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Economy

Federal government should listen to Canadians and restrain spending in upcoming budget

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From the Fraser Institute

By Grady Munro and Jake Fuss

The Trudeau government has repeatedly demonstrated a proclivity to increase spending and run deficits. Recent polling data shows that most Canadians are not in favour of this approach. When it tables its next budget on April 16, the government should listen to Canadians, restrain spending and provide a concrete plan to balance the budget.

The Trudeau government has increased spending substantially since taking office in 2015. When comparing the levels of inflation-adjusted, per-person program spending under every prime minister, Prime Minister Justin Trudeau has overseen the five-highest years of spending in the country’s history—even when COVID-related spending is excluded. Unsurprisingly, this proclivity to spend has resulted in eight consecutive deficits from 2015/16 to 2022/23, with another six planned from 2023/24 to 2028/29.

These eight years of borrowing have contributed to an $867.2 billion (or 82.0 per cent) increase in total gross government debt since 2014/15. Not only does this represent hundreds of billions that must be paid back by future generations, this debt run-up has also imposed significant costs on taxpayers through rising interest payments. In 2023/24, interest costs on federal government debt will reach a projected $46.5 billion—meaning more taxpayer dollars will go towards servicing debt than child-care benefits ($31.2 billion).

Again, while the Trudeau government was originally elected on the promise of higher spending for infrastructure and temporary deficits, recent polling data shows that Canadians are not happy with this approach—62.9 per cent of Canadians want the Trudeau government to cut spending. Conversely, less than a quarter (24.6 per cent) of respondents want the government to continue as planned (8.7 per cent want further increases in spending).

Of the respondents that feel the government should cut spending, 60.1 per cent want to use the savings to repay debt while 39.9 per cent want tax cuts. Debt reduction or tax relief would be a welcome development. But how much would the federal government need to cut spending to be in a position to balance the budget in the near future?

A recent study shows the federal government could simply limit the growth in annual program spending to 0.3 per cent for two years and balance the budget by 2026/27. In other words, the government could grow annual program spending by $2.9 billion from 2024/25 to 2026/27 and still balance the budget.

This is not to say the government wouldn’t face tough decisions in determining how to limit spending growth, and which areas of spending to target, but there’s a clear path to budget balance if the government wants to respect the wishes of most Canadians. And there are clear areas of spending where savings could be found.

For example, corporate welfare (i.e. government subsidies to businesses). Federal business subsidies nearly doubled from $6.5 billion in 2019 to $11.2 billion in 2022, yet research shows that they do little to promote economic growth and may actually harm the economy. Reducing or eliminating corporate welfare would help restrain overall spending.

After nearly a decade of growing spending and continuous deficits, Canadians have expressed a desire for the federal government to finally change its approach to fiscal policy. Through restrained spending there’s a clear path to a balanced budget that brings opportunities for debt reduction or tax relief—a path the Trudeau government can choose in its upcoming budget.

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Economy

Canadians experiencing second-longest and third steepest decline in living standards in last 40 years

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From the Fraser Institute

From 2019 to 2023, Canadian living standards declined—and as of the end of 2023, the decline had not yet ended, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Despite claims to the contrary, living standards are declining in Canada,” said Grady Munro, policy analyst at the Fraser Institute and co-author of Changes in Per-Person GDP (Income): 1985 to 2023.

Specifically, from April 2019 to the end of 2023, inflation-adjusted per-person GDP, a broad measure of living standards, declined from $59,905 to $58,111 or by 3.0 per cent. This decline is exceeded only by the decline in 1989 to 1992 (-5.3 per cent) and 2008 to 2009 (-5.2 per cent). In other words, it’s the third-steepest decline in 40 years.

Moreover, the latest decline (which comprises 18 fiscal quarters) is already the second-longest in the last 40 years, surpassed only by the decline from 1989 to 1994 (which lasted 21 quarters). And if not stabilized in 2024, this decline could be the steepest and longest in four decades.

