As finance minister, Chrystia Freeland’s new job of leading the Canadian economy out of trouble will be a bit like conducting an orchestra while a large portion of the musicians stand on their chairs and jeer.
The analogy is inadequate, because there is no job like running a national economy during a time of crisis — especially with a minority government. But Freeland has an advantage in that, so much more than her predecessors, she has already sketched out the score.
Like great war leaders, such as former Canadian insurance salesman Arthur Currie at Vimy Ridge or the idle and awkward youth who became the Duke of Wellington and faced Napoleon at Waterloo, successful finance ministers are proven in the field.
Among those already jeering are those who say Freeland is not qualified.
Canada is a trillion dollars in debt. Our new finance minister has no financial experience or education. It’s time for an election.<br> <a href=”https://twitter.com/hashtag/cdnpoli?src=hash&ref_src=twsrc%5Etfw”>#cdnpoli</a> <a href=”https://twitter.com/hashtag/cpcldr?src=hash&ref_src=twsrc%5Etfw”>#cpcldr</a><br> <a href=”https://t.co/8enFmUjFsI”>https://t.co/8enFmUjFsI</a>
Tough as it is to make money in business, the task of running a country’s finances is by comparison colossal. And it must be done in public view.
“The restart of our economy needs to be green,” Freeland said in her first day on the job. “It also needs to be equitable, it needs to be inclusive and we need to focus very much on jobs and growth.”
Economic rough draft
To help us imagine how the new finance minister might begin solving such diverse — and some would say — conflicting problems, there is in her case a unique resource available.
As a long-time journalist and author whose articles are easily available in the internet age, Freeland has left open a picture window into her economic thinking open to anyone whose interested.
Besides proving that she can absorb complexity at the highest level and synthesize it into something almost anyone can understand, as a journalist Freeland has met with and commented, revealingly, on economic and political actors around the world.
“Voters care deeply about big ideas and will elect the leaders who take the trouble to engage them,” she wrote approvingly for Reuters as she paraphrased the thinking of newly elected Calgary mayor Naheed Nenshi in 2011.
‘Voters care about big ideas,’ Chrystia Freeland wrote when she covered Calgary Mayor Naheed Nenshi’s surprise election for Reuters in 2011. (REUTERS)
Perhaps even more revealing as a political economy blueprint for fixing what ails Canada is her book Plutocrats, which is also conveniently summarized in her 2013 TED Talk.
Laid bare as an unflagging supporter of capitalism, she points out that one of the system’s biggest flaws in its current format is the still growing rich-poor divide which, if it continues, she insists, will likely bring that system to its knees.
“Global capitalism wasn’t supposed to work that way,” Freeland wrote.
Looking for the invisible hand
One advantage of depending on the “small-government” capitalist free market system so often backed, at least with lip service, by conservatives, is that in theory, the role of the politician is relatively simple: back off and let the invisible hand do its job.
Intervening to make things work better is so much more difficult and error prone. But with the economy shrinking due to COVID-19, the wealth-gap widening, and the deficit exploding, a traditional small-government policy of austerity and low taxes seems untenable. It is deeply in conflict with Freeland’s stated views.
So far the money distributed, including Friday’s announced $37-billion extension of the Canada emergency response benefit (CERB) by the federal government has been useful in tiding us over an economic shock that few expected.
But even if the bottomless piggy bank of modern monetary theory works, most proponents of government spending believe it cannot outgrow GDP forever, but must rekindle the economy so that the spending eventually pays for itself.
That is harder but not necessarily impossible, according to economists like Mariana Mazzucato, author of The Entrepreneurial State, who debunks the idea that governments must stand by helplessly as the titans of business decide how money should be spent.
Pumping money into green growth as Europe and even pro-coal Australia have done certainly has widespread support from the expanding environmental business sector and if packaged wisely, could have even broader appeal.
“…”As technologies change, we can capitalise on our strengths in renewables to continue to lead the world in energy exports,” said Angus Taylor, Australia’s energy minister.” <br><br>Australia aims to become renewable energy export superpower – <a href=”https://t.co/Fhyp0utIg8″>https://t.co/Fhyp0utIg8</a> via <a href=”https://twitter.com/FT?ref_src=twsrc%5Etfw”>@FT</a>
Following Australia to become a “renewable energy export superpower” is hardly crazier than the billions spent by former prime minister Stephen Harper to promote a similar plan for fossil fuels, or Prime Minister Justin Trudeau’s multi-billion dollar investment in a pipeline, now that oil prices are falling and demand shrinking.
But to create jobs, especially in the booming tech sector, means creating businesses and keeping them from being bought up by foreign giants.
“Immediate action must be taken to create a domestic supply chain of capital, both public and private sector, working in tandem to support all entrepreneurs,” wrote a group of venture capitalists in the Hill Times last week. They say they have a plan to make it happen.
And how to stop the slide into greater inequality? The Green Party last week added its support for a universal basic income. The New Democrats have pushed for universal child care. Gradually raising the federal minimum wage toward a living wage might do the trick. Alternatively, some Conservatives have called for an election to stop out-of-control spending.
With her hands on the purse strings, Freeland knows there is only so much money to go around.
But with so much in flux and so much money spent already, she may have a window to make significant change. Tax historians have suggested this might be a rare moment when Canadians would support a more distributive tax regime.
Radical changes are risky. They can lead to radical errors. But time is of the essence. And the window may soon close.
Freeland’s task is no cake walk. Without a majority government the job may be impossible, as a cacophony of opposition from entrenched and divergent interests overwhelms the conductor’s timely measures.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
