Business
Federal budget fails to ‘break the glass’ on Canada’s economic growth crisis
From the Fraser Institute
By Grady Munro and Jake Fuss
“You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass,” said Carolyn Rogers, Bank of Canada senior deputy governor, in a speech last month while warning that Canadians may see living standards fall if nothing is done to promote economic growth.
In advance of the Trudeau government’s 2024 budget released on Tuesday, many called for the government to finally address Canada’s stagnant economic growth. But despite the growing consensus that this issue represents a national crisis, the Trudeau government simply continued with the same approach that helped get us to this point in the first place.
“You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass,” said Carolyn Rogers, Bank of Canada senior deputy governor, in a speech last month while warning that Canadians may see living standards fall if nothing is done to promote economic growth.
Ten days later in a joint interview, former Quebec premier Jean Charest and former federal finance minister Bill Morneau urged the Trudeau government to focus on economic growth in the budget. Specifically, Morneau suggested Canada needs more business investment “from other sources than the government.”
These are just two examples of the growing consensus that Canada is suffering an economic and productivity growth crisis.
Economic growth generally refers to the increase in gross domestic product (GDP), which measures the total output of the economy and is driven by three factors—the labour supply, the capital stock and the efficiency in which labour and capital are used.
Canada’s GDP growth in recent years has been driven almost entirely by the labour supply, as the country has experienced historically high population growth. However, although GDP in aggregate has been growing, GDP per person (a common indicator of living standards) has been declining at an alarming rate. Since the second quarter of 2022 (when it peaked post-COVID), inflation-adjusted GDP per person has fallen from $60,178 to $58,111 in the fourth quarter of 2023—and has declined during five of those six quarters, and now sits below where it was at the end of 2014.
Labour productivity, which is the amount of output (GDP) produced per hour worked, has seen a similar decline. Statistics Canada recently reported that the fourth quarter of 2023 represented the first time productivity increased since the beginning of 2022, and that for the prior six quarters labour productivity had declined or remained stagnant.
The consequence of both declining GDP per person and lower productivity, as Carolyn Rogers warned, is a lower standard of living for Canadians. To reverse this crisis, the Trudeau government must address the cause of Canada’s weak economic growth—a severe lack of business investment.
Business investment provides the capital needed to equip workers with the technology and equipment to become more efficient and productive. Yet according to a recent study, from 2014 to 2021, inflation-adjusted business investment per worker in Canada fell from $18,363 to $14,687.
This decline in business investment is partly the result of the Trudeau government’s disinterest in encouraging entrepreneurship and private-sector business investment. Indeed, the government’s approach of high spending, more regulation and significant involvement in the economy has done little to foster widespread economic growth.
And by raising capital gains taxes on individuals and businesses, which the Trudeau government did in this latest budget, in the words of former Bank of Canada governor David Dodge, the government is doing “exactly the wrong thing” to boost productivity. Rather, these measures simply provide more reason for people and businesses to invest elsewhere.
This latest Trudeau budget doubles down on a failed approach. Spending is up, government involvement in the economy is increasing, and increased capital gains taxes will only make our investment challenges more difficult. We need a complete reversal in policy to solve our economic growth crisis.
Authors:
Business
Debunking the myth of the ‘new economy’
From Resource Works
Where the money comes from isn’t hard to see – if you look at the facts
In British Columbia, the economy is sometimes discussed through the lens of a “new economy” focused on urbanization, high-tech innovation, and creative industries. However, this perspective frequently overlooks the foundational role that the province’s natural resource industries play in generating the income that fuels public services, infrastructure, and daily life.
The Economic Reality
British Columbia’s economy is highly urbanized, with 85% of the population living in urban areas as of the 2021 Census, concentrated primarily in the Lower Mainland and the Capital Regional District.
These metropolitan regions contribute significantly to economic activity, particularly in population-serving sectors like retail, healthcare, and education. However, much of the province’s income—what we call the “first dollar”—originates in the non-metropolitan resource regions.
Natural resources remain the backbone of British Columbia’s economy. Industries such as forestry, mining, energy, and agriculture generate export revenue that flows into the provincial economy, supporting urban and rural communities alike. These sectors are not only vital for direct employment but also underpin metropolitan economic activities through the export income they generate.
They also pay taxes, fees, royalties, and more to governments, thus supporting public services and programs.
Exports: The Tap Filling the Economic Bathtub
The analogy of a bathtub aptly describes the provincial economy:
- Exports are the water entering the tub, representing income from goods and services sold outside the province.
- Imports are the water draining out, as money leaves the province to purchase external goods and services.
- The population-serving sector circulates water within the tub, but it depends entirely on the level of water maintained by exports.
