It was described in many different ways. The Liberals characterized their fourth federal budget delivered this past Tuesday as a “pre-election budget designed to ease Canadians’ anxieties.” Political commentators, however, upon learning of its contents, described it as “the predicted pre-election spendathon”; “a testament to the pleasures of endless growth”; and, “a blunt political statement and a dare to their Conservative opponents to cut Liberal spending on social programs.”
The 460-page budget tome is entitled Investing in the Middle Class, but it could be more properly named, “Spending for the Middle Class.” Finance Minister Bill Morneau’s 2019 budget includes $22.8 billion in new spending divided into more than 100 new measures to be spent over the next five years. There is new spending to support first time home buyers, the purchase of electric cars, and broadband services to rural Canada. There are new tax credits for further education and skills training and more money for new indigenous programs. The Liberals are also hiring more bureaucrats and establishing an office to look at a new national prescription drug plan – a promise they will elaborate on, on the campaign hustings.
Finance Minister Bill Morneau will be delivering his fourth federal government budget next Wednesday, March 19. Given the news that the government ran a budgetary surplus of $300 million through the first nine months of the fiscal year, many financial analysts and political pundits are expecting the Finance Minister to increase federal spending – yet again.
Avery Shenfeld, chief economist for CIBC, forecasts in a Canadian Press interview: “I’m expecting cheques to go out somewhere. Remember that in the last election the party that won was the one party not promising to balance the budget… The recent sluggishness of the economy is just one more reason to expect a budget that sends out some goodies.”
While Canadians bear witness to all of the sordid details of the Jody Wilson-Raybould / Gerald Butts / Justin Trudeau / SNC-Lavalin scandal (a.k.a. LavScam), our federal government is lurching from one crisis to another without any clear direction. With the scandal, there are many other issues unfolding unchecked in the nation’s capital.
Canada’s economy is tanking. Statistics Canada reports that the country’s economy has come to a halt in the final three months of 2018, and the data is actually much worse than anyone has reported. The economy grew by just 0.1 per cent in the fourth quarter, the worst quarterly performance in two and a half years. The slowdown has extended well beyond the energy sector. In this quarter, consumption spending grew at the slowest pace in almost four years. Housing prices fell by the most in a decade. Business investment has dropped sharply and domestic demand posted its largest decline since 2015. This has impacted both consumer and business confidence. Bloomberg reports non-residential capital spending is down and residential investment has contracted for a second straight quarter with its biggest drop since 2009. Canadians declaring bankruptcy is up 15 per cent in the last half of 2018. Exports dropped. Imports declined. The loonie has nose-dived. In summary, the economy is a mess.
The resignation of Prime Minister Justin Trudeau’s Principal Secretary Gerald Butts has sent shockwaves through the corridors of power in Ottawa. Tendered in the quiet of a long weekend, Butt’s departure from the PMO is recognized as the signal most remarkable event since the 2015 election itself.
His critics have likened Gerald Butts to some shadowy Rasputin or Svengali figure; politicos from all sides agree that he is a busy Wizard of Oz operating the controls behind the doors of the PMO. Butts relationship to the Prime Minister is characterized as puppet master Edgar Bergen to Charlie McCarthy – or Jim Hensen to the Muppets. To state he is close to the Prime Minister and the central architect of this government’s agenda is an understatement.
A week is a long time in politics. For Prime Minister Justin Trudeau and his Prime Minister’s Office (PMO) staff this past week probably felt like an eternity.
The alleged interference of the PMO with the Canadian judiciary process and the surfacing backstories of how PM Trudeau and his staff pressured the Justice Minister have rocked the corridors of power. The allegation is that the PM wanted his Justice Minister to direct federal prosecutors to make a “deferred prosecution agreement” so that multinational engineering firm SNC-Lavalin could avoid trial on $130 million bribery and fraud charges in relation to contracts in Libya. In short, the PM wanted the Justice Minister to deal a “get out of jail free” card to the Quebec firm.
Here is an excerpt from Ottawa’s Hansard, an official verbatim record of what was said in the House of Commons on Tuesday, February 5th. Conservative MP Pierre Poilievre was in a heated exchange with the Prime Minister about taxes imposed on Canadians. Poilievre questions:
“The Prime Minister says that people who take the bus are too rich and therefore should lose their transit tax credit. Soccer moms and hockey dads, the Prime Minister says are too rich, so he takes away their children’s fitness tax credit. At the same time, he forces these same working-class families to pay for his taxpayer-funded nannies. Will the Prime Minister put aside the hypocritical class warfare and tell us the true cost of his tax increases that he would bring in if he got re-elected?”
