Pierre Poilievre’s argument against the federal Liberal government rests on a very simple premise: that excessive federal spending is the root of all evil. According to the Conservative leader, federal spending has driven up inflation and inflation has led to higher interest rates, and the combination of the two has made everything terrible.
With that in mind, Poilievre was understandably excited on Monday to highlight an analysis published by Scotiabank that found government spending was ultimately responsible for driving the Bank of Canada’s key policy rate 200 basis points higher than it might have gone otherwise.
“Scotiabank says that government deficits have added two percentage points to interest rates,” Poilievre told the House of Commons.
The fine print is less helpful to the Conservative leader. Seventy of those basis points are linked to spending by provincial governments (most of which are currently run by conservative-minded premiers). Another 20 points are the responsibility of municipal governments.
That still leaves 110 basis points — the equivalent of 1.1 percentage points — tied to federal spending over the past four years. But 80 of those points were driven by federal spending to support individuals and businesses during the pandemic.
Sean Fraser, the Liberal minister of housing, eventually got around to pointing this out to the Conservatives. He asked the opposition side to imagine what the situation would be now if the government hadn’t provided those supports.
The political, economic and fiscal reality of this moment — defined by persistent inflation and higher interest rates — still seemed to be written all over the Fall Economic Update Finance Minister Chrystia Freeland tabled Tuesday afternoon.
“The foundation of our fall economic statement is our responsible fiscal plan,” Freeland told the House.
Liberal leader Justin Trudeau at Liberal party headquarters in Montreal on Oct. 20, 2015 after winning the general election. Trudeau’s campaign embraced deficit financing to pursue government priorities. (Sean Kilpatrick/Canadian Press)
The relative responsibility of Liberal fiscal policy has been up for debate since the moment during the 2015 election campaign when Justin Trudeau said a government led by him would run a deficit to fund its chosen priorities.
For 20 years — from 1995 to 2015 — it was accepted wisdom that running a deficit was inherently bad, something that could be barely tolerated only in the event of an economic crisis. And that shibboleth of official Ottawa has proved exceedingly hard to shake.
For sure, the Liberals have not helped their cause with a run of deficits that have been higher than promised. But in her remarks to the House, Freeland emphasized the relative soundness of the federal government’s books, at least when compared to other G7 countries. She also noted the government’s current efforts to cut or re-purpose $15 billion in federal spending.
The new spending announced on Tuesday is relatively restrained. Freeland did not table the sort of mini-budget that recent fall updates have become. Finding things the government could do without committing significant new funds seems to have been the order of the day — and nearly all of the new measures are aimed at addressing the cost of living concerns that dominate federal politics right now.
“We are taking care not to feed inflation — by carefully targeting new investments towards the priorities of Canadians today, and towards the future growth that makes our finances sustainable,” Freeland said.
The fiscal hawks are circling
Poilievre was unimpressed.
“With this $20 billion of costly new spending, this update can be summed up very simply: prices up, rent up, debt up, taxes up, time’s up,” the Conservative leader said after Freeland had finished.
The Conservatives, he said, would be voting against “this disgusting scheme.”
Poilievre’s taunts notwithstanding, the Liberals seem to be contending with some basic realities. With the Bank of Canada increasing interest rates to combat inflation, the economy has slowed. The government has to take care to avoid feeding inflation. It might also be worried about disappointing credit rating agencies. Meanwhile, higher interest rates have increased the cost of servicing the federal debt.
Poilievre calls fall economic statement ‘disgusting scheme’
Featured VideoConservative Leader Pierre Poilievre criticizes the more than $20 billion in new spending promised in the federal government’s fall fiscal update.
Even if the government was eager to spend a lot more right now, it seems to have decided that its room to manoeuvre is limited.
That likely complicates any hopes the NDP might have had of seeing a national, single-payer pharmacare program implemented over the next two years. But Poilievre and other fiscal hawks will still find plenty to worry about here.
Compared to the outlook presented in the spring budget, the deficit for the current fiscal year is virtually unchanged. But the shortfall is now expected to be larger over the next four years.
Federal debt as a share of the economy — the debt-to-GDP ratio — is still expected to decline over the medium term, but not before rising slightly to 42.7 per cent next year. The annual public debt charge — the interest the government pays on its total debt — is also now projected to peak at 1.8 per cent of GDP, twice what it was before the pandemic.
Those numbers are hardly unprecedented. At 42.7 per cent, the debt-to-GDP ratio would be roughly where it was when Jean Chretien left office. Public debt charges as a share of GDP were higher as recently as 2007.
Can Liberals convince Canadians it’s all worthwhile?
If Tuesday’s update manages to avoid pushing up inflation and interest rates (and makes for happier voters as a result), the Liberals might consider it a successful exercise. But that still might amount to only half the battle.
Poilievre’s argument isn’t simply that the government is spending too much. He also argues it’s not accomplishing very much with all the money it’s spending. That too is hardly a new criticism, but it’s one the Liberals have long struggled to rebut.
It’s also a more relevant debate. The size of the federal government’s spending envelope has always been less interesting than what it did with it. And making the case that the government has accomplished something with those deficits seems vital to the Liberal cause ahead of the next election.
Deputy Prime Minister and Minister of Finance Chrystia Freeland, joined by Mayor Olivia Chow, makes a housing announcement in Toronto on Nov. 14, 2023. (Evan Mitsui/CBC)
In her budget speech and in the economic update itself, Freeland highlighted the implementation of the Liberal child care program and the money families with young children have saved as a result.
But memories are short, and voters aren’t obviously in a mood to reward the Liberals just because they implemented a national child care program — which may be why the finance minister spent nearly half of her speech talking about housing.
“Our country needs more homes — and we need more of them, fast,” Freeland said, promising to tackle the problem with “purpose, drive and intensity.”
However much the government spends or does to get those house built — and whatever the size of the deficit that results — voters will be looking for some tangible signs of progress.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.
Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.
The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.
“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.
“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”
Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.
The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.
The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.
Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.
More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.
Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.
“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.
Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.
“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.
Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.
Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.
Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”
“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.
This report by The Canadian Press was first published Sept. 18, 2024.
