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PM Trudeau’s “Monetary Policy” gaffe could cost the Liberals the election. But will it?

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Back in 1993 things were not going well for Canada’s Progressive Conservative Government.  Brian Mulroney’s government had served 2 mandates and Canadians were clearly ready to move on.  The Conservatives decided Kim Campbell would be the best leader to bring a renewed excitement to their reelection hopes.  Campbell was a fresh face and that was important to the party which was losing support quickly.  She was also from Vancouver, which was a nice change for the party normally represented by leaders from Ontario or Quebec.  Even more importantly, when she won the leadership she would become the first female leader of a country in North America.  As Canadians would discover just a few months later though, no one cared about any of that.  That campaign did not go well.  The Conservatives not only lost.  They were decimated right out of official party standing.  The governing party won just 2 seats in the entire nation (Jean Charest in Quebec, and Elsie Wayne in New Brunswick). Kim Campbell did not even win her own seat.  Henceforth the Reform Party represented the Conservative voice for the next two elections.

For one reason or another, Canadians simply did not connect with Kim Campbell.  One of the biggest gaffes of that election campaign came when a reporter pressed Campbell for details on an issue and she replied “The election is not a time to discuss serious issues.”  That was the wrong answer.  Despite what she may have truly meant, all Canadians heard was “I don’t need to explain anything to you.”.  That was exactly the wrong thing to say at the worst possible time.

Why bring this up now, 28 years later? Well Prime Minister Justin Trudeau has made his first major gaffe of this election campaign.   And for those who care about monetary policy (which should be everyone who pays taxes and works or has savings, etc) it’s very likely as stunning a statement as Kim Campbell made three decades ago.

First some background.  In 2021, Canadians find themselves in an astounding situation.  When the covid pandemic hit last year governments all over the world shut down their economies for weeks, and then months.  Government stimulus was the order of the day and Canada’s was among the most generous in the world.  People were paid to stay at home.  Businesses were paid to continue to provide jobs to people working from home.  Landlords were paid to keep tenants afloat.  All in all, government money is being spent at unprecedented rates.

To pay for all this the Trudeau government attempted to pass a bill through Parliament which would allow it to raise taxes at will without a budget and without even coming back to ask Parliament to present a plan or ask for approval.  That didn’t go over so well.  But instead of turning back the taps, or introducing a budget with higher taxes the government worked out a plan with the Bank of Canada.  How this works basically is that every month the Bank of Canada prints out a few billion dollars, and the government uses that to pay for all the stimulus they want.  Over the first year of covid that totalled about 350 Billion dollars!

The Bank of Canada has left the core function expressed in its mandate in order to print all this extra money.  Despite it’s best efforts to decouple inflation from the printing of extra money, it’s not working.  Canada’s inflation rate has been blowing through the target of 2% month after month after month.

This is the the mandate as expressed by the Bank of Canada itself on its website.

The Bank of Canada is the nation’s central bank. Its mandate, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” The Bank’s vision is to be a leading central bank—dynamic, engaged and trusted—committed to a better Canada.

The Bank has four core functions:

  • Monetary policy: The Bank’s monetary policy framework aims to keep inflation low, stable and predictable.
  • Financial system: The Bank promotes safe, sound and efficient financial systems within Canada and internationally.
  • Currency: The Bank designs, issues and distributes Canada’s bank notes.
  • Funds management: The Bank acts as fiscal agent for the Government of Canada, managing its public debt programs and foreign exchange reserves.

The Bank of Canada’s mandate is expiring at the end of this year and the new mandate could change.  Some are saying the Bank should continue to print money at an unprecedented rate and Canadians will learn to live with high inflation.  Considering this drives up the cost of everything from our homes and vehicles, to the food we eat there could hardly be a more important issue.  That’s why PM Trudeau’s response to this question in Vancouver this week is so stunning.  When asked if he would consider a higher tolerance for inflation going forward here’s what he said.

 

Reporter Question about the renewal of the Bank of Canada mandate due at the end of 2021:

-Do you have thoughts about that mandate?  Would you consider a slightly higher tolerance for inflation?

Prime Minister Justin Trudeau: “When I think about the biggest, most important economic policy this government, if re-elected, would move forward, you’ll forgive me if I don’t think about monetary policy.” 

Of course this spurred an immediate reaction from the opposition Conservatives.  That oppostion is perhaps best summed up in this address from Pierre Poilievre.

