Last week, we saw the federal finance minister table (the government’s) fall economic statement, effectively a “mini-budget” that provides us a snapshot of our economic forecast and the government's plans.
With Canada now facing 40-year high inflation, the statement was widely anticipated.
I am disappointed in the results, however, which ignored weeks of Conservative calls for immediate tax relief and a reining in of government spending.
Young adults, families, seniors and persons with disabilities often write to me about the difficulty of affording ever-increasing grocery, gas and heating costs. Labour shortages and supply chain issues across our economy still need to be addressed.
The government's proposals involve more inflationary stimulus, which will only drive-up costs further. Worse yet, the statement predicts a recession is now likely in 2023.
Independent government officers, like the Parliamentary Budget Officer, have also recently published their analyses of Canada’s economic situation.
I'll go through some of the biggest takeaways from my perspective when going through the PBO’s detailed report for what is estimated to come down the line economically over the next couple of years.
I'll focus on three areas—employment, federal debt and inflation.
First, the PBO estimates the unemployment rate will increase in 2023 to 5.8%, with a significant factor being people retiring. If the predicted recession hits next year at levels that some economists are projecting, the unemployment rate could certainly increase further and we'll see a move away from “help wanted” signs, to companies having to downsize in some sectors, while others will still struggle to get the skilled workers they need.
Second, the PBO lays out the estimated federal government revenue and debt levels and states, "despite the projected decline in the budgetary deficit; public debt charges are projected to more than double from their 2020-21 level (of $20.4 billion), reaching $47.6 billion in 2027-28 due to higher interest rates and the additional accumulation of federal debt."
As the finance minister talks about how the federal debt should be lower (though it is the highest ever in Canada), the PBO reports the public debt charges will actually be more than double. That means we are paying more for that debt.
A comparison is it is like doubling the interest you'd be charged on your monthly credit card bill. As you make payments, your bill total could slowly decrease, but every dollar you put in would be worth less as it will take much longer to pay the debt off, and you'll pay far more in total.
Third is our record high inflation. The PBO's estimates show federal government revenues increasing yearly until 2028. The estimated increase is more than $40 billion alone from 2022 to 2024.
We all know inflation has been as high as 8.1% this year, with food costs even higher, and the government's revenue increase is primarily due to higher inflation adding tax revenue. In addition, the government increases to payroll tax, excise tax and carbon tax all bring in more revenue. Those increased tax dollars to the government's coffers, based on inflation and tax increases, do not reflect a robust economy. That extra revenue is on the backs of seniors, families, young adults, small businesses and not from profits.
As we enter what is likely to be a turbulent 2023, I will continue to represent the residents of Kelowna-Lake Country by advocating for solutions that will preserve jobs and lower costs.
Meanwhile, with Veterans Week and Remembrance Day, I hope everyone in Kelowna-Lake Country will join me in taking a moment to recognize those who bravely served Canada in times of war, conflict, and peace. We also honour those who continue to serve our country today.
Kelowna City Park features the Field of Crosses display, and poppies were available for purchase around our community (leading up to Remembrance Day today) to help support local veterans and their families.
Lest we forget.
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This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.