” between 2016 and 2019 (pre-COVID), growth in per-person GDP (inflation-adjusted) was an anemic 0.9 percent. According to one study, among the last five pre-recession periods in Canadian history, the Trudeau period (again, 2016 to 2019) recorded the weakest economic growth “
The Trudeau government was first elected in 2015 based in part on a new approach to government policy, which promised greater prosperity for Canadians based on short-term deficit spending (totaling $25.1 billion over three years), lower taxes for most Canadians (except higher-income earners), and a more active approach to economic development (LPC, 2015). This new policy direction stood in stark contrast to the consensus of the previous 20 years (Clemens and Palacios, 2017). The result has been a marked deterioration in the country’s finances, economic stagnation, and a collapse in business investment. If Canada is to restore its fiscal and economic health, Ottawa must enact fundamental policy reform.
Government spending, taxes, and debt
The Trudeau government has markedly increased spending to finance both new programs and increases in existing programs. Federal spending (excluding interest costs) increased from $256.3 billion in 2014-15 (the year before the Trudeau government took office) to $448.2 billion in 2022-23 (an increase of 74.9 percent) (Canada, 2023a) and a projected $453.0 billion in 2023-24 (Canada, 2023b). Not surprisingly, COVID-related spending contributed to increases in 2019-20 to 2021-22. But in 2022-23 and thereafter, there is no COVID-related spending.
The federal government has used tax increases and large increases in borrowing to finance these spending increases. In 2016, the federal government increased the top personal income tax rate imposed on entrepreneurs, professionals , and business owners from 29 percent to 33 percent. Consequently, the combined top personal income tax rate (federal and provincial) now exceeds 50 percent in eight provinces (with the remaining provinces only slightly below 50 percent) and in 2022 Canada had the 5th highest tax rate out of 38 OECD countries. This represents a serious competitive challenge for Canada’s ability to attract and retain entrepreneurs, investors, skilled professionals, and businesses.
And while the Trudeau government reduced the middle personal income tax rate, it also eliminated several tax credits. The combination of the two policy changes means that 86 percent of middle-income families now pay higher personal income taxes (Palacios et al., 2022). If the analysis also includes increases to the Canada Pension Plan contribution rate, almost all Canadians now pay higher taxes.
The Trudeau government also borrowed to finance its new spending. Figure 1 contrasts the originally
planned deficits with the actual deficits incurred by the Trudeau government (excluding COVID-related
spending) from 2016-17 to 2022-23. The actual borrowing exceeds the originally planned borrowing
every year (except 2021-22), often by significant margins, due to the government’s inability to control
spending growth.
The string of deficits means federal debt (measured as gross debt) has ballooned to $1.9 trillion
(2022-23) and is projected to reach $2.4 trillion by 2027/28, fueling a dramatic growth in interest costs,
which have grown by 53.2 percent (inflation-adjusted) between 2014/15 and 2023/24 and will reach
a projected $46.5 billion in 2023/24. Interest costs now consume substantial revenue that is then unavailable for government services or tax reduction.
Simply put, Trudeau government policy changes have produced large increases in government spending, taxes, and borrowing. Unfortunately, these policy changes have not resulted in a more robust and vibrant economy.
Weak economic growth and collapsing business investment
The broadest measure of living standards is GDP per person, which calculates the total value of all goods and services produced in the economy in a given year (adjusted by the population). As illustrated in Figure 2, between 2016 and 2019 (pre-COVID), growth in per-person GDP (inflation-adjusted) was an anemic 0.9 percent. According to one study, among the last five pre-recession periods in Canadian history, the Trudeau period (again, 2016 to 2019) recorded the weakest economic growth (Clemens, Palacios, and Veldhuis, 2021). Another study found that Canada’s per-person GDP growth from 2013 to 2022 was the weakest on record since the 1930s (Cross, 2023). And per-person GDP in 2022 (inflation-adjusted) had still not recovered from the pandemic losses and was basically stagnant at 2018 levels (see figure 2).
Prospects for the future, given current policies, are not encouraging. The OECD projects that Canada will record the lowest rate of per-person GDP growth among 32 advanced economies from 2020 to 2030 and from 2030 to 2060(OECD, 2021).Countries such as Estonia, South Korea, and New Zealand are expected to vault past Canada and achieve higher living standards by 2060.
According to a recent analysis, Canada’s economic growth crisis is due in part to the decline in business investment, which is critical to increasing living standards because it equips workers with tools and technologies to produce more higher-quality goods and services. This, in turn, fuels innovation and improved productivity (Cross, 2023). There are obvious explanations for the decline in business investment including regulatory barriers, particularly related to the energy and mining sectors (Globerman and Emes, 2021), and government deficits, which imply tax increases in the future, dampening investment today. Business investment (inflation-adjusted), excluding residential construction, has declined by 1.8 percent annually since 2014.