The question is, will Canadians punish Prime Minister Trudeau for either lacking basic economic knowledge, or not caring about it?  Kim Campbell failed to win her own seat, but she did not seem to connect well with Canadians at all even before that election campaign.  Justin Trudeau has so far been immune to gaffes.  Even though he’s had more than 5 years in government, millions of Canadians stand by him loyally.  Will this time be any different?

After 15 years as a TV reporter with Global and CBC and as news director of RDTV in Red Deer, Duane set out on his own 2008 as a visual storyteller. During this period, he became fascinated with a burgeoning online world and how it could better serve local communities. This fascination led to Todayville, launched in 2016.

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2025 Federal Election

The Liberals torched their own agenda just to cling to power

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This article supplied by Troy Media.

Troy Media By Pat Murphy

The Liberals just proved they’ll do anything to win, including gutting key Trudeau-era policies

With the general election safely in the rear-view mirror, here are some observations.

The Liberal will to power

To me, the most surreal moment came during Mark Carney’s speech on the night he won the Liberal leadership. Raucous cheers ensued when he
declared the abolition of the consumer carbon tax and the retreat from the increase in capital gains inclusion rates. If you knew nothing about Canadian politics, you’d think this jubilation was in response to the assertion of long-cherished Liberal policies and principles.

But, of course, it was nothing of the sort.

In fact, the policies being jettisoned were Liberal in origin and had been hitherto fiercely defended. If you criticized the carbon tax, you were labelled a climate change “denier.” And if you were opposed to the capital gains changes, you were indifferent to increased inequality, the spread of child poverty and various other social ills.

This ability to shamelessly execute dramatic policy flips is indicative of the Liberals’ intense passion for power. And however cynical it may be, it’s one of the keys to their status as Canada’s “natural governing party.”

Thus we have Mark Carney presenting as someone who “just got here,” a tactic designed to disassociate himself from the previous Liberal government. It was  immaterial that he was an adviser to that same government, has stocked his team with its alumni and was an early advocate of carbon taxes. Instead of the enthusiastic net-zero hawk, he ran as the sober, economics-savvy technocrat whose banking and private sector experience is tailor-made for the current trade-war turbulence.

Does this mean that Carney has abandoned the ideological agenda of his unpopular Liberal predecessor? Not necessarily—and probably not at all.
Still, it worked politically. Will to power isn’t something to be sneezed at.

Conservative blues

There’s no sugar-coating the fact that it’s been a deeply disappointing election for the Conservatives. After being the “inevitable” government-in-waiting just four months ago, the combination of Justin Trudeau’s departure and Donald Trump’s trade war totally upended the electoral landscape. And to add insult to injury, their leader, Pierre Poilievre, lost his seat. That said, not everything is doom and gloom.

Compared to the actual results from the previous (2021) election, the Conservatives gained 25 seats. Or if you prefer adjusting the 2021 results to
reflect the new electoral boundaries, the seat gain comes to 18. Either way, the direction is non-trivially positive.

The popular vote share of 41.4 per cent is similarly impressive. Looking over the past 60 years, the Conservative median vote was in the 35 to 36 per cent range. You might call that their natural base. Only Brian Mulroney’s fragile coalition ever brought them north of 40 per cent.

And as Poilievre has been criticized for simply playing to the base, it’s fair to ask whether 41 per cent or thereabouts is the party’s new base. If it is, the
Conservative future is potentially promising.

Mind you, Poilievre might not be around to personally reap the rewards.

The NDP debacle

It was the worst of times for the NDP. Their support collapsed, dropping to its lowest ever level in terms of vote share, and they lost official party status. In the process, they shed over 70 per cent of their caucus and were wiped out in voter rich Ontario. Some of this misfortune may be attributed to their propping up the Trudeau government, thus tending to blur the difference between the two parties. So when Trump’s trade war hit, it was easy for NDP voters to flee to Carney’s perceived safe pair of hands.

To the extent that’s true, there’s a historical echo. Between 1972 and 1974, the NDP supported Pierre Trudeau’s Liberal minority in return for various policy concessions. Then the Liberals pulled the plug, winning a majority in the ensuing election while the NDP lost almost half of their seats. It was that will to power again!

This underlines the dilemma confronting parties like the NDP. Do they want to ruthlessly compete for power? Or are they content with shaping public debate, gradually making once-radical ideas seem mainstream and pushing the boundaries of what society sees as politically acceptable?

It’s a very real—and honourable—trade-off choice.

The pollsters

In a post-election interview, poll aggregator Philippe J. Fournier was generally satisfied with his model’s performance. And if you take margins of error into account, he was justified in doing so.

