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Business

Federal government’s redistribution economics doesn’t work

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7 minute read

From the Fraser Institute

By Jason Clemens, Jake Fuss, and Milagros Palacios

Prime Minister Trudeau’s vision for a more prosperous Canada relies on a much larger role for the federal government, with more spending, regulation, borrowing and higher taxes. By moving existing money around—both from higher-income workers to average Canadians and from the future to the present through borrowing—he believes the Canadian economy will be stronger and living standards will rise. But after nine years of governing, the evidence is clear—the prime minister’s redistribution economics doesn’t work and has actually reduced living standards in Canada.

Let’s first understand the magnitude of the changes made by the Trudeau government. Federal spending (excluding interest costs on debt) has risen from $256.2 billion in the last year of the Harper government to an estimated $483.6 billion this year, an increase of 88.7 per cent.

Even excluding COVID-related spending, the Trudeau government has recorded the five highest years of federal spending (on a per-person basis, after adjusting for inflation) in the history of the country, far surpassing spending during both world wars and the Great Recession.

Under Trudeau, the federal government has introduced several new programs (including dental caredaycare  and pharmacare), and expanded several existing programs such as the cash transfer to families with children under 18 and corporate welfare.

Redistributing existing income has been a clear policy goal of the Trudeau government. From 2015 to 2022, average government transfers to families with children have increased from $12,685 to $15,750 (inflation-adjusted), an increase of 24.2 per cent. Yet among these same families, employment income only increased 8.0 per cent during the same period, meaning government transfers grew more than three times faster than their employment income. And as a share of household income, government transfers have increased from an average of 8.0 per cent between 1995 and 2007, when employment income was growing much faster, to 10.3 per cent in 2022.

The Trudeau government has financed this explosion in federal spending by borrowing, which is simply taxation deferred to the future, and tax increases.

Specifically, the government increased personal income taxes on professionals, entrepreneurs and successful business owners. It also increased taxes on businesses, which is an indirect and less transparent way of increasing taxes on average people since businesses don’t actually pay taxes, only people pay taxes. Higher business taxes mean less investment and thus lower wage growth for workers, lower payments to the business owners, and/or higher prices for consumers buying goods and services.

The Trudeau government also opaquely increased taxes on average Canadians. While it lowered the second personal income tax rate, it simultaneously eliminated several tax credits. As a result, 86 per cent of middle-income families experienced an increase in their personal income taxes as did 75 per cent of families with children in the bottom 20 per cent of income-earners.

But again, the government financed much of its new spending by borrowing, which means future tax increases. Consider that total federal debt stood at a little over $1.0 trillion when the Trudeau government took office in late-2015. By the government’s own estimates, total federal debt will reach almost $2.1 trillion next year.

Higher debt means higher interest costs, which divert money away from programs such as health care or badly needed tax relief. From 2015-16 (when Trudeau was first elected) to this year, federal debt interest costs have increased from  $21.8 billion to an expected $54.1 billion. For context, this year the federal government expects to raise $54.1 billion from the GST, which means that every cent raised from the national sales tax will go to pay interest costs on the federal debt.

By focusing on moving around existing income (i.e. redistribution) rather than promoting income growth through investment and entrepreneurship, the Trudeau government has helped produce an outright economic growth crisis. Canada’s current decline in per-person GDP, a broad measure of living standards, is one of the longest and deepest declines of the last 40 years. Moreover, as of the end of 2023, the latest year of available data, the decline in living standards had not stopped so there’s a chance this could be the worst fall in living standards since at least the early-1980s.

According to a 2023 study, growth in per-person GDP from 2013 to 2022 was at its lowest rate since the Great Depression. Indeed, Canada’s post-COVID recovery was the 5th-weakest in the industrialized world. And prospects for the future are no better. A recent study by the OECD estimated that Canada would have the slowest growth in living standards among 32 high-income countries for the foreseeable future.

Simply put, the Trudeau government’s policies, which focused on government-led prosperity and moving income around instead of growing incomes, have led to a decline in living standards and economic malaise. Canadians are struggling when we should be leading the world in growth and prosperity. The only way to reverse our economic decline is to embrace a markedly different approach to policy focused on economic growth through entrepreneurship, investment and innovation.

Business

Breaking: Explosive FBI Warning—CCP, Iran, and Mex-Cartels Partnering in Canada to Move Fentanyl and Terrorists Into U.S.

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Sam Cooper's avatar Sam Cooper

Patel’s warning echoes The Bureau’s exclusive reporting on a criminal convergence linking CCP-backed chemical suppliers, Iranian proxies, and Mexican cartels operating through Vancouver superlabs

In an explosive Sunday interview that will place tremendous pressure on Prime Minister Mark Carney’s new Liberal government, FBI Director Kash Patel alleged that Mexican cartels, Chinese Communist Party operatives, and Iranian threat actors have forged a new axis of criminal cooperation, using Canada’s porous northern border and the Port of Vancouver—not the southern Mexican border—as their preferred entry point to flood fentanyl and terror suspects into the United States.

“In the first two, three months that we’ve been in the seat under Donald Trump’s administration, he has sealed the border,” Patel told Fox News’ Maria Bartiromo. “He has stopped border crossings. So where’s all the fentanyl coming from? Still? Where’s the trafficking coming from still? Where are all the narco traffickers going to keep bringing this stuff into the country? The northern border. Our adversaries have partnered up with the CCP and others—Russia, Iran—on a variety of different criminal enterprises. And they’re going and they’re sailing around to Vancouver and coming in by air.”

Patel asserted that adversarial regimes—including Beijing and Tehran—are now working in tandem on “a variety of different criminal enterprises,” and exploiting what he called the “sheer tyranny of distance” on America’s northern frontier, where vast terrain and lax enforcement in Canada have allegedly enabled fentanyl pipelines and terrorist infiltration.

