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Government has inherent bias for more government

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From the Fraser Institute

By Jason Clemens and Jake Fuss

One of the authors of this op-ed resides in a municipality, which recently launched an online survey to gauge the preferences of residents with respect to its upcoming budget, which is laudable, but the questions illustrate a problem within government: a bias for more government.

The City of Coquitlam in British Columbia asked respondents whether it should increase, decrease or simply maintain the same level of spending in 2025 for policing, recreation, water and sewage, infrastructure and others items. The problem: there wasn’t a single question on whether residents prefer tax reductions.

Moreover, there was no discussion or context about how increased spending for these activities must come from taxpayers in the form of either having more taxpayers (city population increases) and/or higher tax rates for those residing in the city. What’s clear from the survey is that the municipal government prefers to spend more.

And this bias towards more government within government is not restricted to this local municipality. Other municipalities, provincial governments and certainly the Trudeau federal government have favoured more spending.

Under Prime Minister Trudeau federal spending has reached never-before-seen levels, even after adjusting for inflation. Consider, for instance, that per-person federal spending (excluding interest costs) will reach $11,901 this fiscal year (inflation-adjusted), well above previous levels of per-person spending including during the 2008-09 financial crisis and both world wars. The rationale is that Ottawa is delivering services demanded by Canadians.

But is that true? Are Canadians demanding national pharmacare, national dental benefits and a national daycare program? The answer depends on whether the costs of those programs are included in the discussion.

2022 poll asked Canadians about their support for all three programs. Support ranged from 69 per cent for national daycare, to 72 per cent for dental care, to 79 per cent for pharmacare. Here’s the problem, though. The questions were asked without respondents considering any costs. In other words, the respondents were asked whether they support these programs assuming they don’t affect their taxes.

But of course, taxpayers must pay for government spending, and when those costs are included, Canadians are much less supportive. In the same poll, when increased spending is linked with an increase in the GST, support plummets to 36 per cent for daycare, 40 per cent for pharmacare and 42 per cent for dental care.

And these results are not unique. A 2020 poll by the Angus Reid Institute found 86 per cent support for a national prescription drug program—but that support drops by almost half (47 per cent) if a one-percentage point increase in the middle-class personal income tax rate is included.

One explanation for the dramatic change in support rests in another poll, which found that 74 per cent of respondents felt the average Canadian family was overtaxed.

So it’s convenient for governments to avoid connecting more spending with higher taxes.

This internal government support for more government also shows up in our tax mix. Canadian governments rely on less visible taxes than our counterparts in the OECD, a group of high-income, developed countries. For instance, Canadian governments collect 6.8 per cent of the economy (GDP) in consumption taxes such as the GST, which are quite visible and transparent because the cost shows up directly on your bill. That ranks Canada 31st of 38 OECD countries and well below the OECD average of 10.0 per cent.

Alternatively, we rely on personal income tax revenues to a much greater degree and, because these taxes are automatically deducted from the paycheques of Canadians, they are much less apparent to workers. Canada collects 12.3 per cent of the economy in personal income taxes, ranking us 6th highest for our reliance on personal income taxes and above the OECD average of 8.3 per cent.

And a complying media aids the push for more government spending. According to a recent study, when reporting on the announcement of three new federal programs (pharmacare, dental care and national daycare) the CBC and CTV only included the cost of these programs in 4 per cent of their television news coverage. Most of the coverage related to the nature of the new programs, their potential impact on Canadians, and the responses from the Conservative, NDP and Bloc Quebecois. Simply put, the main television coverage didn’t query the government on the cost of these new programs and how taxpayers would pay the bill, leaving many viewers with the mistaken impression that the programs are costless.

Indeed, it’s interesting to note that the same study found that 99.4 per cent of press releases issued by the federal government related to these three programs excluded any information on their costs or impact on the budget.

The inherent bias within government for more government is increasingly clear, and supported by a lack of skepticism in the media. Canadians need clearer information from government on the potential benefits and costs of new or expanded spending, and the media must do a better job of critically covering government initiatives. Only then can we realistically understand what Canadians actually demand from government.

Jason Clemens

Executive Vice President, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

2025 Federal Election

Next federal government should end corporate welfare for forced EV transition

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From the Fraser Institute

By Tegan Hill and Jake Fuss

Corporate welfare simply shifts jobs and investment away from other firms and industries—which are more productive, as they don’t require government funding to be economically viable—to the governments’ preferred industries and firms, circumventing the preferences of consumers and investors. And since politicians spend other people’s money, they have little incentive to be careful investors.

General Motors recently announced the temporary closure of its electric vehicle (EV) manufacturing plant in Ontario, laying off 500 people because its new EV isn’t selling. The plant will shut down for six months despite hundreds of millions in government subsides financed by taxpayers. This is just one more example of corporate welfare—when governments subsidize favoured industries and companies—and it’s time for the provinces and the next federal government to eliminate it.

