Economy
Federal government should listen to Canadians and trim the bureaucracy
From the Fraser Institute
By Jake Fuss and Grady Munro
Under Prime Minister Trudeau the government has introduced sweeping national programs in the areas of dental care, daycare and pharmacare, increased cash transfers to some Canadians while also spending billions on corporate welfare.
Under the Trudeau government, the number of federal government employees has grown substantially, and new polling shows that many Canadians would prefer to see that number decline. This would be a step in the right direction, as the growing size of government imposes costs on Canadians with little to no evidence suggesting they’re better off because of it.
Specifically, from 2015 (the year Prime Minister Trudeau was first elected) to March 2024 (the latest month of available data), the number of federal employees grew from 257,034 to 367,772. In other words, in nine years the Trudeau government has increased the size of the federal bureaucracy by 43.1 per cent, nearly three times the rate of population growth (15.2 per cent) over that same period.
In response, many Canadians believe the government should begin cutting back. According a recent poll, when made aware of this increase, nearly half (47 per cent) of respondents said the federal government should start reducing the number of employees while only 7 per cent said the government should hire more.
The growth of the federal public service is part of the Trudeau government’s approach to governance, which has been to increase Ottawa’s involvement in the economy and day-to-day lives of Canadians. Under Prime Minister Trudeau the government has introduced sweeping national programs in the areas of dental care, daycare and pharmacare, increased cash transfers to some Canadians while also spending billions on corporate welfare.
In other words, the Trudeau government has vastly increased the size of government in Canada.
One way to understand the size of government is to measure government spending as a share of the overall economy (GDP), which shows the extent to which economic activity is directly or indirectly controlled by government activities. From 2014/15 to 2024/25, total federal spending (as a share of GDP) will increase from 14.1 per cent to a projected 17.9 per cent—meaning federal bureaucrats now control a larger share of economic activity than they did before the Trudeau government came to power.
Of course, Canadian taxpayers ultimately foot the bill for a larger federal government, and 86 per cent of middle-income Canadians now pay higher taxes than in 2015. Yet for all this increased spending and taxation, it’s unclear Canadians are better off.
In fact, inflation-adjusted GDP per person (a broad measure of living standards) has been in a historic decline since mid-2019, and as of the second quarter of 2024 it sat below the level it was at the end of 2014. And recent polling shows that 74 per cent of respondents feel the average Canadian family is overtaxed, while 44 per cent feel they receive “poor” or “very poor” value from government services.
Clearly, the federal government should break from the status quo and take a different approach focused on smaller and smarter government. A good first step would be to listen to Canadians and trim the number of bureaucrats.
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Business
Alberta freest Canadian province, ranks 12th in North American; other provinces rank near bottom
From the Fraser Institute
By: Dean Stansel, José Torra, Matthew D. Mitchell and Ángel Carrión-Tavárez
Alberta is, once again, the Canadian province with the highest level of economic freedom, while most other provinces rank in the bottom half in the annual Economic Freedom of North America report, published today by the Fraser Institute, an independent, non-partisan, public policy think-tank.
Individuals have more economic freedom when they are allowed to make more of their own economic decisions such as what to buy, where to work and how to start and run a business. And research shows that economic freedom is fundamental to prosperity.
The report ranks the provinces and states individually for each country (Canada, the U.S. and Mexico). In addition, there is a fourth measure comparing and ranking all states and provinces, across all three countries. All of the rankings measure government spending, taxation, regulations and labour market restrictions using data from 2022 (the latest year of available comparable data).
“Higher taxes, higher levels of government spending and overly burdensome regulations continue to depress economic freedom across much of Canada, which makes it harder for individuals and businesses to thrive and create jobs,” said Matthew Mitchell, a senior fellow at the Fraser Institute and co-author of this year’s report.
In the ranking covering all three countries, which includes both federal and provincial government policies, Alberta is once again the highest-ranking Canadian province. It tied four U.S. states at 12th, having improved its ranking from 41st last year.
The next freest province is British Columbia, which ranks 43rd out of 93, followed by Ontario (47th), Saskatchewan (50th), Manitoba (53rd) and Quebec (54th).
The four Atlantic provinces— New Brunswick (57th), Prince Edward Island (58th), Nova Scotia (59th) and Newfoundland and Labrador (60th)—have the lowest levels of economic freedom among all provinces and U.S. states, only outranking the Mexican states and Puerto Rico. New Hampshire, once again, earned the overall top spot amongst all provinces and states in the rankings this year.
