt that issues related to the rising cost of living, a lack of affordable housing, and low wages had been growing for many years and that the Government of Canada should have been better prepared to assist Canadians with these challenges.”
The report concludes: “Most thought that the Government of Canada was on the wrong track when it came to alleviating the financial pressures currently impacting Canadian households.”
Further recent public opinion research reveals there are two specific areas that irritate Canadians. A CTV News survey conducted by Nanos Research reports that more than one in two (53 per cent) believe that the carbon tax is ineffective against climate change. Two of three Canadians (67 per cent) feel that the recent federal carbon tax hikes in pump prices and home fuel and the introduction of the second carbon tax on July 1 was “poor timing” when so many are experiencing financial stress.
The second irritant for Canadians is the excessive hiring of new federal bureaucrats in Ottawa. The facts are that under Justin Trudeau, there are more than 98,000 new bureaucrats on the federal payroll. In the last three years alone – through the pandemic years – 56,000 new positions were added. For every 1,000 jobs in Canada there are now 24.4 federal jobs in 2022-2023, compared to 21.7 in 2014-2015.
Canadians’ increased stress and strain has been met with a series of tone-deaf responses from the country’s finance minister Chrystia Freeland. Throughout the spring session of parliament and into the summer, Freeland’s refrain has been: “The reality is that Canada is a fantastic country and Canada is doing really well.” Canadians have been treated to a lecture of sorts by Freeland…
- At a recent G20 finance ministers’ conference she was ecstatic in announcing Canada’s inflation rate dropped to 2.8 per cent, noting the lower rate “is a significant moment. It should provide a lot of relief to Canadians. I do not have a crystal ball, but I do think that today is a milestone moment.” Freeland then tweeted out “Canada’s plan to bring down inflation is working.”
- The finance minister returned from that conference to hold a media event at a local grocery store to highlight how the government was coming to the aid of strapped Canadians with new one-time relief cheques to families and individuals to offset the rising cost of groceries (a gesture that has been coined the “Trudeau food stamp program”).
- Freeland was in PEI recently where she addressed the impact the carbon tax hikes have on Island tourism and workers’ daily commutes. Her suggestion is that people need to consider public transit or cycling to work and for groceries. She crowed to the Charlottetown audience, “I am right now an MP for downtown Toronto, and a fact that still shocks my dad is that I don’t actually own a car.”
But Freeland’s bravado and confidence in her government’s fiscal prowess is not a true reflection of Canadians’ nightmarish reality. For example, Statistics Canada’s Consumer Price Index (CPI) report for June did indicate a 2.8 per cent inflation rate – but the most significant financial indicators for Canadians are “elevated grocery prices (9.1 per cent) and mortgage interest costs (30.1 per cent).”
The report’s analysis highlighted, “Prices for many grocery items have continued to increase month after month and on balance are 20 percent above levels reported two years earlier. During 2022 the sticker shock in grocery aisles became remarkably broad based with elevated price growth – year over year increases of 10 percent or more – affecting a larger share of overall food expenditures.” The report concludes: “Shoppers are spending more but buying less.”
There are other telltale statistical reports that reveal how Canadians are coping with inflation, the rise in interest rates and increased taxes.
- A Bank of Canada survey states homeowners with variable rate mortgages are cutting household budgets and moonlighting in second jobs: “Many low income households are already buying only necessities, leaving little room for further cuts to their spending.” The bank reports that nine interest rate increases have seen mortgage costs triple.
- A Leger poll found that more than two in five (43 per cent) said they had to change their summer vacation plans due to their finances.
- MNP Consumer Debt Index report indicates 69 per cent of Canadians are now reporting that interest rate increases are affecting their household finances. One in three Canadians say they cannot cover their debt payments and more than half state they are $200 or less away from paying their monthly bills.
- The federal Office of the Superintendent of Bankruptcy latest report shows that Canadian business insolvencies are at an all-time high. The 1,090 commercial bankruptcies in the last quarter (an increase of 37 per cent over last year) are linked to high inflation and raised interest rates.
The final word on Canadians’ nightmare goes to Matthew Lau of the Financial Post who asserts that the Trudeau government’s excessive spending, deficit financing, and market interference have been the primary factor of the country’s inflationary pressure. Lau factors that Canada’s CPI is about nine per cent higher today than it would have been had it followed the economic course set pre-pandemic. In other words, what the Trudeau government did through the years 2021-23 has created greater inflationary pressure and, therefore an increased cost-of-living for Canadians.
Lau obviously does not agree with PM Trudeau’s or finance minister Freeland’s remarks on the government’s fiscal management when he observes, “It’s when politicians meddle that things become unnecessarily expensive — as is the case in this country despite what its government may say.”
Chris George is an Ottawa-based government affairs advisor and wordsmith, president of CG&A COMMUNICATIONS. Contact: ChrisG.George@gmail.com
LINKS: https://niagaraindependent.ca/canadians-midsummer-nights-nightmare-part-one/ & https://niagaraindependent.ca/canadians-midsummer-nights-nightmare-part-two/