This week MPs returned to Ottawa and to the last Parliamentary Session before the fall federal election. All eyes were on Prime Minister Justin Trudeau and Conservative Leader Andrew Scheer as they traded barbs. The Leaders were practicing new lines, sure to be folded into campaign stump speeches crafted to grab Canadians’ attention and secure their votes.
Through the spring, MPs will be in Ottawa a total of 14 weeks, only 69 legislative days. In that short time, the Government will want to check off some important initiatives: the new environmental assessment process for resource projects, hand gun legislation, and the Finance Minister will look to pass a pre-election budget. At the forefront of the House of Commons agenda, however, will be the spirited exchanges between our national political leaders. Canadians can expect increasingly heated rhetoric and partisan attacks.
This week there was a stark news item from a well-respected financial firm that Canadians must brace for harder economic times. Jim Mylonas of BCA Research Inc. alerted Canadians that the country’s economy is teetering and this year will likely tip into a recession. What is disconcerting is that Canadians are being told to prepare for a recession even though the North American economy is healthy and poised to grow through the year. What’s more is this foreboding warning comes from a learned market analyst, a global macro strategist in a Montreal firm that has been forecasting markets and economies for 70 years.
Bloomberg News found the BCAB Research statement striking: “Canada’s economy may soon endure something it hasn’t faced in 68 years: A recession without the U.S. in the same boat.” In a Bloomberg interview, Mylonas explained that Canadians’ incredibly high household debt combined with rising interest rates will push the country’s economy into recession. That will occur even when, south of the border, the American economy is expanding.
Prime Minister Justin Trudeau’s cabinet shuffle on Monday contained a surprise with his appointing of Nova Scotia MP Bernadette Jordan as Minister of Rural Economic Development. This new cabinet portfolio is to create and advance a rural-development strategy. The PMO’s news release stated that the new minister will work with municipalities, provinces, territories, and Indigenous partners to meet the “unique and diverse infrastructure needs of rural communities.”
Bernadette Jordan is relatively unknown outside of Atlantic Canada. Jordan is a first-term MP representing the Nova Scotia riding of South Shore-St. Margarets. Before her time in Ottawa, she worked in the community newspaper industry and was a fundraiser for a local Health Services Foundation in the small maritime town of Bridgewater. With her fellow Atlantic Liberal MPs, Jordan was selected to serve as Chair of the Atlantic Liberal Caucus.
To provide Canadians with a snap shot of our financial health as we head into the New Year, the Canadian public policy thinktank Fraser Institute published a sober assessment of the country’s current economic affairs. The key take-away from the Institute’s review is that Canada’s economy is underperforming and Canadians are just beginning to feel the impact. Although Finance Minister Bill Morneau’s Fall Economic Statement provided us with a reassuring review of our county’s economic prospects, the fact is the Canadian economy expanded by a mere 2.1 per cent in the past year. That is nearly a full percentage point below the United States at 3.0 per cent. As it is, Canada is an unattractive economy; a point of fact – foreign investment in Canada is down 55 per cent over the past five years.
Come the New Year, all eyes will be on Ottawa as Canadians bear witness to a parade of politicians and pollsters, all positioning and pontificating in advance of the October 21, 2019 federal election vote. We can expect dramatic headlines covering the spin and counter-spin of not only the politicians vying for your vote, but also pollsters and pundits who will be commenting on the rhetoric and “the horserace” itself.
Expect conflicting polls feeding opposing commentary. For example, two polls taken a year prior to the fall 2019 vote heralded opposite forecasts. Sun Media trumpeted the federal Conservatives would win a majority government. Meanwhile, CBC reported to Canadians that the national polls are in Trudeau’s favour.
What has the Canadian Government committed to in signing the UN Global Compact for Migration? The document reads that “member states and partners will thus hold each other more accountable on their promises to deliver results for refugees and their hosts.” As detailed in last week’s column, these promises include immediately taking steps to resettle 1.4 million refugees and migrants to willing host countries, promoting the “whole-of-society” benefits of mass migration, and “sensitizing and educating” media that are critical of the UN migration initiative.