“The link between economic freedom and prosperity is clear: people who live in provinces or states that have comparatively lower taxation, lower government, sound regulatory regimes and more flexible labor markets tend, on average, to live happier, healthier and wealthier lives,” Mitchell said.
For instance, according to the latest report, total income in the freest jurisdictions grew 29 per cent after adjusting for inflation over the last decade, while in the least-free jurisdictions, total inflation adjusted income fell 13 per cent.
The Economic Freedom of North America report (co-authored by Dean Stansel, José Torra and Ángel Carrión-Tavárez) is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.
Detailed tables for each country and subnational jurisdiction can be found at www.freetheworld.org.
Economic Freedom of North America 2024
- The indices in the Economic Freedom of North America 2024 measure the degree to which governments in North America permit their citizens to make their own economic choices.
- They include data from the 10 Canadian provinces, 50 US states, 32 Mexican states, and the US territory of Puerto Rico.
- In the all-government index—which takes account of federal as well as state/provincial policies—the most economically-free jurisdiction in North America is New Hampshire, followed by Idaho, Oklahoma and South Carolina tied for third, and Florida and Indiana tied for fifth.
- The lowest-ranking jurisdictions are all Mexican states. In last place is Ciudad de México. Above that is Colima, Campeche, Tamaulipas, and Zacatecas.
- Alberta is the highest-ranking Canadian province, tied for 12th place with Tennessee, South Dakota, Colorado, and Texas. The next-highest Canadian province is British Columbia, which is tied with Massachusetts, Minnesota, and New Mexico for 43rd.
- Average economic freedom across all 93 jurisdictions has fallen every year since 2017 and is now slightly above its all-time low.
- Incomes in the freest top 25 percent of North American jurisdictions were 21 times higher than in the least-free.
- From 2013 to 2022 the population of the freest US states grew 10 times faster and total employment grew three times faster than in the least-free states.
conflict
Energy Security in a Turbulent World: Canada’s Moment to Lead
From the Frontier Centre for Public Policy
By Terry Etam
Autos are different than maple syrup, which is different than oil, which is different than natural gas…Ottawa, get out of that freaking UN playpen, we have issues here.
Want an example of how upside down the whole world is? Consider these two quotes, retrieved from the web this past weekend, about whatever the hell is going on in Syria:
“There are posts on X discussing this event, with some suggesting that Assad might have fled to Moscow, though these should be treated with caution as social media can spread unverified information. Official state responses or confirmations from the Syrian government were not detailed in the provided sources… This situation reflects the ongoing instability in Syria, where despite years of conflict, the dynamics can still shift dramatically. However, without more concrete details or official statements, the full implications and the veracity of the breach into Assad’s palace remain to be fully assessed.”
“The Assad regime’s ongoing refusal to engage in the political process outlined in UNSCR 2254, and its reliance on Russia and Iran, created the conditions now unfolding, including the collapse of Assad regime lines in northwest Syria. At the same time, the United States has nothing to do with this offensive…”
Now isn’t that interesting, hey? The best and the worst of social media – a voice of calmness and reason, and an inflammatory one of accusations and denial. One statement urging caution and suspicion of social media; the other hurling accusations and the sort of militant and overly simplified claims that sadly seem to be the hallmark of extremism.
Here’s the funny part: the first calm comment originated from… X’s AI machine Grok, which collates mass data from X, formerly Twitter, the “unhinged right wing platform” which many decry it as. The second inflammatory one originated from – the White House. In whom shall we trust…?
Chaos reigns supreme around the world, and there simply isn’t enough reliable information to leap to significant conclusions. Trump’s recent tariff announcements fit squarely into this mayhem, where the right answer to what will happen is: “No one has any idea where these will lead, including most certainly not Trump.”
It’s hard to catalogue it all, but here goes an attempt to capture some of the most pertinent brick-in-a-washing-machine situations, to possibly guide toward a plausible outlook for the energy industry. If that – a plausible outlook – sounds like a wet-noodle conclusion, well, it is. It should be quite evident that any sort of dead certainty is the realm of fools
Consider all this mayhem unfolding, particularly in comparison to the dreamy world of the 1990s when the Berlin Wall had fallen, and we were all flitting about with flowers in our hair discussing the “peace dividend”.
