by Maj (ret'd) CORNELIU. CHISU, CD, PMSC,
FEC, CET, P. Eng.
Former Member of Parliament
Pickering-Scarborough East
The Trudeau government will table its next budget on April 16, 2024. So it is time to take another look at what they intend or should do to redress our country’s economy, stop waste, and really look after the interests of the country and its citizens.
Since first elected, the Trudeau government has escalated spending on new or expanded programs and services, financing it through government debt.
From 2014/15 to 2022/23, the government increased annual program spending by approximately 75 per cent. If we adjust for population growth and inflation, the Trudeau government has recorded the five-highest years of per-person spending in Canadian history.
All of this new spending has resulted in eight consecutive budget deficits under Prime Minister Trudeau, with six more projected until 2028/29. These deficits have contributed to an $867.2 billion increase in gross federal debt from 2014/15 to 2022/23.
The federal government plans to spend more taxpayer dollars on debt interest ($46.5 billion) in 2023/24 than on child-care benefits ($31.2 billion).
As a result, future generations will have to pay off a debt burden that’s nearly double what it was when Prime Minister Trudeau was elected in 2015.
Let us face the crude reality. As the economic growth crisis deepens, the standard of living worsens. More to the point, the economy is now growing slower than the population, which is why per capita GDP is falling.
The latest figures from Statistics Canada confirm that Canada suffered yet another decline in per capita GDP in the fourth quarter of 2023: the fifth decline in the past six quarters, the worst sustained drop in more than 30 years. Per capita GDP, after adjusting for inflation, is now below where it was in the fourth quarter of 2014, nine years ago. That has left living standards worse in the fourth quarter of 2023 than they were at the end of 2014.
The result is an end to the belief that we are among the richest countries in the world. From placing sixth among OECD countries in GDP per capita in 1981, we have fallen to 15th place in 2022. We have been surpassed by countries like Ireland, the Netherlands, Austria, Sweden, Iceland, Australia, Germany, Belgium and Finland, who used to be poorer than we were.
So what can we expect without a radical change in government policies; change the political class does not seem ready to even consider? Unless we find a solution quickly the economy will continue to shrink, and living standards will not be all that suffers. Everything they represent will suffer.
A society that cannot look forward to a future of rising living standards is one that is deprived of one of the primary motivating forces of human behaviour – hope. Without the universal lubricant of growth, all of the divisions within a society – between the classes, between the generations, between sexes and races and regions – are likely to be more inflamed.
What makes this especially depressing is that it is almost never discussed in our politics. Party leaders hammer away at each other over growth in the short term, though they can do very little to alter it. Long-term growth, which is more responsive to policy, barely rates a mention. What they think about the future of Canada is probably the farthest thing from their mind as they look for grab an illusive and short-lived imaginary power.
For all the fruitless debates about macroeconomic stabilization policy, and which form of stimulus is most effective at raising growth in the short term, the long-term growth trajectory is blindly ignored. Yet it is the long-term growth of an economy that is really responsive to policy.
Another major problem Canada continues to ignore is our alarming drop in productivity, which is closely connected to the extraordinary decline of business investment in Canada. Simply put, our workers are less productive than other countries’ workers because they have less capital to work with.
Therefore, getting our investment rates up is obviously part of the solution. It matters, however, what you invest in, as much as how much you invest.
The current trend in disaggregate and chaotic investment it is very troubling.
While business investment in residential structures has roughly doubled as a percentage of GDP since 2000, investment in machinery and equipment has roughly halved, with our manufacturing industries destroyed to the benefit of other countries.
Could this go some way towards explaining why our relative growth in productivity has fallen off so sharply since 2000?
Have we been so busy capitalizing on rising housing prices that we have neglected to invest in the sorts of things that make it possible to afford a house?
Over the last thirty years, manufacturing jobs have constituted a declining share of working-class employment. This is true even among men, for whom manufacturing employment went from a high of 20 percent of working-class jobs to only 13 percent today. Among women, manufacturing represents only 6 percent of working-class jobs.
Conversely, jobs in sales and services have grown significantly over the same period. Today, almost half of the working class is employed in sales/service jobs. Among working-class women, it accounts for more than half.
The trades continue to be an important part of working-class employment, but not skilled tradespeople with formal training, as was formerly the case. Today, it is mostly helpers and labourers who fall into the working class.
Notably, immigrants are much more likely to find themselves in the working class than other Canadians, due to ancient and restrictive professional trade laws. Census data show that the longer an immigrant has been in Canada, the less likely he or she is a member of the working class. Fifty percent of immigrants who arrived in the previous five years found themselves in the working class, whereas only 34 percent—equivalent to the national average—of immigrants in Canada longer than 35 years did.
In short, a member of this newly defined working class, is just as likely to be female, most likely working in sales or the service industry, and highly likely to be a recent immigrant.
So major policy changes on housing, immigration, childcare, and education would show that our politicians are attuned to changing working-class dynamics and ready to fulfill the vision of a multi-ethnic, working-class coalition for the twenty-first century. Effective policies could help them enter the coveted and widely touted middle class; one that seems to be in decline at present, rather than on the rise.
In conclusion, let us see what the visionaries of this year’s budget intend to bring to Canadians.
“Learn from yesterday, live for today, hope for tomorrow.
The important thing is not to stop questioning.” – Albert Einstein.
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