Andrew Scheer, Conservative Leader, has been vocal in his criticism of the Compact signing, suggesting it is yet another step towards Prime Minister Justin Trudeau’s “post-nation”, globalist vision of a world with no borders and no meaningful citizenship. Scheer has argued, in and outside the House of Commons, that Canada must be in control of its immigration policy and its borders – not a faceless UN bureaucracy who cannot be held accountable by the Canadian people. Scheer asserts, “Canadians, and Canadians alone, should make decisions on who comes in our country and under what circumstances.”
The longer title to the “UN Global Compact” document is the United Nations Global Compact for Safe, Orderly and Regular Migration. Canada’s Immigration Minister Ahmed Hussen will sign this international document on Canada’s behalf on December 11 in Marrakech, Morocco.
Though most Canadians have heard little or nothing of this international initiative, the Canadian government has played a leading role in advancing the UN’s “cooperative framework.” Our country’s diplomats are at the forefront of discussions designed to resettle 1.4 million refugees and migrants to willing host countries, presumably those countries who sign onto the UN Global Compact.
The debate in Ottawa revolves around what the signing of this document commits the Canadian Government to regarding its current and future immigrant policies. Is the UN Global Compact a political statement of humanitarian principles for refugees and migrants? Or is it a UN blueprint for the development of international migration policies?
For months leading up to the Liberals’ fall economic statement, Finance Minister Bill Morneau indicated his statement would respond to the recent U.S. corporate tax cuts that had eliminated any tax advantages for Canadian businesses and investors. Morneau stated he could not reduce corporate tax rates for Canadians, as they would cost the government too much, but he would have measures to address the newfound disadvantages experienced by the Canadian business community.
On Nov. 21, the finance minister brought forward his plan offering $17.6 billion of new investment incentives over six years to the country’s business community – something that he concedes will commit the federal government to an indefinite number of deficit budgets.
MP Pierre Polievre, Conservative finance critic, was quick to criticize the Liberal government’s embrace of long-term deficit financing. “Not only did they break their promise, not only will they fail to balance the budget, as they said, but they now admit that under their plan the budget will never be balanced… in other words, they are putting our future in a reckless state of danger by spending our tomorrow on their today.”
In his fall economic statement, federal finance minister Bill Morneau mused: “We could have ignored the concerns of business leaders, decided not to make the investments and the changes that are part of the fall economic statement, and we would have had a lower deficit as a result. To do so would be neither a rational response, nor a responsible one.”
Minister Morneau summed up his address with the observation, “Because our economy is doing well, we also have the fiscal room to follow through on the commitments we made”; which, in essence, was offering some reassurances to Canadian businesses and to taxpayers that the Liberal government has a firm handle on the country’s finances.
The finance minister announced $17.6 billion of new spending over the next six years to boost Canadian business investment and economic activity. In response to the attractive tax cuts south of the border, the minister’s statement highlighted $16 billion of tax breaks for business. The biggest portion of this commitment is the $14.4 billion earmarked to allow businesses to write off some types of machinery and equipment more quickly.
Parliament Hill is seized with pipeline politics. Our country’s oil and gas sector is pitted against Ottawa’s bureaucracy. Western Canadians are feeling betrayed and victimized by Prime Minister Trudeau. It’s déjà vu all over again!
This drama is unfolding in the Senate of Canada where a piece of legislation is being hotly debated on the floor of the Upper House. Bill C-69, the Impact Assessment Act, will establish new federal government environmental assessment processes for the development of all major resources projects in Canada. Minister of Environment and Climate Change Catherine McKenna claims it will restore public trust and provide greater transparency in government approval processes, for it ensures greater public input, greater participation by Indigenous peoples, and it is intended to ensure decisions will be informed by scientific evidence.
Recent government announcements and news reports have provided Canadians with an accounting of how much our Canadian governments are in debt. The current federal government, spending hundreds of billions of dollars, seemingly pays no heed to the size of their annual deficits. Add the sum of all provincial governments’ deficit budgets and one soon realizes that our governments are burying us in a deep, dank financial hole; from which no Canadian alive today will likely climb out. The reported numbers are startling.
In Ottawa, the federal government recorded a shortfall of $19 billion for the last fiscal year, repeating the deficit amount of the previous year. The government reports its federal spending continues to rise and is now $332 billion – $332,000,000,000 – the highest amount of government spending ever recorded.