Pointing directly at Carney’s government, Patel continued:
“Now we’re focused on it and we’re calling our state and local law enforcement partners up [at the northern border]. But you know, who has to get to step in is Canada—because they’re making it up there and shipping it down here.”

The FBI director’s warning—posted on the White House’s X account— follows exclusive reporting by The Bureau and a newly released 2025 threat assessment from the U.S. Drug Enforcement Administration, which, for the first time, officially flags Canada as an emerging threat node in the North American drug supply chain.

As The Bureau reported earlier this week, the DEA highlighted the dismantling of a fentanyl “super laboratory” in October 2024 in Falkland, British Columbia—a mountainous corridor between Vancouver and Calgary—as an emerging threat in fentanyl trafficking targeting the United States. Sources pointed to the same converged threat network—China, Iran, and Mexico—mentioned today by FBI Director Kash Patel.

“According to these sources,” The Bureau reported Friday, “the site forms part of a broader criminal convergence involving Chinese, Mexican, and Iranian networks operating across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Quebec. The Bureau’s sources indicate that the Falkland facility was connected to Chinese chemical exporters sanctioned by the United States Treasury, Iranian threat actors, and operatives from Mexican drug cartels.”

In his remarks today, Patel appeared to directly link this criminal convergence to terrorist infiltration.
“And I’ll give you a statistic that I gave to Congress that nobody was paying attention to,” Patel added. “Over 300 known or suspected terrorists crossed into this country last year, illegally… 85 percent of them came in through the northern border.”

Patel also appeared to turn up the political pressure on Ottawa, alluding to President Trump’s recent controversial statements about Canada—which became a flashpoint in the federal election, with many voters embracing the Liberal Party’s campaign framing Carney as a bulwark against Trump.

“I don’t care about getting into this debate about making someone the 51st state or not,” Patel said, referencing Trump’s remarks. “But [Canada] are a partner in the north. And say what you want about Mexico—but they helped us seal the southern border. But facts speak for themselves. It’s the [northern] border that’s open.”

The Bureau will continue to follow this story in the coming week.

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Automotive

Tesla stock soars for fourth straight week on Musk Play plan, board shake-up

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Quick Hit:

Tesla shares surged more than 16% this week, notching a fourth consecutive week of gains and cutting into steep year-to-date losses. The rally is fueled by news of a potential new pay package for Elon Musk and the strategic addition of Jack Hartung, Chipotle’s outgoing president, to Tesla’s board. These developments come amid rising scrutiny over the board’s governance and compensation decisions, especially concerning Musk’s controversial $56 billion pay package from 2018.

Key Details:

  • Tesla stock has gained over 16% this week and is now down just 13% for the year, recovering from a 40% loss earlier in 2025.
  • Jack Hartung, Chipotle’s president, will join Tesla’s board on June 1, bringing seasoned business leadership.
  • A special Tesla board committee is evaluating a new compensation plan for Musk after legal challenges to his previous $56 billion package.

Diving Deeper:

Tesla’s stock (TSLA) closed the week strong at $349.98, climbing 2.09% on Friday alone and marking a fourth straight week of gains. This momentum has helped the electric vehicle maker erase much of its earlier 2025 losses, which had topped 40% at one point. Now down just 13% year-to-date, the turnaround comes as investors digest two pivotal developments that could shape Tesla’s future leadership and direction.

The most immediate catalyst: Tesla’s announcement that Jack Hartung, the president of Chipotle Mexican Grill, will join its board of directors beginning June 1. Hartung will also serve on the audit committee, a significant appointment given Tesla’s board has been under fire for lack of independence and weak oversight of CEO Elon Musk. Hartung brings executive experience from not only Chipotle but also board roles at Portillo’s, the Honest Company, and ZocDoc—credentials that could help restore confidence in Tesla’s boardroom governance.

Hartung’s addition follows the bombshell report from the Financial Times earlier this week that Tesla’s board has formed a special committee to explore a new pay package for Elon Musk. The committee’s task is to find “alternative ways” to reward Musk for past work in case Tesla fails to reinstate the original 2018 compensation deal, which is now under appeal with the Delaware Supreme Court. That deal—valued at $56 billion—has drawn fire from large shareholders, prompting broader questions about Musk’s influence over Tesla and whether the board has effectively served as a rubber stamp for his ambitions.

Critics have warned that Musk’s threat to redirect his artificial intelligence efforts away from Tesla unless he is granted additional stock options represents an outsized concentration of power in the hands of one individual. While Musk continues to be the face of the company’s innovation and success, these governance concerns have given activist investors and institutional shareholders new ammunition.

Tesla board chair Robyn Denholm has also come under scrutiny, particularly after Wall Street Journal reporting suggested the board was considering replacing Musk or had urged him to spend more time at the company. Denholm has publicly denied those claims, but her own record—cashing out more than half a billion dollars in Tesla stock since joining the board in 2014—hasn’t helped stem criticism. In fact, the board recently had to settle a lawsuit over excessive director compensation, refunding millions of dollars to shareholders.

Despite these governance challenges, the market has responded positively to the board’s recent moves, seeing them as steps toward restoring stability and investor confidence. The addition of Hartung and the new pay committee could signal a willingness to address long-standing concerns about independence and oversight, even as Musk remains firmly at the center of Tesla’s orbit.

For now, investors appear to be betting that a more disciplined board—paired with a still-charismatic and high-impact CEO—could be a recipe for renewed growth and focus.

Elon Musk introducing the Model X” by Steve Jurvetson licensed under (CC BY-SA 2.0)

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