According to a 2023 study (Hill and Emes, 2023), between 2014 and 2021, business investment per worker (inflation-adjusted, excluding residential construction) decreased by $3,676 (to $14,687) compared to growth of $3,418 (to $26,751) in the United States. Put differently, in 2014, Canadian
businesses invested 79 cents per worker for every dollar invested in the United States. By 2021, that level of investment had declined to just 55 cents per worker.
Moreover, the amount of investment in Canada by foreigners has decreased while the amount of investment by Canadians outside of the country has increased. In 2008, the two levels were roughly comparable—$65.7 billion in foreign direct investment (FDI) in Canada vs. $84.6 billion in investment by Canadians outside of the country. However, a sizeable change began in 2015; by 2022, the amount of FDI ($64.6 billion) was significantly smaller than the amount of investment by Canadians outside the country ($102.3 billion).
Finally, while Canada’s labour market has consistently demonstrated its strength and resilience, the labour market numbers hide some concerning trends. For example, between February 2020 (when the pandemic began) and June 2023, private-sector job creation (net) was fairly weak at 3.3 percent compared to 11.8 percent job growth in the government sector (Eisen, Ryan and Palacios, 2023). In other words, the recovery and growth in the private sector following the pandemic has not been as strong as expected.
Conclusion: The Path Forward
There is reason for optimism, however, since many of Canada’s challenges are of the federal government’s own making. The Chrétien Liberals in the 1990s faced many of the same challenges that we do today (Veldhuis, Clemens, and Palacios, 2011). By shifting the focus to more prudent government spending, balanced budgets, debt reduction, and competitive tax rates, the Chrétien Liberals—followed in large measure by the Harper Tories—paved the way for two decades of prosperity when Canada outperformed other OECD countries on economic growth, job-creation, and business investment.
To help foster greater prosperity for Canadians today, the federal government can learn from the Chrétien Liberals, and the Harper Tories. The rest of this series identifies policy options that can increase living standards for Canadians by repairing federal finances, improving tax competitiveness, and lowering economic barriers. These reforms could help build a more prosperous country through the creation of good jobs which would lead to rising incomes for Canadians.
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Drug cartels, China, and Canada’s negligence are fueling the deadliest epidemic of our time
It took the threat of U.S. tariffs for Canada to wake up to the horrors of the fentanyl epidemic that is destroying young lives and shattering families. Canadians, who panicked over COVID-19 deaths, have hardly noticed that far more healthy Canadians and Americans are now dying from fentanyl overdoses than ever died from COVID.
Yet while Americans confront this deadly epidemic, Canada remains oblivious to how deeply the crisis has infiltrated our borders.
A grim milestone came in 2021 when U.S. opioid overdose deaths exceeded 100,000 in a single year. More than a million Americans have died from opioid overdoses since these highly addictive drugs first entered the market. Today, fentanyl overdose is the leading cause of death for Americans aged 18 to 25.
Behind every kilogram of fentanyl lies half a million potential deaths. Behind every pill—a game of Russian roulette.
Fentanyl is a synthetic opioid so powerful that one kilogram can kill 500,000 people. Its extreme potency makes it both highly dangerous and easy to smuggle. A single backpack thrown across the border can carry $1 million worth of the drug. It is easy to see why so many opportunists are willing to risk their lives producing and selling it. Overdose statistics fail to capture the bodies found in deserts or those murdered in the vicious drug trade.
Fentanyl is produced for a few cents per pill but sold on the street for many times that, making it both profitable and a cheap high. Incredibly addictive, it is found in virtually all street drugs, giving “the most bang for the buck.” Made by amateurs, these drugs are carelessly laced with lethal doses. And because the pills look identical, users never know whether a dose will get them high—or kill them.
But Canada is not just a bystander in this crisis. A loophole in our border laws—the “de minimis” exemption—has turned Canada into a gateway for fentanyl entering U.S. communities. This exemption allows exporters to ship small packages valued at less than $800 directly to customers with minimal border inspection. Chinese exporters exploit this loophole to ship fentanyl precursors into Canada, where they are processed into pills or moved to Mexico under the supervision of Mexican drug cartels.
The Trump administration has pressed Canada to close this loophole. That it has existed for years, almost unnoticed, should shock us to the core.
The problem of fentanyl production within Canada should not be minimized. The RCMP reports that fentanyl labs are appearing across B.C., often producing methamphetamine alongside fentanyl. These small labs supply both domestic and international markets. The threat is real, and it is growing.