“The severity of the decline in living standards should be a wake-up call for policymakers across Canada to immediately enact fundamental policy reforms to help spur economic growth and productivity,” said Jason Clemens, study co-author and executive vice-president at the Fraser Institute.

  • Real GDP per person is a broad measure of incomes (and consequently living standards). This paper analyzes changes in quarterly per-person GDP, adjusted for inflation from 1985 through to the end of 2023, the most recent data available at the time of writing.
  • The study assesses the length (number of quarters) as well the percentage decline and the length of time required to recover the income lost during the decline.
  • Over the period covered (1985 to 2023), Canada experienced nine periods of decline and recovery in real GDP per person.
  • Of those nine periods, three (Q2 1989 to Q3 1994, Q3 2008 to Q4 2011, and Q2 2019 to Q2 2022) were most severe when comparing the length and depth of the declines along with number of quarters required for real GDP per person to recover.
  • The experience following Q2 2019 is unlike any decline and recovery since 1985 because, though per person GDP recovered for one quarter in Q2 2022, it immediately began declining again and by Q4 2023 remains below the level in Q2 2019.
  • This lack of meaningful recovery suggests that since mid-2019, Canada has experienced one of the longest and deepest declines in real GDP per person since 1985, exceeded only by the decline and recovery from Q2 1989 to Q3 1994.
  • If per-capita GDP does not recover in 2024, this period may be the longest and largest decline in per-person GDP over the last four decades.

Adobe PDF Read the Full Report

 

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Economy

Feds spend $3 million to fly 182 politicians and bureaucrats to climate conference

Published on

From the Canadian Taxpayers Federation

Author: Ryan Thorpe 

Feds trip to COP28 in Dubai cost $3 million

The cost for Canada to send hundreds of people to COP28 in Dubai has doubled, rising to nearly $3 million, according to government records obtained by the Canadian Taxpayers Federation.

Included in those costs is $1.3 million the federal government dished out to host a “Canada Pavilion” at the summit, which featured a rapper performing a song on “climate disinformation,” while giving a shoutout to Environment Minister Steven Guilbeault.

“Nothing screams fighting climate change like flying around the world burning through jet fuel and millions of tax dollars,” said Franco Terrazzano, CTF Federal Director. “Here’s a crazy idea: maybe the feds don’t need to spend $3 million flying 182 politicians and bureaucrats to Dubai.”

The federal government paid for at least 182 people to go to COP28, held from Nov. 30 to Dec. 12, 2023, in Dubai, United Arab Emirates.

A previous report from the National Post pegged the cost for Canada’s delegation at $1.4 million.

But the bill now sits at $2,954,188, including $825,466 for transportation, $472,570 for accommodations and $295,455 for meals and incidentals, according to the records.

The records indicate the cost could rise even higher, as certain invoices and travel claims “have yet to be processed.”

Costs included $1.3 million for a “Canada Pavilion” to “showcase the breadth of Canadian climate leadership.”

At the Canada Pavilion, a Canadian rapper known as Baba Brinkman – the son of Liberal MP Joyce Murray – performed a rap on “climate disinformation.”

“Climate disinformation, get that immunization, the vaccine for bad meme infiltration,” Brinkman rapped. “Climate misinformation, it leads to polarization, which leads to radical conspiracy ideation.”

Environment Minister Steven Guilbeault also received a shoutout during Brinkman’s rap.

“Really? Hosting a rapper half-way around the world to drop rhymes at a government podium will help the environment?” Terrazzano said.

The records were released in response to an order paper question from Conservative MP Dan Mazier (Dauphin-Swan River-Neepawa).

Most of the hotel expenses came from the Dubai Marriott and the Premier Inn at the Dubai Investment Park, with rooms coming in between $150 and $400 per night.

The most expensive digs was a $816-per-night suite at the Pullman Dubai Jumeriah Lakes Towers, a “five-star hotel offering upscale accommodations.”

The Canadian delegation also handed out $650 worth of gifts during the trip.

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