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Federal government’s ‘fudget budget’ relies on fanciful assumptions of productivity growth

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From the Fraser Institute

By Niels Veldhuis and Jake Fuss

Labour productivity isn’t growing, it’s declining. And stretching the analysis over the Trudeau government’s time in office (2015 to 2023, omitting 2020 due to COVID), labour productivity has declined by an average of 0.8 per cent. How can the Trudeau government, then, base the entirety of its budget plan on strong labour productivity growth?

As the federal budget swells to a staggering half a trillion dollars in annual spending—yes, you read that correctly, a whopping $538 billion this year or roughly $13,233 per Canadian—and stretches over 430 pages, it’s become a formidable task for the media to dissect and evaluate. While it’s easy to spot individual initiatives (e.g. the economically damaging capital gains tax increase) and offer commentary, the sheer scale and complexity of the budget make it hard to properly evaluate. Not surprisingly, most post-budget analysts missed a critically important assumption that underlies every number in the budget—the Liberals’ assumption of productivity growth.

Indeed, Canada is suffering a productivity growth crisis. “Canada has seen no productivity growth in recent years,” said Carolyn Rogers, senior deputy governor at the Bank of Canada, in a recent speech. “You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass.”

The media widely covered this stark warning, which should have served as a wake-up call, urging the Trudeau government to take immediate action. At the very least, this budget’s ability—or more accurately, inability—to increase productivity growth should have been a core focus of every budget analysis.

Of course, the word “productivity” puts most people, except die-hard economists, to sleep. Or worse, prompts the “You just want us to work harder?” questions. As Rogers noted though, “Increasing productivity means finding ways for people to create more value during the time they’re at work. This is a goal to aim for, not something to fear. When a company increases productivity, that means more revenue, which allows the company to pay higher wages to its workers.”

Clearly, labour productivity growth remains critical to our standard of living and, for governments, ultimately determines the economic growth levels on which they base their revenue assumptions. With $538 billion in spending planned for this year, the Trudeau government better hope it gets its forecasts right. Otherwise, the $39.8 billion deficit they expect this year could be significantly higher.

And here’s the rub. Buried deep in its 430-page budget is the Trudeau government’s assumption about labour productivity growth (page 385, to be exact). You see, the Liberals assume the economy will grow at an average of 1.8 per cent over the next five years (2024-2028) and predict that half that growth will come from the increase in the supply of labour (i.e. population growth) and half will come from labour productivity growth.

However, as the Bank of Canada has noted, labour productivity growth has been non-existent in Canada. The Bank uses data from Statistics Canada to highlight the country’s productivity, and as StatsCan puts it, “On average, over 2023, labour productivity of Canadian businesses fell 1.8 per cent, a third consecutive annual decline.”

In other words, labour productivity isn’t growing, it’s declining. And stretching the analysis over the Trudeau government’s time in office (2015 to 2023, omitting 2020 due to COVID), labour productivity has declined by an average of 0.8 per cent. How can the Trudeau government, then, base the entirety of its budget plan on strong labour productivity growth? It’s what we call a “fudget budget”—make up the numbers to make it work.

The Trudeau fudget budget notwithstanding, how can we increase productivity growth in Canada?

According to the Bank of Canada, “When you compare Canada’s recent productivity record with that of other countries, what really sticks out is how much we lag on investment in machinery, equipment and, importantly, intellectual property.”

Put simply, to increase productivity we need businesses to increase investment. From 2014 to 2022, Canada’s inflation-adjusted business investment per worker (excluding residential construction) declined 18.5 per cent from $20,264 to $16,515. This is a concerning trend considering the vital role investment plays in improving economic output and living standards for Canadians.

But the budget actually hurts—not helps—Canada’s investment climate. By increasing taxes on capital gains, the government will deter investment in the country and encourage a greater outflow of capital. Moreover, the budget forecasts deficits for at least five years, which increases the likelihood of future tax hikes and creates more uncertainty for entrepreneurs, investors and businesses. Such an unpredictable business environment will make it harder to attract investment to Canada.

This year’s federal budget rests on fanciful assumptions about productivity growth while actively deterring the very investment Canada needs to increase living standards for Canadians. That’s a far cry from what any reasonable person would call a successful strategy.

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EU investigates major pornographic site over failure to protect children

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From LifeSiteNews

By Jonathon Van Maren

Pornhub has taken down 91% of its images and videos and a huge portion of the last 9% will be gone by June 30 because it never verified the age or consent of those in the videos.

Despite an aggressive PR operation to persuade lawmakers that they have reformed, Pornhub is having a very bad year.

On May 29, it was reported that the European Commission is investigating the pornography giant and three other sites for failing to verify the ages of users.

The investigation, which comes after a letter sent to the companies last June asking what measures they have taken to protect minors, is being carried out under the Digital Services Act. The DSA came into effect in November 2022 and directs platforms to ensure “appropriate and proportionate measures to ensure a high level of privacy, safety, and security of minors, on their service” and implement “targeted measures to protect the rights of the child, including age verification and parental control tools, tools aimed at helping minors signal abuse or obtain support, as appropriate.”

According to France24: “The commission, the EU’s tech regulator, accused the platforms of not having ‘appropriate; age verification tools to prevent children from being exposed to pornography. An AFP correspondent only had to click a button on Tuesday stating they were older than 18 without any further checks to gain access to each of the four platforms.”

Indeed, Pornhub’s alleged safety mechanisms are a sick joke, and Pornhub executives have often revealed the real reason behind their opposition to safeguards: It limits their traffic.

