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Indigenous loan program must include oil and gas

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From the MacDonald Laurier Institute

By Chris Sankey

True reconciliation means acknowledging our right to develop our lands as we see fit

Speculation has swirled for months that Ottawa is planning to introduce a new Indigenous loan guarantee program, and last week’s fiscal update confirmed that more details will be included in the next federal budget. I am not totally against this idea, as it could help Indigenous groups overcome historical barriers to raising capital, particularly through borrowing. However, there has also been speculation that certain industries could be excluded from loan eligibility, in accordance with the government’s environmental, social and governance (ESG) investment framework. This is not OK.

If the government follows through with its plan to roll out a new Indigenous-tailored financial program, it should respect our right to self-determination, which encompasses our autonomy to make investment decisions based on our own, internally defined objectives.

For instance, we are well within our rights to pursue investment opportunities in the energy sector, which offers a path to prosperity for many Indigenous communities. Indigenous-Canadians who work in oil and gas extraction currently make almost three times more than their peers. Quite frankly, it would be irresponsible for us to not seek out new energy investments, given the potential for good-paying energy jobs to lift scores of Indigenous families out of poverty.

A new loan guarantee program would, in theory, provide Indigenous nations with the resources to build our own path forward. But if the loan program were handled by the Canada Infrastructure Bank, as budget 2023 suggested, loans for oil and gas development may be excluded. Applying ESG requirements to the program would have a similar effect.

Such conditions would put remote communities at a disadvantage relative to those located near large urban centres. And communities that are dependent on energy projects for their economic well-being would be left in the lurch.This would be a step away from reconciliation. The federal government should not be able to pick and choose for us which projects we partner on — this is paternalism of the worst sort. Decisions about our lands and the projects built on them should be ours to make — and ours alone.

We have long made decisions about projects in our territories — decisions that balance economic development with stewardship of land and water. The Trudeau government has pledged, repeatedly, to value mutual respect and restorative justice. We need to remind them of that.

Right now, the most important thing the federal government can do is respect the right of all Indigenous communities to self-determination. We have a limited window of opportunity to persuade the Liberal government to include oil and natural gas extraction projects on the list of eligible loan guarantees, and make sure that our inherent right to make decisions about projects on our lands is respected.

This is also an opportunity to forge a much-needed and long-overdue relationship between the Tsimshian, Nisga’a, Haida, Haisla, Heiltsuk, Wet’suwet’en, Gitxsan, Tahltan, Tse’Khene, T’exelcemc and Carrier Sekani people, and build an Indigenous economic corridor stretching from British Columbia to Newfoundland.This loan guarantee program could help lift thousands of Indigenous-Canadians out of poverty, and bring prosperity to our people for generations to come, through inter-generational knowledge and wealth transfer. When our communities prosper, Canada prospers, but we cannot do that without the rest of the country’s help.

This is an opportunity for the federal government to bridge the divide and make Canada the economic powerhouse it ought to be. This loan guarantee program can serve as a much-needed catalyst. We should have the opportunity to invest in any project that has the potential to bring prosperity to our communities, including projects in the oil and gas industry.

Indigenous communities want to be a part of Canada, not apart from Canada. Give us the tools and we’ll finish the job.

Chris Sankey is a senior fellow at the Macdonald-Laurier Institute, a businessman and former elected councillor for the Lax Kw Alaams First Nation.

Business

Higher Capital Gains Taxes cap off a loser federal budget

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From Frontier Centre for Public Policy

By Lee Harding

Even former Liberal Finance Minister Bill Morneau told the Financial Post the capital gains tax increase would be “very troubling for many investors.” He added, “I don’t think there was enough effort in this budget to reduce spending, to create that appropriate direction for the economy.”

New taxes on capital gains mean more capital pains for Canadians as they endure another tax-grabbing, heavy-spending federal deficit budget.

Going forward, the inclusion rate increases to 66 per cent, up from 50 per cent, on capital gains above $250,000 for people and on all capital gains for corporations and trusts. The change will affect 307,000 businesses and see Ottawa, according to probably optimistic projections, rake in an additional $19.4 billion over four years.

A wide chorus of voices have justifiably condemned this move. If an asset is sold for more than it was bought for, the government will claim two-thirds of the value because half is no longer enough.  It’s pure government greed.

If you were an investor or a young tech entrepreneur looking for somewhere to set up shop, would you choose Canada? And if you’re already that investor, how hard would you work to appreciate your assets when the government seizes much of the improvement?

Even before this budget, the OECD predicted Canada would have the lowest growth rates in per-person GDP up to 2060 of all its member countries.

In a speech in Halifax on March 26, Bank of Canada senior deputy governor Carolyn Rogers put the productivity problem this way: “You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass.”

What can Canadians bash now? Their heads against a wall?

Even former Liberal Finance Minister Bill Morneau told the Financial Post the capital gains tax increase would be “very troubling for many investors.” He added, “I don’t think there was enough effort in this budget to reduce spending, to create that appropriate direction for the economy.”

No kidding. Not since the first Prime Minister Trudeau (Pierre) have Canadians been able to count so reliably on deficit spending, higher expenditures, and more taxes.

