The last several weeks have seen widespread reaction to the Liberal government’s fall economic statement.
Fall economic statements, occasionally called “mini budgets,” serve as mid-fiscal year report cards to update Canadians on the current and future state of the federal government’s finances, priorities, and the projected state of the Canadian economy.
The finance minister tried to present the course of her government as “fiscally responsible.” Still, an actual reading of the published numbers shows many worrying trends as we enter the new year. The two most significant “elephants in the room” are the statements concerning numbers projected for the growth in unemployment and servicing costs on the national debt.
On unemployment, the statement projects the federal unemployment rate will rise to 6.5% by the second quarter of next year because of a projected slowdown in the economy. Such a slowdown in our economy is a uniquely homegrown problem. While U.S. GDP grew by 5.2% in the third quarter of 2023, Canada’s GDP shrunk by 1.1%. The statement shows rising unemployment and a slowdown in the economy.
Working families will feel the pinch with the government’s plan to raise Employment Insurance (E.I.) premiums in January, clawing more out of every worker’s paycheque. This increase is also in direct contradiction to a commitment the government made to workers in its budget passed just last spring to not increase E.I. premiums in 2024.
When such specific commitments cannot be trusted to be upheld after just six months, it makes it harder to trust any of the promises made in this newest statement.
Where we can have confidence, sadly, is in the rapidly increasing cost that Canadians are bearing when it comes to servicing the federal government’s debt load. As announced by the finance minister, the federal government’s $1.2 trillion debt will require $326 billion spent over the next six years in service costs – that means paying debt interest payments.
Those billions in interest payments on an increasing debt will mean more tax dollars will go towards debt interest payments than healthcare or infrastructure and will instead go to bankers and bondholders.
The government is still committed to raising the floor at which the (federal) carbon tax is set by a trajectory of quadrupling it, increasing the cost of basic necessities such as food, gas, and heating. That increase will come even though the Parliamentary commissioner for the environment confirmed the government is on track to miss its emissions reduction targets and the Parliamentary budget officer showing the carbon tax leaves most Canadian households at a net loss.
One hundred and thirty First Nations communities in Ontario collectively recently filed suit against the federal government over the carbon tax (claiming it’s) grossly unfair and discriminatory.
Rising unemployment, high-interest rates and tax hikes are all the lingering effects of eight years of inflationary deficits run by the government. They have merged to create a severe and widespread affordability crisis in Canada.
In Kelowna-Lake Country, we are seeing the effects, with a reported 38% increase year over year at local food banks and stated projections at a shocking 100% additional increase over the next three to four months. It was reported that one (food bank) saw a 91-year-old as a client there for the first time in their life. The United Way B.C. recently released a report about how more B.C. seniors are facing the potential for homelessness than ever before.
While the fall economic statement may have created photo opportunities for government ministers, it was grim reading looking ahead to 2024. Rising prices, rent, debt and taxes will only worsen a severe affordability crisis.
Unless the government offers a significant change in direction from its proposed course, my “common-sense” Conservative colleagues and I will vote no-confidence on the fall economic statement.
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Tracy Gray is the Conservative MP for Kelowna-Lake Country.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.