Meanwhile, Pornhub — and other sites owned by parent company Aylo — are blocking their content in France in response to a new age verification law that came into effect on June 7. Solomon Friedman, Aylo’s point man in the Pornhub propaganda war, stated that the French law was “potentially privacy infringing” and “dangerous,” earning a scathing rebuke from France’s deputy minister for digital technology Clara Chappaz.

“We’re not stigmatizing adults who want to consume this content, but we mustn’t do so at the expense of protecting our children,” she said, adding later, “Lying when one does not want to comply with the law and holding others hostage is unacceptable. If Aylo would rather leave France than apply our law, they are free to do so.” According to the French media regulator Arcom, 2.3 million French minors visit pornographic sites every month.

Incidentally, anti-Pornhub activist Laila Mickelwait reported another major breakthrough on June 7. “P*rnhub is deleting much of what’s left of the of the site by June 30,” she wrote on X. “Together we have collectively forced this sex trafficking and rape crime scene to take down 91% of the entire site, totaling 50+ million videos and images. Now a significant portion of the remaining 9% will be GONE this month in what will be the second biggest takedown of P*rnhub content since December 2020.”

“The reason for the mass deletion is that they never verified the age or consent of the individuals depicted in the images and videos, and therefore the site is still awash with real sexual crime,” she added. “Since the fight began in 2020, 91% of P*rnhub has been taken down — over 50 million images and videos. Now a huge portion of the last 9% will be gone by June 30 because P*rnhub never verified the age or consent of those in the videos and the site is a crime scene.”

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Jonathon’s writings have been translated into more than six languages and in addition to LifeSiteNews, has been published in the National PostNational ReviewFirst Things, The Federalist, The American Conservative, The Stream, the Jewish Independent, the Hamilton SpectatorReformed Perspective Magazine, and LifeNews, among others. He is a contributing editor to The European Conservative.

His insights have been featured on CTV, Global News, and the CBC, as well as over twenty radio stations. He regularly speaks on a variety of social issues at universities, high schools, churches, and other functions in Canada, the United States, and Europe.

He is the author of The Culture WarSeeing is Believing: Why Our Culture Must Face the Victims of AbortionPatriots: The Untold Story of Ireland’s Pro-Life MovementPrairie Lion: The Life and Times of Ted Byfield, and co-author of A Guide to Discussing Assisted Suicide with Blaise Alleyne.

Jonathon serves as the communications director for the Canadian Centre for Bio-Ethical Reform.

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Natural gas pipeline ownership spreads across 36 First Nations in B.C.

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Chief David Jimmie is president of Stonlasec8 and Chief of Squiala First Nation in B.C. He also chairs the Western Indigenous Pipeline Group. Photo courtesy Western Indigenous Pipeline Group

From the Canadian Energy Centre

Stonlasec8 agreement is Canada’s first federal Indigenous loan guarantee

The first federally backed Indigenous loan guarantee paves the way for increased prosperity for 36 First Nations communities in British Columbia.

In May, Canada Development Investment Corporation (CDEV) announced a $400 million backstop for the consortium to jointly purchase 12.5 per cent ownership of Enbridge’s Westcoast natural gas pipeline system for $712 million.

In the works for two years, the deal redefines long-standing relationships around a pipeline that has been in operation for generations.

“For 65 years, there’s never been an opportunity or a conversation about participating in an asset that’s come through the territory,” said Chief David Jimmie of the Squiala First Nation near Vancouver, B.C.

“We now have an opportunity to have our Nation’s voices heard directly when we have concerns and our partners are willing to listen.”

Jimmie chairs the Stonlasec8 Indigenous Alliance, which represents the communities buying into the Enbridge system.

The name Stonlasec8 reflects the different regions represented in the agreement, he said.

The Westcoast pipeline stretches more than 2,900 kilometres from northeast B.C. near the Alberta border to the Canada-U.S. border near Bellingham, Wash., running through the middle of the province.

Map courtesy Enbridge

It delivers up to 3.6 billion cubic feet per day of natural gas throughout B.C. and the Lower Mainland, Alberta and the U.S. Pacific Northwest.

“While we see the benefits back to communities, we are still reminded of our responsibility to the land, air and water so it is important to think of reinvestment opportunities in alternative energy sources and how we can offset the carbon footprint,” Jimmie said.

He also chairs the Western Indigenous Pipeline Group (WIPG), a coalition of First Nations communities working in partnership with Pembina Pipeline to secure an ownership stake in the newly expanded Trans Mountain pipeline system.

There is overlap between the communities in the two groups, he said.

CDEV vice-president Sébastien Labelle said provincial models such as the Alberta Indigenous Opportunities Corporation (AIOC) and Ontario’s Indigenous Opportunities Financing Program helped bring the federal government’s version of the loan guarantee to life.

“It’s not a new idea. Alberta started it before us, and Ontario,” Labelle said.

“We hired some of the same advisors AIOC hired because we want to make sure we are aligned with the market. We didn’t want to start something completely new.”

Broadly, Jimmie said the Stonlasec8 agreement will provide sustained funding for investments like housing, infrastructure, environmental stewardship and cultural preservation. But it’s up to the individual communities how to spend the ongoing proceeds.

The long-term cash injections from owning equity stakes of major projects can provide benefits that traditional funding agreements with the federal government do not, he said.

Labelle said the goal is to ensure Indigenous communities benefit from projects on their traditional territories.

“There’s a lot of intangible, indirect things that I think are hugely important from an economic perspective,” he said.

“You are improving the relationship with pipeline companies, you are improving social license to do projects like this.”

Jimmie stressed the impact the collaborative atmosphere of the negotiations had on the success of the Stonlasec8 agreement.

“It takes true collaboration to reach a successful partnership, which doesn’t always happen. And from the Nation representation, the sophistication of the group was one of the best I’ve ever worked with.”

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