In British Columbia, international exports have historically played a critical role. In 2022, the province exported $56 billion worth of goods internationally, led by forestry products, energy, and minerals. While metropolitan areas may handle the logistics and administration of these exports, the resources themselves—and the wealth they generate—are predominantly extracted and processed in rural and resource-rich regions.
Metropolitan Contributions and Limitations
Although metropolitan regions like Vancouver and Victoria are often seen as economic powerhouses, they are not self-sustaining engines of growth. These cities rely heavily on income generated by resource exports, which enable the public services and infrastructure that support urban living. Without the wealth generated in resource regions, the urban economy would struggle to maintain its standard of living.
For instance, while tech and creative industries are growing in prominence, they remain a smaller fraction of the provincial economy compared to traditional resource industries. The resource sectors accounted for nearly 9% of provincial GDP in 2022, while the tech sector contributed approximately 7%.
Moreover, resource exports are critical for maintaining a positive trade balance, ensuring that the “economic bathtub” remains full.
A Call for Balanced Economic Policy
Policymakers and urban leaders must recognize the disproportionate contribution of British Columbia’s resource regions to the provincial economy. While urban areas drive innovation and service-based activities, these rely on the income generated by resource exports. Efforts to increase taxation or regulatory burdens on resource industries risk undermining the very foundation of provincial prosperity.
Furthermore, metropolitan regions should actively support resource-based industries through partnerships, infrastructure development, and advocacy. A balanced economic strategy—rooted in both urban and resource region contributions—is essential to ensure long-term sustainability and equitable growth across British Columbia.
At least B.C. Premier David Eby has begun to promise that “a new responsible, sustainable development of natural resources will be a core focus of our government,” and has told resource leaders that “Our government will work with you to eliminate unnecessary red tape and bureaucratic processes.” Those leaders await the results.
Conclusion
British Columbia’s prosperity is deeply interconnected, with urban centres and resource regions playing complementary roles. However, the evidence is clear: the resource sectors, particularly in the northern half of the province, remain the primary engines of economic growth. Acknowledging and supporting these industries is not only fair but also critical to sustaining the provincial economy and the public services that benefit all British Columbians.
Sources:
- Statistics Canada: Census 2021 Population and Dwelling Counts.
- BC Stats: Economic Accounts and Export Data (2022).
- Natural Resources Canada: Forestry, Mining, and Energy Sector Reports.
- Trade Data Online: Government of Canada Export and Import Statistics.
Business
Trump puts all federal DEI staff on paid leave
From LifeSiteNews
Trump’s shuttering of federal DEI programs is in keeping with his promise to ‘forge a society that is colorblind and merit-based.’
President Donald Trump has ordered all federal diversity, equity and inclusion (DEI) staff to be placed on paid leave by Wednesday evening, in accordance with his executive order signed on Monday.
The president pledged during his inaugural address to “forge a society that is colorblind and merit-based,” which is the impetus behind his efforts to abolish DEI programs that prioritize race and ethnicity above merit when hiring workers.
Trump’s Executive Order on Ending Radical and Wasteful Government DEI Programs and Preferencing stated, “Americans deserve a government committed to serving every person with equal dignity and respect, and to expending precious taxpayer resources only on making America great.”
“President Trump campaigned on ending the scourge of DEI from our federal government and returning America to a merit based society where people are hired based on their skills, not for the color of their skin,” White House press secretary Karoline Leavitt said in a statement Tuesday night. “This is another win for Americans of all races, religions, and creeds. Promises made, promises kept.”
The Office of Personnel Management issued a memo to the leaders of federal departments instructing them to inform employees by 5 p.m. ET on Wednesday that they will be placed on paid administrative leave as all DEI offices and programs prepare to shut down, according to NBC News.
It is unclear how many employees will be affected by the erasure of federal DEI programs.
Diversity training has “exploded” in the federal government since Joe Biden took office in 2020, the Beacon noted, with all federal agencies having mandated a form of DEI training before he left office.
DEI initiatives have long been widely denounced by conservatives and moderates as divisive, but they have been coming under increasing fire for undermining the competence and most basic functioning of public institutions and private corporations, even putting lives at risk.
For example, some commentators have blamed growing – and at times catastrophic and fatal – airplane safety failures in part on DEI hires and policies. Upon the revelation that a doctor at Duke Medical School was “abandoning… all sort(s) of metrics” in hiring surgeons in order to implement DEI practice, Elon Musk warned that “people will die” because of DEI.
Conservatives have also criticized DEI for stoking rather than curing division. A recent study shows that DEI programs actually breed hostility in businesses and schools.
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