Between the federal government and Ontario government, GM received about $500 million to help fund its EV transition. But this is just one example of corporate welfare in the auto sector. Stellantis and Volkswagen will receive about $28 billion in government subsidies while Honda is promised $5 billion.

More broadly, from 2007 to 2019, the last pre-COVID year of data, the federal government spent an estimated $84.6 billion (adjusted for inflation) on corporate welfare while provincial and local governments spent another $302.9 billion. And crucially, these numbers exclude other forms of government support such as loan guarantees, direct investments and regulatory privileges, so the actual cost of corporate welfare during this period was much higher.

Of course, politicians claim that corporate welfare benefits workers. Yet according to a significant body of research, corporate welfare fails to generate widespread economic benefit. Think of it this way—if the businesses that received subsidies were viable to begin with, they wouldn’t need government support. So unprofitable companies are kept in business through governments’ support, which can prevent resources, including investment and workers, from moving to profitable companies, hurting overall economic growth.

Put differently, rather than fuelling economic growth, corporate welfare simply shifts jobs and investment away from other firms and industries—which are more productive, as they don’t require government funding to be economically viable—to the governments’ preferred industries and firms, circumventing the preferences of consumers and investors. And since politicians spend other people’s money, they have little incentive to be careful investors.

Governments also must impose higher tax rates on everyone else to pay for corporate welfare. In turn, higher tax rates discourage entrepreneurship and business investment—again, which fuels economic growth. And the higher the tax rates, the more economic activity they discourage.

GM’s EV plant shut down once again proves that when governments try to engineer the economy with corporate welfare, workers will ultimately lose. It’s time for the provinces and the next federal government—whoever it may be—to finally put an end to this costly and ineffective policy approach.

Tegan Hill

Director, Alberta Policy, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute
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Hudson’s Bay Bid Raises Red Flags Over Foreign Influence

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From the Frontier Centre for Public Policy

By Scott McGregor

A billionaire’s retail ambition might also serve Beijing’s global influence strategy. Canada must look beyond the storefront

When B.C. billionaire Weihong Liu publicly declared interest in acquiring Hudson’s Bay stores, it wasn’t just a retail story—it was a signal flare in an era where foreign investment increasingly doubles as geopolitical strategy.

The Hudson’s Bay Company, founded in 1670, remains an enduring symbol of Canadian heritage. While its commercial relevance has waned in recent years, its brand is deeply etched into the national identity. That’s precisely why any potential acquisition, particularly by an investor with strong ties to the People’s Republic of China (PRC), deserves thoughtful, measured scrutiny.

Liu, a prominent figure in Vancouver’s Chinese-Canadian business community, announced her interest in acquiring several Hudson’s Bay stores on Chinese social media platform Xiaohongshu (RedNote), expressing a desire to “make the Bay great again.” Though revitalizing a Canadian retail icon may seem commendable, the timing and context of this bid suggest a broader strategic positioning—one that aligns with the People’s Republic of China’s increasingly nuanced approach to economic diplomacy, especially in countries like Canada that sit at the crossroads of American and Chinese spheres of influence.

This fits a familiar pattern. In recent years, we’ve seen examples of Chinese corporate involvement in Canadian cultural and commercial institutions, such as Huawei’s past sponsorship of Hockey Night in Canada. Even as national security concerns were raised by allies and intelligence agencies, Huawei’s logo remained a visible presence during one of the country’s most cherished broadcasts. These engagements, though often framed as commercially justified, serve another purpose: to normalize Chinese brand and state-linked presence within the fabric of Canadian identity and daily life.

What we may be witnessing is part of a broader PRC strategy to deepen economic and cultural ties with Canada at a time when U.S.-China relations remain strained. As American tariffs on Canadian goods—particularly in aluminum, lumber and dairy—have tested cross-border loyalties, Beijing has positioned itself as an alternative economic partner. Investments into cultural and heritage-linked assets like Hudson’s Bay could be seen as a symbolic extension of this effort to draw Canada further into its orbit of influence, subtly decoupling the country from the gravitational pull of its traditional allies.

From my perspective, as a professional with experience in threat finance, economic subversion and political leveraging, this does not necessarily imply nefarious intent in each case. However, it does demand a conscious awareness of how soft power is exercised through commercial influence, particularly by state-aligned actors. As I continue my research in international business law, I see how investment vehicles, trade deals and brand acquisitions can function as instruments of foreign policy—tools for shaping narratives, building alliances and shifting influence over time.

Canada must neither overreact nor overlook these developments. Open markets and cultural exchange are vital to our prosperity and pluralism. But so too is the responsibility to preserve our sovereignty—not only in the physical sense, but in the cultural and institutional dimensions that shape our national identity.

Strategic investment review processes, cultural asset protections and greater transparency around foreign corporate ownership can help strike this balance. We should be cautious not to allow historically Canadian institutions to become conduits, however unintentionally, for geopolitical leverage.

In a world where power is increasingly exercised through influence rather than force, safeguarding our heritage means understanding who is buying—and why.

Scott McGregor is the managing partner and CEO of Close Hold Intelligence Consulting.

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