Interest rates are rising and many Canadians will begin to feel the pain. Last week the Bank of Canada hiked its key lending rate and major lending institutions followed suit, raising prime interest rates. This is the fifth time since the summer of 2017 that rates have risen and the Bank of Canada has indicated they are about to become more aggressive in 2019 and 2020. Some financial analysts point to recent comments made by Bank of Canada Governor Stephen Poloz to forecast the rate could climb as high as 3.5 percent.
What does that mean for an average household? Over the past 15 months, the Bank of Canada’s interest rate hikes have added an average of $2,500 in costs for Canadian households. Should the rate go as high as 3.5 percent, the costs would double again. If this were to occur, financial surveys indicate that one in two Canadians’ ability to service their existing debts will be directly affected. Half of Canadian households.
As of Wednesday this week, Canadians can possess and share up to 30 grams of legal cannabis. We can legally buy it and we can grow up to four pot plants per residence for personal use.
Reaction by our national leaders has been rather mellow. Prime Minister Justin Trudeau reassured Canadians the country is ready for this drug, admitting he has regularly enjoyed it through the years. NDP Leader Jagmeet Singh stated his greatest concern is how fast the federal government can expunge Canadians’ criminal records for pot possession.
Canadians have been reassured by Vancouver police chief Adam Palmer, who is president of the Canadian Association of Chiefs of Police. Chief Palmer stated emphatically, “I’m here to tell Canadians that police are ready.” (At the same time, he admitted enforcing new laws around legal weed will be “a work in progress.”)
Tuesday morning the CBC ran a headline story: “’Yay!’: How the Canadians won the argument that opened the door to a NAFTA deal” reporting a confident Prime Minister Justin Trudeau saying, “There was [on Saturday] a sense things were falling into place.” In most news reports this week Canadians have been reassured that PM Trudeau and Foreign Affairs Minister Chrystia Freeland (dubbed “the warrior princess”) were victorious in wrestling U.S. President Donald Trump to concede to Canadian terms on an improved NAFTA deal.
That is the Canadian story. But, how is this 11th hour deal being received south of the border? (Warning: Americans have a remarkably different take.)
In December, U.S. President Donald Trump unveiled a tax plan that effectively cuts America’s top corporate tax rate from 35 per cent to 20 per cent and allows companies to immediately deduct from their tax bills the full cost of capital spending. Proponents of the tax package predict this will boost business investment in the United States and encourage U.S. companies to repatriate money they previously held abroad.
In a recently released economic report by PricewaterhouseCoopers (PwC), Canadians are warned that the American tax plan will siphon 650,000 jobs from Canada over the next 10 years as businesses shift their activity south of the border.
Aurora-Oak Ridges-Richmond Hill MP Leona Alleslev surprised everyone on the first day of the Fall Session of Parliament, rising in her place on the government backbenches to announce that she will “cross the floor” to join the Conservative party caucus.
It is remarkable that a MP would leave a government caucus to sit with an opposition caucus. However, what is most startling is what this rookie MP had to say about her Liberal colleagues’ abilities to manage the affairs of the country. Her assessment of the state of Canada was both focused and sobering.
“We find ourselves in a time of unprecedented global instability. We see fundamental shifts in the global economy, while trade relationships, international agreements and defence structures are under threat.
This week, the Liberal Caucus met in Saskatoon, Saskatchewan while the NDP Caucus hunkered down in Surrey BC. News out of both federal caucuses revealed that the MPs have been given their election scripts to begin their long march towards the 2019 vote.
The two caucuses met with a backdrop of contentious Canadian news items dominating the national conscience. Canadians are pre-occupied with the faltering NAFTA negotiations, the fate of the recently nationalized TransMountain pipeline project, the strong provincial opposition that has risen against Ottawa’s planned carbon tax plan, and the seemingly lack of controlling the flow of irregular migrants crossing our Canadian borders.
Headline news from the Nation’s Capital through the summer focused on the fate of NAFTA and the evolving asylum seekers-border issues. A vast majority of Canadians enjoying their summer escapes likely missed any other federal news. Here are six news items (in no particular order) from the month of August that should not pass unnoticed for those interested in the developing stories of our federal government.
When Members of Parliament recess for the summer, they don’t don shorts and sandals to hit a beach like quick-change artists; but instead, the first step they take is to meet their local constituency staff and schedule “the summer break.”
The 2018 summer plans of Niagara West MP Dean Allison are a good example of what our elected representatives organize for themselves when they are not in the Nation’s Capital.
Prime Minister Justin Trudeau shuffled his cabinet yesterday, bringing five new ministers to the table and creating a new portfolio for border security, an issue that has become a political vulnerability for the government over the past months.