Exactly how many Canadians have died from fentanyl overdoses is unclear. However, with Canada’s population roughly one-ninth of the U.S., it is reasonable to estimate that Canadian deaths are approximately one-ninth of U.S. numbers.
But overdose numbers alone don’t tell the whole story. The number of lives wrecked by this drug is staggering. Parents watch their children—once vibrant and full of promise—disappear before their eyes. Their beauty fades, their minds unravel, and their lives collapse into the desperate cycle of chasing the next fix. Some escape. Many don’t. Until death takes them, that is.
The new Trump administration has promised to confront this carnage. “This is a drug war,” Peter Navarro, assistant to the president and director of the Office of Trade and Manufacturing Policy, recently told reporters. “The Mexican cartels have expanded up to Canada, making fentanyl there and sending it down to the U.S. The Chinese are using Canada to send in small parcels below the radar. It’s important that Canadians understand we are trying to stop the killing of Americans by these deadly drugs.”
But while the U.S. acts, Canada hesitates. Trump is addressing the problem—Canada is enabling it.
The Trump administration also views Canada’s lax drug laws and casual attitude toward buying and selling even the most dangerous drugs as an exacerbating factor. However, on the fentanyl issue, it is clear Trump is determined to tackle a problem Canada has largely ignored. He should be commended for this, and Canada should start cleaning up its own mess.
Yet fentanyl smuggling from Canada is only part of a larger issue. Behind the drug trade lies an even more insidious enemy: the Chinese Communist Party (CCP).
The importation of fentanyl precursors from China, facilitated by Mexican cartels, has turned Vancouver into a money-laundering hub for the CCP. Investigative reporters like Sam Cooper and Terry Glavin have revealed the depth of this corruption, despite the Hogue Commission’s failure to expose it fully.
Ryan P. Williams, president of the Claremont Institute, warns that “The fentanyl crisis is part of a larger campaign by the CCP to destabilize Western nations. They flood our streets with poison while corrupting our institutions from within. If Canada doesn’t confront this threat, it will lose not only lives—but its sovereignty.”
Our new “fentanyl czar,” appointed by Prime Minister Justin Trudeau, should not only address the drug crisis but also expose how deeply a hostile CCP has compromised Canada.
Tackling the fentanyl problem will be enormously difficult—likely impossible— for the Trump administration without cooperation from China, Mexico and even Canada. And forcing that cooperation is likely the first part of Trump’s plan.
Canada’s role may be small, but it must take full responsibility for securing its borders and confronting the fentanyl crisis. Trump has forced us to act. Now, if we are serious about restoring our nation’s integrity, we must break the CCP’s grip on our institutions.
In doing so, we will save Canadian lives.
Brian Giesbrecht is a retired Manitoba judge. He is a Senior Fellow at the Frontier Centre for Public Policy. He was recently named the ‘Western Standard Columnist of the Year.’
America’s natural gas industry celebrated Monday after President Donald Trump signed into law a resolution repealing Biden-era fees on methane emissions.
The Waste Emissions Charge, which Republicans say is the equivalent of a natural gas tax, was authorized by the 2022 Inflation Reduction Act and implemented by the Environmental Protection Agency in November 2024.
The resolution rescinds that regulation under the Congressional Review Act. The CRA legislation gives Congress the authority to repeal regulations issued during the final months of a previous administration.
House Committee on Energy and Commerce Chairman Brett Guthrie, R-Ky., called the repeal “a victory for the American businesses and families who would have been forced to bear the cost of the Biden-Harris Administration’s natural gas tax.”
“It’s time to restore American energy dominance by harnessing innovation and producing the natural gas needed to support our electric grid,” Guthrie added.
Energy experts who testified before Congress in February said the high energy prices during Joe Biden’s presidency directly resulted from increased environmental regulations on energy production. The regulations slowed down domestic energy production and consequently led to increased costs, they said.
The American Exploration and Production Council (AXPC) shares the same view, praising Republicans in Congress and Trump for repealing the Waste Emissions Charge.
“AXPC thanks President Trump for signing the Congressional Review Act legislation – to undo EPA’s flawed rule to implement the natural gas tax,” AXPC CEO Anne Bradbury stated. “While American energy producers remain laser focused on reducing methane emissions, this punitive rule risked undermining those efforts.”
An analysis by the Congressional Budget Office shows that “Charging for methane emissions leads to an increase in the price of natural gas and a decrease in the quantity of natural gas produced and consumed.”
But environmental groups have argued that the legislation will increase energy costs and disrupt efforts to reduce emissions of a potent greenhouse gas. Nearly 80 environmentalist groups recently sent a letter urging lawmakers to keep the regulation, about to take effect, in place.
The Center Square reached out to multiple environmental groups but received no response in time for publication.