Today we have:
A global movement to advance the BRICS initiative (Brazil, Russia, India, China, and South Africa), a more-than-significant group of nations that is, for the first time in centuries, looking to carve a future for its mostly ‘developing-nation-status’ participants that is, as India says, not anti-western but non-western. The aligned BRICS nations contain over 3 billion people, which is climbing as more nations seek to join, with a combined GDP of over $30 trillion. These nations do not share the West’s devotion to moralistic causes; they are hungry and want to eat, they want refrigerators and cars, and they want to stop burning dung in their kitchens.
Multiple, simultaneous wars have ensnared the weirdest alignment of countries that may lead to unpredictable outcomes. Let’s start with the poster child for bang-bang bingo, the Middle East. We have…Israel not just fending off but looking to wipe out terrorist organizations that operate in Lebanon, Gaza, Yemen, Qatar (until just a few weeks ago, apparently), and Lord knows where else. All those terrorist organizations trace back to a central head in Iran, who is no doubt in Israel’s crosshairs. Based on this conflict, nations have been forced to align with the Israeli side, or the Iranian side if said nation is close to any one of the tentacles of the Iranian complex.
Now at the same time, Iran is supplying weapons to Russia, which is waging another war that multiplies the minefield of geopolitical relations. China is supporting Russia and, thereby, a de facto supporter of Iran, or kind of, and both support North Korea for some crazy reason. So, by way of association, anyone looking to join the BRICS group is in some way sanctioning what Iran and Russia are doing, including, as Trump called him one upon a time, Little Rocket Man. But Orange Man Bad and Little Rocket Man get along very well, even though this is structurally impossible based on history, and on last year’s ‘rock solid’ alliances.
Now consider that countries like Saudi Arabia, Thailand, Malaysia, and Vietnam have either expressed interest in joining BRICS, or are on their way to membership (the United Arab Emirates has now actually joined). These are significant entities because they are significant trading partners with the US (and the US/west is fully dependent on China anyway for metals/minerals processing, a situation that seems to have yet to fall into the West’s consciousness. What is the West to do when valuable trading partners decide they’d rather join Satan and the Communists’ trading block, rather than the open-if-hectoring arms of the wealthy West?
In a new development, Trump announced 100 percent tariffs on BRICS if they did not make efforts to trade in a manner that would challenge the USD’s status as the global reserve currency. This is even though the US economy is deeply entwined with many countries in BRICS, and these tariffs would rock the US and its voters to the core (with more elections coming up in two years, all this must resolve quickly or boom, there goes the balance of power again).
Now, let’s look at how the madness has permeated the world of energy. We have a new US president who announced tariffs of 25% on any goods from Canada (oil? Who knows?) and who also said he would prefer to see Keystone XL built, thereby increasing the volume of the product he is seeking to keep out via tariffs…? He has pledged to cut American energy prices in half and promote ‘drill baby drill” while cutting oil prices in half will decimate any producer’s desire to “drill baby drill”.
That’s just in the US. Look at what happened at COP29, where the host country’s president apparently used the conference as a networking event to cement more oil and gas production deals. Later in the conference, an OPEC minister took the stage – mere days after the UN Secretary General’s tiresome wailing about the mortal danger we are all in due to the combustion of fossil fuels – to declare that oil was “a gift from God.” Throw all that into a pot, and surprise, surprise, the final conference statement of progress read like a kid’s soliloquy on why his bedroom was such a disaster –but don’t worry, it will never happen again. In other words, just a bunch of jibber jabber, if for no other reason than to cloak that 70,000 freaking people jetted around the world to a remote location to study the suicidal impact of people flying around the world to remote locations. (And climate conferences manage, if nothing else, to land tens of thousands of people in every exotic destination in every corner of the world, all flown in, to shout vigorously about among other things, the ecological horror that is flying. It’s all too funny for words.)
We have Europe on its industrial knees, Germany in particular, because it shut down all its clean baseload energy sources (nuclear) and stopped buying its life blood fuel – natural gas – from Russia because, and here we go again right back into the swamp, of Russia’s invasion of Ukraine. German industrial output is in freefall, auto manufacturers are bleeding red ink because they are forced to limit sales of the cars people want – internal combustion engine ones – because German policy dictates that electric vehicles must make up a specific percentage of sales. Despite Germany’s formidable engineering prowess, the simple observation that if no one buys EVs, no automaker will sell any ICEs – that’s how a forced EV proportion of sales works – and everything crumbles as a result. Volkswagen is looking to shut down German manufacturing plants for the first time ever. It is a crazy industrial policy.
