The Trudeau government released its 2019 budget today. Finance Minister Bill Morneau delivered a budget that caters to voters over businesses, and not everyone is happy with the announcements.
There was a high amount of focus on this
Asked to define “middle class” during a year-end television interview, Prime Minister Justin Trudeau glibly answered that Canadians know what it is; unable to define it himself.
This, after he concocted the Soviet-sounding Ministry of Middle Class Prosperity and tapped Ottawa-Vanier MP Mona Fortier to head it up; herself stumped on local radio about what constituted the middle class in Canada, or what her duties entailed.
So how about attempting to determine “middle class” by what it is not? And just for fun, let’s use some Liberal behaviours from the past to assist–consider them a window into future expectations for this government.
For starters, middle class Canadians are not seconding government jets for a Costa Rican Christmas like Trudeau has done.
According to the PM’s New Year’s Eve itinerary, he will ring in 2020 at this tropical locale while middle class Canadians suffer through another winter, and now pay the Liberals’ carbon tax for the privilege of heating their homes.
If this weren’t galling enough, former Environment Minister Catherine McKenna continues her incessant Tweet parade about “transitioning to a net zero carbon economy” while her boss burns aviation fuel like Leonardo DiCaprio.
Of course, Leonardo pays for his jet travel and luxury yacht trips while Trudeau bills the taxpayer because nothing says middle class Canadian like paying for a trust fund millionaire’s exotic vacations.
And speaking of sunny holidays for the rich and famous, who could forget Trudeau’s visit to Aga Khan’s private Bahamian Island in Christmas of 2016?
Then-ethics commissioner Mary Dawson determined that the trip broke conflict of interest law–Trudeau’s first of three such transgressions–but by now, most middle class Canadians understand that the rules only apply to them, not the privileged like Trudeau.
Given this do-as-I-say-not-as-I-do track record, expect more hypocrisy, more elitism and more condescension from the Liberals’ minority regime in 2020, as their government boldly takes risks that middle class Canadians and those struggling to join them, will ultimately endure.
But before getting into the risks that a string of deficit budgets or new environmental legislation creates, the government’s stance on Islamic State “foreign travellers” is very instructive.
Dozens of these ISIS perps–60 by government estimate–have returned to Canada and are simply allowed to live freely among the general population.
Some even gave media interviews bragging about their terrorist activity overseas, while ex-Public Safety Minister Ralph Goodale made excuses about why it’s so difficult to prosecute them.
No biggie, right?
Rank-and-file Canadians would simply take the risk on behalf of this feckless and impotent policy of “de-radicalization” and “reintegration”: on the buses, the subways and in the public square, while guys like Trudeau enjoy drivers and round-the-clock security.
While British troops were hunting their homegrown ISIS perps on the battlefield, federal Liberals were planning therapy sessions for our “foreign travellers”.
And as Trudeau admitted during an Edmonton town hall in February 2018, the RCMP would monitor these enemies of the state 24/7, at great expense of manpower and resources.
So the Liberal idea of creating a benevolent and caring society on the backs of middle class Canadians continues apace and comes in a variety of flavours too, like the federal carbon tax which ramps up to $30-per-ton in April 2020 for jurisdictions without their own schemes.
Don’t forget that Liberals gave carbon tax exemptions to ‘energy intensive-trade exposed’ industries and placed the burden on–you guessed it–middle class Canadians.
See how easy middle class Canada is to define, once the Liberals’ rose-coloured glasses are removed.
So what if the price of gasoline becomes too expensive for some to fill up their vehicles, or if people lose their jobs, as some 175,000 resource sector workers in Alberta have since Trudeau took power in 2015.
According to McKenna, people can simply be “retrained” for new jobs in the “green economy”, and car owners, well maybe they should switch to using public transit or riding bicycles.
For someone privileged enough to do graduate studies at London School of Economics and a law degree at McGill, one gets the impression that the idea of “risk” for McKenna is somewhat different than how middle class Canadians view it.
Same goes for our trust fund PM, or his millionaire Finance Minister Bill Morneau who justifies adding another $100 billion in federal debt over the next four years because interest rates are cheap and our debt-to-GDP ratio is manageable.
As Morneau borrows Canada’s way into his idea of “prosperity”, keep in mind that he and his cohorts will be collecting gold-plated government pensions when our children are picking up the tab for their reckless spending.
So sit tight middle class Canadians. Liberals have big plans for 2020 and much of it involves spending your money to tell you how to live your lives.
Parliamentary Budget Officer Yves Giroux has released the 2019 Economic and Fiscal Update, in it, he urges MPs to take a serious look at how the government plans to cut spending, while also pointing an increasing debt-to-GDP ratio.
According to the PBO report released on Thursday, the federal government has stated it will cut $7.5 billion over five years, equating to a cut of $1.5 billion per year, but has provided “incomplete” information regarding where and how the cuts will be made.
“No details have been published regarding the process or the criteria that will be used to assess programs, making it difficult to determine the viability of these savings,” the PBO report states. “Parliamentarians may wish to request details on the specific mix of tax policies and operational actions the government plans to introduce to reach the $1.5-billion annual target.”
The office also raised concerns over the potential increase in the debt-to-GDP ratio.