Political analysts view this shuffle as a political move in advance of the 2019 election. There are additional ministers from Ontario and Quebec, where the Liberals need to maintain and, if possible, grow their seat count. David Moscrop, a political scientist at Simon Fraser University explains “The shuffle gives Trudeau an opportunity to put his best players on the pitch before the campaign.”
To recap the last six weeks: on June 1st, the U.S. imposed hefty levies on Canadian steel and aluminum imports, in response to China, South Korea and Vietnam dumping these products into our country. On July 1st, Canada retaliated by placing tariffs worth a total of $16.6 billion on U.S. goods from ketchup and candles to shaving products and insecticides.
In turn, the U.S. is suing Canada at the World Trade Organization stating that the retaliatory tariffs are “completely without justification.” President Donald Trump has also publicly stated he is considering putting a further 25-per-cent levy on all cars and trucks imported to the U.S.
Not all are supportive of the Trudeau Government’s trade negotiation tactics with the United States.
With Canada’s national election only 16 months away, it is now anticipated that the fate of the trade agreement with our southern neighbor will be a central campaign issue. Lawrence Solomon, policy director for Toronto-based Probe International, suggests Trudeau is using the trade talks to position for a tough re-election year by creating a boogeyman and a crisis: “NAFTA necessarily thus becomes not an economic exercise but a political one.”
In Ottawa, there are two prevailing threads of thought on what has become the never-ending saga of the Canada-U.S. Trade Talks. One is rallying behind Prime Minister Trudeau and supporting the Liberal Government’s attempt to reason with an unpredictable U.S. President. The second is highly critical, suggesting that the Liberals are purposely sabotaging the negotiations for their own domestic political gains. The next three columns will review the political gamesmanship between Canada and the U.S. and assess what all the public posturing may mean for the outcome of the trade talks – and for the 2019 federal election.
For months, Ottawa’s political networks and national press corps have been wholly focused on U.S. President Donald Trump and his every utterance on the North American Free Trade Agreement (NAFTA). Canadians are anxious. Given the magnitude of trade between our two countries, NAFTA has a large impact on our country’s economic growth and maintaining our standard of living.
As Parliament recessed for the summer, news leaked out that the Trudeau Government quietly renewed the current federal equalization formula for provinces through the year 2024.
In the 584-pages of 2018 budget documentation, Finance Minister Bill Morneau had buried a provision that extended the existing equalization formula, providing no formal notices to provinces or the public. With the passage of the omnibus budget legislation, stealthily, Morneau unilaterally assured the renewal of the federal-provincial equalization arrangement — to the huge benefit of Quebec, and over the vocal protests of Newfoundland and Labrador, and the western provinces of Saskatchewan and Alberta.
On Parliament Hill, time stood stand, or rather any sense of time was lost in the surreal tension of Wednesday, May 2. Members of Parliament were shocked. News travelled in whispers of disbelief. And then there was an oppressive sadness that enveloped the Nation’s Capital and left anguished MPs groping for words, as we all do when faced with a close friend’s passing.
Wednesday morning, Gordon Brown – Gordie to everyone who knew him – had started his day playing hockey with friends at the Ottawa Morning Hockey League. The MP made it to his Hill office and sometime shortly before 10 o’clock he had a heart attack. Paramedics performed emergency resuscitation efforts en route to the hospital, where he was pronounced dead.
The rights of parliamentarians to oversee government spending dates back to 1215 and the signing of the Magna Carta. Since that agreement between the King of England and Lord Barons, parliamentarians have voted on the details of how a government will spend the tax dollars raised from the people of the land. In Canada, expenditure estimates for each of the government’s departments are tabled in parliament so MPs can question the respective ministers on their spending plans.
There are only two weeks left in the House of Commons calendar before Members of Parliament break for their summer recess. Although they may soon be spared the cut and thrust of Parliamentary debates, there will be little relief as MPs are sure to feel the heat – both literally and figuratively.
The recent national polls from Nanos Research and Angus Reid have the Conservatives overtaking the governing Liberals in popular support; the Reid results show the Conservatives with a comfortable 10 percentage point lead (40% – 30%) in popular vote. Yet, what is most unsettling for Liberal MPs is the pollsters’ regional breakdowns that reveal the Liberals would be wiped out west of Quebec. PM Justin Trudeau could lose more than half his Ontario MPs and the Liberals would be annihilated in the western provinces.
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