We are now seeing a pushback against the rushed energy transition/net-zero-whenever agenda that is far beyond my imagination (and my imagination is big) because the inevitable has happened – it is hitting people’s pocketbooks. In the latest very big news on that front, the state of Texas is suing BlackRock, State Street, and Vanguard for illegally conspiring to manipulate energy markets and drive-up costs for consumers. Texas Attorney General’s office issued a news release stating: “Over several years, the three asset managers acquired substantial stockholdings in every significant publicly held coal producer in the United States, thereby gaining the power to control the policies of the coal companies. Using their combined influence over the coal market, the investment cartel collectively announced in 2021 their commitment to weaponize their shares to pressure the coal companies to accommodate “green energy” goals. To achieve this, the investment companies pushed to reduce coal output by more than half by 2030.” The Attorney General argues that efforts to restrict coal power have led to increased electricity costs across the United States, resulting in significant revenue gains for the investment companies that hold shares in these firms. Additionally, the news release claims that these companies misled thousands of investors who chose to invest in non-ESG (Environmental, Social, and Governance) funds, aiming to maximize their profits. Despite their claims to the contrary, these funds implemented ESG strategies. Notably, ten other states have joined the lawsuit.
While that is all unfolding, Trump’s threat of a 25 percent tariff on imports of Canadian and Mexican goods could include oil and natural gas. Given that the North American energy market is hugely intertwined, and that natural gas is quite different than oil (gas is to a certain extent a two-way street – for every 3 GJ of natural gas that Canada exports to the US, the US exports 1 to Canada), there is much complexity here to unpack, and I’m not sure anyone is able to… There are many levels of analysis here – economic, political, geopolitical, retaliatory, defense (Are NATO commitments met? Silence from the Canucks), and there isn’t any indication that either Canada or the US grasps the full nationwide repercussions. Autos are different than maple syrup, which is different than oil, which is different than natural gas…Ottawa, get out of that freaking UN playpen, we have issues here.
The most recent feedback out of Canada’s tariff situation, the reports of the conversations between the two leaders, indicate that in the short term, the tariffs are unavoidable until “the US balances its budget.” No one knows what that means, and assuming the worst isn’t a bad idea because nothing is very stable these days. Having said that, tariffs on oil and gas are going to be chaotic, to put it mildly, if for no other reason than the US needs Canadian crude grades that it cannot produce in the short term, and because the US exports natural gas to Canada in significant quantities.
And that’s just the North American perspective. Globally, we are in severe turmoil as well. We have policymakers who cannot comprehend the very basic math involved in the quantities of energy the developing world will want, and at the very same time those Western policymakers are overseeing the maddest race ever to thrive in the AI and crypto mining spaces, both of which are power hogs of unimaginable proportions because each embeds an unusual feedback loop whereby the more power is consumed, the better these things perform, and the more profitable they are, so guess what happens.
Back here in Canada, some excellent thinkers are pointing out that this country needs to start thinking at a somewhat higher level on the energy file at least, such as Heather Exner-Pirot pointing out in the Calgary Herald that Canada should be looking at reviving Keystone XL and Northern Gateway. The article also discusses how we should be accelerating LNG export development. These are excellent points – we need to take control of our energy destiny to the extent possible. Trudeau’s rushed visit to Florida to plead Canada’s case was a stark and somewhat embarrassing display of exactly what the power relationship is here.
Maybe the US election will also be sufficiently jarring in Canada to cause a thunderclap in the hallways in Ottawa on the energy file. Canada is an energy powerhouse – oil, natural gas, nuclear, hydro, renewables where they work, it is a minerals powerhouse, it has world-class agricultural and manufacturing prowess…the list goes on and on.
The world is demonstrably uncertain, but in the chaos is opportunity. Nationally we have become preoccupied with trivialities and attempting to solve the world’s problems – from a point of view that doesn’t even understand them in the first place.
The US election is a wake-up call to Canada, and many other countries as well – stop playing games, stop acting as though elected officials and an army of bureaucrats are our moral compass, and get back to governance; put your thinking hats on like hasn’t been done for a while; focus on strengths; get our own house in order before lecturing the world. Do right by the people that voted for you, not your perceived legacy.
Few countries are as blessed as Canada with pretty much everything. Time to get off our back foot.
Terry Etam is a columnist with the BOE Report, a leading energy industry newsletter based in Calgary. He is the author of The End of Fossil Fuel Insanity. You can watch his Policy on the Frontier session from May 5, 2022 here.
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