Economy
Canada living standards falling behind rest of developed world
From the Fraser Institute
By Alex Whalen, Milagros Palacios, and Lawrence Schembri
On Canada Day, Deputy Prime Minister Chrystia Freeland proclaimed that “Canada is the best country in the world,” yet Canadians are getting poorer relative to their peers in many other countries and our living standards are falling. This trend is expected to continue well into the future, unless our policymakers make significant changes.
Economists often measure living standards by real gross domestic product (GDP) per person—in other words, the inflation-adjusted monetary value of what a country produces in goods and services divided by its population.
As noted in a new study published by the Fraser Institute, from 2002 to 2014, Canada’s GDP per-person growth roughly kept pace with the rest of the OECD. But from 2014 to 2022, the latest year of available comparable data, Canada’s annual average growth rate declined sharply, ranking third-lowest among 30 countries over the period. Consequently, in dollar terms, Canada’s GDP per person increased only $1,325 during this time period, compared to the OECD average increase of $5,070 (all values in 2015 U.S. dollars).
Moreover, between 2014 and 2022, Canada’s GDP per person declined from 80.4 per cent of the U.S. level to 72.3 per cent, and lost substantial ground to key allies and trading partners such as the United Kingdom, New Zealand and Australia.
And according to OECD projections, Canada will have the lowest projected average annual growth rate of GDP per person (at 0.78 per cent) from 2030 to 2060 when our GDP per person will be below the OECD average by $8,617. This represents a swing of more than $11,000 from where it was in 2002.
Why is this happening?
Several reasons, including historically weak business investment over the past decade, a substantial shift in the composition of permanent and temporary immigrants towards those with less education and fewer skills, and subdued technological innovation and adoption. These factors have combined to produce very low or negative labour productivity growth due to weak growth in the education and skills of the average worker and the amount of capital (namely plant, machinery and equipment) per worker.
While most advanced countries are experiencing similar trends, the situation in Canada is among the worst. Consequently, our relative decline in living standards grows exponentially because Canada’s poor performance compounds over time.
To break out of this rut and prevent this further decline in Canada’s living standards relative to our peers, policymakers must enact comprehensive and bold policy changes to encourage business investment and innovation, promote worker education and training, and achieve better immigration outcomes where more is not always better.
As a starting point, governments should improve the climate for business investment and for investment in education and training by streamlining regulation and major project approvals and reducing current and expected future tax burdens on firms and workers.
Levels of government debt and debt interest costs are approaching thresholds of unsustainability not seen since the 1990s. Governments, including the federal government, must exercise spending restraint to put their finances on a more sustainable path to mitigate the “crowding out” effects of government spending and debt in private markets, and thereby promote private investment. In addition, policies that liberalise intra-provincial and international trade and foster more competition, especially in key industries (e.g. transportation, communication, finance) would help boost investment, productivity and living standards.
Because GDP per person is so closely connected to incomes and living standards, Canada’s decline relative to our peer countries on this key metric should concern all Canadians. Given Canada’s projected continued poor performance, our country needs a major series of policy reforms to avoid further declines in living standards.
Authors:
From LifeSiteNews
Saskatchewan has become the first Canadian province to free itself entirely of the carbon tax.
On March 27, Saskatchewan Premier Scott Moe announced the removal of the provincial industrial carbon tax beginning April 1, boosting the province’s industry and making Saskatchewan the first carbon tax free province.
Under Moe’s direction, Saskatchewan has dropped the industrial carbon tax which he says will allow Saskatchewan to thrive under a “tariff environment.”
“I would hope that all of the parties running in the federal election would agree with those objectives and allow the provinces to regulate in this area without imposing the federal backstop,” he continued.
The removal of the tax is estimated to save Saskatchewan residents up to 18 cents a liter in gas prices.
The removal of the tax will take place on April 1, the same day the consumer carbon tax will reduce to 0 percent under Prime Minister Mark Carney’s direction. Notably, Carney did not scrap the carbon tax legislation: he just reduced its current rate to zero. This means it could come back at any time.
Furthermore, while Carney has dropped the consumer carbon tax, he has previously revealed that he wishes to implement a corporation carbon tax, the effects of which many argued would trickle down to all Canadians.
The Saskatchewan Association of Rural Municipalities (SARM) celebrated Moe’s move, noting that the carbon tax was especially difficult on farmers.
“I think the carbon tax has been in place for approximately six years now coming up in April and the cost keeps going up every year,” SARM president Bill Huber said.
“It puts our farming community and our business people in rural municipalities at a competitive disadvantage, having to pay this and compete on the world stage,” he continued.
“We’ve got a carbon tax on power — and that’s going to be gone now — and propane and natural gas and we use them more and more every year, with grain drying and different things in our farming operations,” he explained.
“I know most producers that have grain drying systems have three-phase power. If they haven’t got natural gas, they have propane to fire those dryers. And that cost goes on and on at a high level, and it’s made us more noncompetitive on a world stage,” Huber decalred.
The carbon tax is wildly unpopular and blamed for the rising cost of living throughout Canada. Currently, Canadians living in provinces under the federal carbon pricing scheme pay $80 per tonne.
As the federal government removes the consumer carbon tax, the Canadian Taxpayers Federation is calling on all party leaders to oppose all carbon taxes, including the hidden tax on business.
“Canadians fought hard to force Ottawa to back down on its consumer carbon tax and now the fight moves to stopping the hidden carbon tax on business,” said Franco Terrazzano, CTF Federal Director. “Canadians can’t afford a carbon tax on business that pushes up prices at the gas station and makes it harder for our businesses to compete while they’re already struggling with a trade war.”
Today, the federal government cut the consumer carbon tax rate to $0. This will reduce taxes by about 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.
The federal government still imposes an industrial carbon tax on oil and gas, steel and fertilizer businesses, among others.
During the Liberal Party leadership race, Prime Minister Mark Carney said he would “improve and tighten” the industrial carbon tax and “extend the framework to 2035.”
Just 12 per cent of Canadians believe businesses pay most of the cost of the industrial carbon tax, according to a Leger poll commissioned by the CTF. Meanwhile, 70 per cent said businesses would pass most or some carbon tax costs on to consumers.
Conservative Party Leader Pierre Poilievre said he will “repeal the entire carbon tax law, including the tax on Canadian businesses and industries.”
“Carbon taxes on refineries make gas more expensive, carbon taxes on utilities make home heating more expensive and carbon taxes on fertilizer plants increase costs for farmers and that makes groceries more expensive,” Terrazzano said. “Canadians know Poilievre will end all carbon taxes and Canadians know Carney’s carbon tax costs won’t be zero.
“Carney owes Canadians a clear answer: How much will your carbon tax cost?”
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