Nonetheless, his final projection had the Liberals at 186 seats and the Conservatives at 124. The respective actuals were 169 and 144. And he
significantly underestimated the Conservatives in Ontario while overestimating the Liberals in Alberta.

Vindication is sometimes in the eye of the beholder.

Troy Media columnist Pat Murphy casts a history buff’s eye at the goings-on in our world. Never cynical – well, perhaps a little bit.

The views, opinions, and positions expressed by our columnists and contributors are solely their own and do not necessarily reflect those of our publication.

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.

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Business

Canada urgently needs a watchdog for government waste

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This article supplied by Troy Media.

Troy Media By Ian Madsen

From overstaffed departments to subsidy giveaways, Canadians are paying a high price for government excess

Canada’s federal spending is growing, deficits are mounting, and waste is going unchecked. As governments look for ways to control costs, some experts say Canada needs a dedicated agency to root out inefficiency—before it’s too late

Not all the Trump administration’s policies are dubious. One is very good, in theory at least: the Department of Government Efficiency. While that
term could be an oxymoron, like ‘political wisdom,’ if DOGE proves useful, a Canadian version might be, too.

DOGE aims to identify wasteful, duplicative, unnecessary or destructive government programs and replace outdated data systems. It also seeks to
lower overall costs and ensure mechanisms are in place to evaluate proposed programs for effectiveness and value for money. This can, and often does, involve eliminating departments and, eventually, thousands of jobs. Some new roles within DOGE may need to become permanent.

The goal in the U.S. is to reduce annual operating costs and ensure government spending grows more slowly than revenues. Washington’s spending has exploded in recent years. The U.S. federal deficit now exceeds six per cent of gross domestic product. According to the U.S. Treasury Department, the cost of servicing that debt is rising at an unsustainable rate.

Canada’s latest budget deficit of $61.9 billion in fiscal 2023-24 amounts to about two per cent of GDP—less alarming than our neighbour’s situation, but still significant. It adds to the federal debt of $1.236 trillion, about 41 per cent of our estimated $3 trillion GDP. Ottawa’s public accounts show expenses at 17.8 per cent of GDP, up from about 14 per cent just eight years ago. Interest on the growing debt accounted for 9.1 per cent of
revenues in the most recent fiscal year, up from five per cent just two years ago.

The Canadian Taxpayers Federation (CTF) consistently highlights dubious spending, outright waste and extravagant programs: “$30 billion in subsidies to multinational corporations like Honda, Volkswagen, Stellantis and Northvolt. Federal corporate subsidies totalled $11.2 billion in 2022 alone. Shutting down the federal government’s seven regional development agencies would save taxpayers an estimated $1.5 billion annually.”

The CTF also noted that Ottawa hired 108,000 additional staff over the past eight years, at an average annual cost of more than $125,000 each. Hiring based on population growth alone would have added just 35,500 staff, saving about $9 billion annually. The scale of waste is staggering. Canada Post, the CBC and Via Rail collectively lose more than $5 billion a year. For reference, $1 billion could buy Toyota RAV4s for over 25,600 families.

Ottawa also duplicates functions handled by provincial governments, often stepping into areas of constitutional provincial jurisdiction. Shifting federal programs in health, education, environment and welfare to the provinces could save many more billions annually. Poor infrastructure decisions have also cost Canadians dearly—most notably the $33.4 billion blown on what should have been a relatively simple expansion of the Trans Mountain pipeline. Better project management and staffing could have prevented that disaster. Federal IT systems are another money pit, as shown by the $4-billion Phoenix payroll debacle. Then there’s the Green Slush Fund, which misallocated nearly $900 million.

Even more worrying, the rapidly expanding Old Age Supplement and Guaranteed Income Security programs are unfunded, unlike the Canada Pension Plan. Their combined cost is already roughly equal to the federal deficit and could soon become unmanageable.

Canada is sleepwalking toward financial ruin. A Canadian version of DOGE—Canada Accountability, Efficiency and Transparency Team, or CAETT—is urgently needed. The Office of the Auditor General does an admirable job identifying waste and poor performance, but it’s not proactive and lacks enforcement powers. At present, there is no mechanism in place to evaluate or eliminate ineffective programs. CAETT could fill that gap and help secure a prosperous future for Canadians.

Ian Madsen is a senior policy analyst at the Frontier Centre for Public Policy.

The views, opinions, and positions expressed by our columnists and contributors are solely their own and do not necessarily reflect those of our publication.

© Troy Media

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.

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