“The fiscal outlook… does not meet the government’s commitment to reducing debt relative to GDP, as the government is forecasting a 31 percent debt-to-GDP ratio in 2019-20 and 2020-21, higher than 30.8 percent in 2018-19,” Thursday’s report states. “A combination of additional spending restraint, revenue increases or faster economic growth would be needed prior to March 31, 2020, to put the debt-to-GDP ratio on a declining path in 2019-20.”
The increase in debt-to-GDP notably directly contradicts statements made by the PM and his steam, including in the most recent mandate letter given to Mr. Morneau.
The fiscal update from Finance Minister Bill Morneau’s department talked up work on the Trans Mountain pipeline expansion his government nationalized for $4.5 billion in 2018, but the extent of promised Indigenous ownership remains to be seen.
“We are in the process of discussing with Indigenous people the potential for their ownership…that potential goes right up to the entire ownership possibly,” said Morneau on Monday following the release of his department’s fiscal update
“But we’re not nearly there yet so we don’t yet have a sense of the interest. We don’t yet have a sense of which of the Indigenous peoples impacted would be keenly interested and capable of moving forward.”
Since Prime Minister Justin Trudeau’s offer to sell indigenous buyers 100 percent of the project – an existing, operational 1150km bitumen pipeline and the project to twin it – three buyers have emerged.
These include the Western Indigenous Pipeline Group whose First Nation partners live on the TMX right-of-way, Project Reconciliation and Alberta Iron Coalition.
Additionally, Métis settlements in Alberta already affected by the oil patch say they are being left out of the entire discussion on future development decisions related to TMX.
The Post Millennial has spoken to each of these Indigenous interests previously, except Alberta Iron Coalition; all are bullish on owning the project.
Métis remain supportive of the pipeline expansion, but want more attention paid to managing cumulative impacts from development to date, before TMX triples the current pipeline’s volume of 300,000 barrels/day.
While Western Indigenous Pipeline Group CEO Joe Dion insists that Ottawa is duty-bound to deal with them first as their interests are directly bisected by TMX, Morneau made no commitments.
“We’re not far enough along to get to a conclusion on (indigenous ownership) and certainly not far enough along to get to any idea of whether one group versus another group would be involved in that,” the minister said on that question.
Adding some uncertainty to TMX fortunes are six coastal First Nations in British Columbia, who are at Federal Court of Appeal this week to argue the second round of consultations for the pipeline expansion were again, inadequate.
The Tsleil-Waututh and Squamish Nations scored their first victory against the Trans Mountain project back on August 30, 2018, after the federal appeals court quashed original National Energy Board permits.
Within 24 hours of this decision, Kinder Morgan shareholders voted to sell Trans Mountain to the Government of Canada and Ottawa re-started consultations with affected First Nations.
The national federal debt is currently in excess of $675 billion, about 30 percent of our annual Gross Domestic Product of $2.14 trillion or what’s referred to in fiscal policy-speak as ratio of debt-to-GDP.
And this federal debt-to-GDP metric, combined with low interest rates is how Finance Minister Bill Morneau justifies continued deficit spending to the tune of nearly $100 billion more over the next four years.
“Our intent is to make those investments and to do it in a way that will help us grow our economy,” said Morneau on Monday of the continued red ink noted in his government’s fall fiscal update for the country.
According to Finance department figures, on the current trajectory of government revenues and spending, our GDP ratio that will settle down slightly from this budget’s 31 percent, to 29.8 percent in 2023-24.
But weighing only federal debt against gross domestic product to gauge Ottawa’s borrowing safe zone is problematic, because that debt is only part of the picture.
Add in outstanding provincial and territorial borrowing and Canada’s debt-to-GDP almost doubles to nearly 60 percent, or around $1.2 trillion.
As far back as in June, even the International Monetary Fund cautioned that jurisdictional borrowing in Canada needs to be addressed in its Economic Outlook.
“Provincial governments should do more to create more spending room…ensur(ing) that both levels of government have enough room to respond in case of a downturn,” reads IMF’s report.
“Reducing debt faster would provide more options to handle future challenges, such as those related to aging and weak productivity growth.”
Ian Lee, a business professor and faculty chair at Carleton’s Sprott School of Business, said in addition to sub-sovereign and provincial debt, Canadian household debt should also be cause for concern.
“We’ve got really overextended consumers, about two trillion dollars in debt,” he said. “We know exports are down, manufacturing has been in steady collapse since the 1970s, so what is the anchor or the driver that is going to drive us forward?”
Consumer debt in Canada topped $2.25 trillion at the end June, of which nearly $1.5 trillion is tied up in mortgages. Add this on top of federal and sub-sovereign Canadian debt and the country’s aggregate debt-to-GDP ratio sky-rockets to 281 percent.
“And housing and real estate is completely tapped out and they’re extremely over-indebted and so where’s the next big growth going to come from? I can’t see it,” added Lee.
While the Canadian economy recorded 400,000 net new jobs for 2019, November employment numbers from Statistics Canada indicated 71,000 people got pink slips a month before Christmas and that declines were experienced “in manufacturing and natural resources, as well as in the services-producing sector.”