As is so often the case I find myself agreeing with the Globe and Mail‘s John Ibbitson when he says, in a recent column in that newspaper, that “Finance Minister Chrystia Freeland’s fall economic statement is an act of deception – or maybe self-deception … [because] … While this Liberal government promises to invest up to $100-billion over three years in stimulus, to move toward a new national child-care system and “national, universal pharmacare,” and to launch major new initiatives to fight climate change, combat systemic racism and improve conditions on First Nations reserves, it fails to confront two truths that undermine all those commitments.” They are:
- The pandemic has left this country measurably poorer; and
- The statement largely ignores the biggest challenge of all: societal aging.
“By failing to accommodate these two truths,” he writes, “the Liberals are fooling either themselves or us.” My suspicion is that it’s a bit of the first and a lot of the second. My guess is that is part of the reason that Deputy Minister of Finance (one of the the most senior bureaucrats in the country and the top mandarin in Finance) Paul Rochon has decided to retire. He knows that the Liberal plan is fiscally unsound and dangerous for Canada, but he has been overruled by self-serving politicians.
Explaining his analysis Mr Ibbitson says that “The COVID-19 pandemic has savaged this country’s finances. You simply can’t slough off a deficit that will likely surpass $400-billion once we’ve struggled through the dark winter that awaits us. Years of previously unimaginable deficits lie ahead … [and] … The Conference Board of Canada, in its analysis of the update, calculated that federal and provincial net debt is approaching $2-trillion, more than 92 per cent of GDP, a level not seen since the fiscal crisis of the early 1990s.” That crisis, you may recall, was when Prime Minister Jean Chrétien and his Finance Minister (and later prime minister) Paul Martin finally got serious about dealing with the enormous deficit that Pierre Trudeau had left …
… when he dug a fiscal hole for Canada which Prime Minister Brian Mulroney started to fix but which required more drastic measures ~ mainly offloading the costs of social services, including medicare, on to the (then) “have” provinces: Alberta, British Columbia and Ontario.
“Back then,” John Ibbitson writes, “it took years of cutbacks by every level and stripe of government to bring the deficits under control. Governments slashed transfers, raised taxes, closed hospitals, cut back welfare, expanded class sizes, cancelled infrastructure plans. People were left homeless … [and, although] … Interest rates are much lower today than they were in the 1990s, a situation that the economic statement assumes will continue indefinitely … [but some experts disagree] … “I just don’t know that we can hang our hats on that going forward,” says Pedro Antunes, chief economist at the Conference Board of Canada.“
Moving on towards his second problem area, Mr Ibbitson says that “For much of the 1990s, Canada’s real GDP grew by about 2 per cent or 3 per cent a year. But since the financial crisis of 2008-09, Canada has experienced sluggish growth, and faced more of the same even before the pandemic struck, making it harder to balance the books … [and, he explains] … One reason for the weak growth is aging, a word that appears just once in the economic statement’s 223 pages. Yet costs for health care and long-term care are steadily increasing because the median age is steadily increasing, a situation that will worsen in the years ahead, undermining any government’s ability to spend on new programs … [but] … As premiers pointed out on Tuesday, the economic statement doesn’t include increased funding for health care, while spending for improvements in long-term care is limited and temporary … [thus, he asks] … Where is the money supposed to come from for child care, for pharmacare, for green infrastructure, for housing supports, when long-term-care costs are expected to triple over the next three decades?“
The obvious answer is that we need a younger society, one that pays more taxes to support all the social programmes that so many Canadians regard as “sacred trusts.” But, and the data here is 100% indisputable, Canada, like pretty much every other developed country, does not “produce” enough children to even maintain its current population, much less “grow” a younger workforce:
Many countries (and provinces) have tried larger and larger “baby bonuses” and subsidized child care and so on but nothing seems to work. It appears that there is a nearly iron-clad economic “law:” higher incomes = fewer children.
There is one inescapable conclusion: on the subject of immigration, generally, Justin Trudeau is right! Canada needs more and more working age immigrants who will contribute, as will their children and grandchildren, so the data suggests, to our prosperity. But, in immigration, Canada should be selective and selfish. No on has a “right” to migrate to Canada just because they want a better life. Many countries with very high birthrates also have poor education systems and, therefore, do not produce enough of the sorts of people who will thrive and prosper in Canada and those they do produce are needed, more, in their own countries. Canada does not do anyone a favour when it takes the best and brightest ~ physicians, engineers and so on ~ from less developed countries to drive taxis in Montreal and Toronto. But there are several countries, India and the Philippines, for example, that still have high enough birth rates (2.2 and 2.6 respectively) and who produce people who have proven to be excellent immigrants: socially sophisticated, accustomed to democratic institutions, hard working, entrepreneurial and with a strong belief in education which suggests that their children and grandchildren will also be very productive.
Sadly, I suspect that Prime Minister Justin Trudeau’s views on immigration are focused, almost exclusively, on what he and his handlers perceive to be politically advantageous for the Liberal Party rather than on the needs and “good” of the country. I, personally, happen to support an initiative that aims to “grow” Canada to a population of 100 Million by the year 2100. Not everyone agrees and, sadly, again, too many of those who disagree and actively oppose any and all immigration are Conservatives who have their heads buried in the logical sand … if not somewhere worse.
We need, as I said, to be selective and selfish in recruiting immigrants … and recruiting is, in my opinion, the right word. We ~ our government ~ should do less and less sifting through the applicants and more and more active recruiting, in places like Hong Kong, India and the Philippines, for the people we need and want. Hong Kong would be a great places to start, after the pandemic dust settles, when employers are, once again, looking for workers. It is full of bright young people who want to start again in a new, better place:
“For Canada,” John Ibbitson concludes, “the task after the pandemic will be the same as it was before: to align federal and provincial responsibilities and resources to meet the needs of a society in which people are getting older – only now with a damaged economy and greater debt … [and] … With their economic statement, the Liberals have promised sound finances, someday, while also promising greater social equality, details to come … [but] … In a society growing older, in a country that is suddenly poorer, to promise both is to offer neither. And that may be the greatest deception of all.“
The answer to my opening question is clear: Chrystia Freeland is trying to fool us. I suspect that those observers who say that the aim of this fiscal update was to earmark great pots of unallocated money for Justin Trudeau to use ~ as big promises ~ in an election campaign that he seems to desperately want in order, I guess, to win a majority which will allow him to coverup his and his family’s involvement in the WE Charity Scandal, are correct. There seems to be little in Minister Freeland’s statement that promises any good at all for Canada and Canadians.