Long ago, it seems now, when Justin Trudeau was not yet prime minister, he campaigned on “a modest short-term deficit” of less than $10 billion for each of the first three years and a balanced budget by the 2019-2020 fiscal year.

His rationale was that low interest rates made it a rare opportunity to borrow and build infrastructure, all to encourage economic growth. Of course, the budget never balanced itself and Canada has lost $225 billion in foreign investment since 2016.

The deficits continue though the excuse of low interest rates is long gone. Despite higher carbon and capital gains taxes, this year’s deficit will match last year’s: $40 billion. Infrastructure seems less in view than an ever-expanding nanny state of taxpayer-funded dental care, child care, and pharmacare.

Of course, the Trudeau deficits were not as modest as advertised, and all-time federal debt has doubled to $1.2 trillion in less than a decade. Debt interest payments this coming fiscal year will be $54.1 billion, matching GST revenue and exceeding the $52 billion of transfers to the provinces for health care.

In 1970, columnist Lubor Zink quoted Pierre Trudeau as saying, “One has to be in the wheelhouse to see what shifts are taking place . . . The observer . . . on the deck . . . sees the horizon much in the same direction and doesn’t realize it but perhaps he will find himself disembarking at a different island than the one he thought he was sailing for.”

Like father, like son, Justin Trudeau has captained Canada to a deceptive and unwelcome destination. What started as Fantasy Island is becoming Davy Jones’ Locker.

Lee Harding is a Research Fellow at the Frontier Centre for Public Policy

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Canada’s economy has stagnated despite Ottawa’s spin

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From the Fraser Institute

By Ben Eisen, Milagros Palacios and Lawrence Schembri

Canada’s inflation-adjusted per-person annual economic growth rate (0.7 per cent) is meaningfully worse than the G7 average (1.0 per cent) over this same period. The gap with the U.S. (1.2 per cent) is even larger. Only Italy performed worse than Canada.

Growth in gross domestic product (GDP), the total value of all goods and services produced in the economy annually, is one of the most frequently cited indicators of Canada’s economic performance. Journalists, politicians and analysts often compare various measures of Canada’s total GDP growth to other countries, or to Canada’s past performance, to assess the health of the economy and living standards. However, this statistic is misleading as a measure of living standards when population growth rates vary greatly across countries or over time.

Federal Finance Minister Chrystia Freeland, for example, recently boasted that Canada had experienced the “strongest economic growth in the G7” in 2022. Although the Trudeau government often uses international comparisons on aggregate GDP growth as evidence of economic success, it’s not the first to do so. In 2015, then-prime minister Stephen Harper said Canada’s GDP growth was “head and shoulders above all our G7 partners over the long term.”

Unfortunately, such statements do more to obscure public understanding of Canada’s economic performance than enlighten it. In reality, aggregate GDP growth statistics are not driven by productivity improvements and do not reflect rising living standards. Instead, they’re primarily the result of differences in population and labour force growth. In other words, they aren’t primarily the result of Canadians becoming better at producing goods and services (i.e. productivity) and thus generating more income for their families. Instead, they primarily reflect the fact that there are simply more people working, which increases the total amount of goods and services produced but doesn’t necessarily translate into increased living standards.

Let’s look at the numbers. Canada’s annual average GDP growth (with no adjustment for population) from 2000 to 2023 was the second-highest in the G7 at 1.8 per cent, just behind the United States at 1.9 per cent. That sounds good, until you make a simple adjustment for population changes by comparing GDP per person. Then a completely different story emerges.

Canada’s inflation-adjusted per-person annual economic growth rate (0.7 per cent) is meaningfully worse than the G7 average (1.0 per cent) over this same period. The gap with the U.S. (1.2 per cent) is even larger. Only Italy performed worse than Canada.

Why the inversion of results from good to bad? Because Canada has had by far the fastest population growth rate in the G7, growing at an annualized rate of 1.1 per cent—more than twice the annual population growth rate of the G7 as a whole at 0.5 per cent. In aggregate, Canada’s population increased by 29.8 per cent during this time period compared to just 11.5 per cent in the entire G7.

Clearly, aggregate GDP growth is a poor tool for international comparisons. It’s also not a good way to assess changes in Canada’s performance over time because Canada’s rate of population growth has not been constant. Starting in 2016, sharply higher rates of immigration have led to a pronounced increase in population growth. This increase has effectively partially obscured historically weak economic growth per person over the same period.

Specifically, from 2015 to 2023, under the Trudeau government, inflation-adjusted per-person economic growth averaged just 0.3 per cent. For historical perspective, per-person economic growth was 0.8 per cent annually under Brian Mulroney, 2.4 per cent under Jean Chrétien and 2.0 per cent under Paul Martin.

Due to Canada’s sharp increase in population growth in recent years, aggregate GDP growth is a misleading indicator for comparing economic growth performance across countries or time periods. Canada is not leading the G7, or doing well in historical terms, when it comes to economic growth measures that make simple adjustments for our rapidly growing population. In reality, we’ve become a growth laggard and our living standards have largely stagnated for the better part of a decade.

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