The Niagara Independent, October 6, 2023 – Elianna Lev, reporter for Yahoo Canada News, caused quite a stir this week when she wrote a news article on the Toronto-based grocery chain Longo’s selling a pre-cooked Thanksgiving turkey for $119.99. Longo’s had other more economical pre-cooked meals like roasted porchetta for $59.99 or a roasted turkey breast for $59.99. BlogTO picked up on Lev’s news items and listed off a number of recent stories about inflated prices for butter, potato chips, spices and condiments.
Clearly for Canadians this holiday weekend, “talking turkey” will be less expensive than sitting down to their Thanksgiving dinner.
The latest food price figures from Statistics Canada have basic family staples rising on average from 10 to 18 per cent year over year. Butter and eggs are up 10 per cent, potatoes are up 10 per cent, peanut butter is up 17 per cent, and apple juice up 18 per cent.
With these inflated prices, a recent University of Toronto study found almost six million Canadians – 15.9 per cent of all households – experiencing food insecurity in the country. This week a new study out of Dalhousie University reported almost one in two Canadians (45.5 per cent) now shop with an eye to cost rather than to the food product’s nutritional value. Half of Canadians (49.2 per cent) have reduced buying meat because of the high cost.
Assuming many families and friends will be eating a Thanksgiving meal of turkey and trimmings, can there be any doubt where the dinner conversations will lead? For most, the rising cost of living in Canada – for food, rent, mortgages, fuel, etc. – has become indigestible.
In Ottawa, MPs on the House of Commons finance committee are currently chewing on testimony from leading economists, who are assessing the root causes and impact of inflation in the country. Key witnesses have set the table for what we might expect will be a damning committee report. For example, David Dodge, former governor of the Bank of Canada, told MPs, essentially, that Canadians face a bleak future of higher taxes and diminished government services.
Dodge surmised Canada will be challenged with the health costs of an aging population and the costs associated with subsidizing both individuals and business to meet 2050 net-zero carbon emissions targets. Dodge flatly states that Canadians will need to make sacrifices and government, business, and people will need to curtail spending. “Attempting to finance all these investments by borrowing is resulting in an increase in prices and interest rates and will continue to do so at least over the next decade… The burden of past debt will increase year after year. Governments cannot borrow their way out of these difficult choices.”
In commenting on the Trudeau government’s fiscal approach he did not mince words, “That is the terrible job – and I use those words advisedly – the terrible job of governing. You have to make the choices.” Dodge added, “This is going to take time, to bring inflation down. Once we got off track, just as we know in the 1970s, it takes time and it takes a lot of effort on the part of the government.”
In related news this week, finance department officials made a shocking and absurd claim they did not have a clue of the estimated billions of dollars the government is currently spending on debt interest. For the record, last 2022-23 fiscal year, the government paid $34.7 billion on interest charges to service the federal debt. Earlier this year, Finance Minister Chrystia Freeland projected costs to service the debt would jump to $45 billion in 2023-24 – but since that guestimate, interest rates have risen. So, the obvious concern is, “How many more billions are we paying?”
Ian Lee, a professor from the Sprott School of Business at Carleton University belled the cat when he testified before the committee. Lee stated that excessive government spending coupled with poor economic strategy is the root cause of the grief Canadians can expect to suffer, “Rising inflation was indeed caused by the lockdowns and supply chain interruptions, but exacerbated by massive excessive monetary and fiscal stimulus.”
Lee said to MPs, “I’m urging parliamentarians to return to an examination of the economic fundamentals of Canada by examining low productivity, protectionist policies in certain industries, such as airlines, telecom, agriculture, that exclude foreign competitors that drive up prices to much higher levels.”
David Williams and Jock Finlayson of the Business Council of B.C. echoed this testimony in a Globe and Mail editorial piece they wrote entitled, “Canadians face 40 years of stagnant incomes – government’s economic strategy is failing.” The editorial stated: “Several of the government’s core policy beliefs are misguided. The first is that freewheeling government spending, untethered by the defined limits of a credible fiscal anchor, is not “consumption” but rather “investment” that raises real incomes. The data say otherwise.”
The editorial also pointed out, “The government has relied on households and business taxpayers to fund subsidies for preferred recipients and has massively expanded the bureaucracy without much to show for it other than shrinking the relative size of the private sector. That is a recipe for a low-productivity, low-wage economy.”
Lisa Raitt, co-chair for a nonpartisan advisory council Coalition for a Better Future, also testified before the finance committee. She has serious misgivings about Canada’s current economic well-being, “On a per capita basis, our economy is not only stalled, it’s actually contracting. Real GDP, per capita, has fallen for four straight quarters, and we’re producing less per person today than we did in 2018.”
Raitt made the point that productivity, in terms of output per hour of work, is dismal, “It’s fallen 11 of the last 12 quarters, and the productivity numbers in the first half of the year are below what they were in the final six months of 2014. If things don’t change, we’ll soon be talking about a lost decade of productivity.”
With the financial strain currently being felt through the country, it should be no surprise that Canadians instinctively understand what MPs have been hearing at the finance committee.
Federal government research was recently made public that shows Canadians are dissatisfied with how the government is managing the economy and cost-of-living challenges. This internal report states, “Most thought that the Government of Canada was on the wrong track when it came to alleviating the financial pressures currently impacting Canadian households…. Almost all believed that rising inflation had impacted a large number of households over the past year and had particularly affected lower and middle-income Canadians, seniors living on fixed incomes, and post-secondary students.”
More recently, a Nanos survey concluded “Canadians are increasingly focused on economic issues with inflation (16 per cent), jobs/the economy (13 per cent), housing (11 per cent) in their top five issues.” Another Leger survey revealed nearly half of Canadians (47 per cent) are currently living paycheck to paycheck and 61 per cent of Canadians think their country is experiencing an economic recession.
It is clear the hard realities of the rising cost of living has soured the mood of Canadians. There will be plenty to stomach when we talk turkey this weekend. And the good news for those one-in-two cost-sensitive shoppers is that a nice size frozen butterball turkey can be found at Food Basics, Walmart, and most other discount grocery stores for less than $25.
Have a wonderful holiday weekend with your family and loved ones. Happy Thanksgiving.