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Grounded -The PM’s plane is transformed into a metaphor

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11 minute read

PAUL WELLS

Posted with permission from Paul Wells Substack

I stopped by the Conservative Convention on Thursday night, just briefly. The mood (which I ascertained by asking several Conservative acquaintances “What’s the mood?”) was cautiously optimistic. The Conservatives I met — a random sample, skewed older because I haven’t met a new generation of Conservative activists — sounded pleased with Pierre Poilievre’s summer. But they also figure they’re getting a second look because voters have given the Liberals a hundred looks and they always see the same thing.

Later, word came from India that Justin Trudeau’s airplane had malfunctioned, stranding him, one hopes only briefly. It’s always a drag when a politician’s vehicle turns into a metaphor so obvious it begs to go right into the headline. As for the cause of the breakdown, I’m no mechanic, but I’m gonna bet $20 on “The gods decided to smite Trudeau for hubris.” Here’s what the PM tweeted or xeeted before things started falling off his ride home:

One can imagine the other world leaders’ glee whenever this guy shows up. “Oh, it’s Justin Trudeau, here to push for greater ambition!” Shall we peer into their briefing binders? Let’s look at Canada’s performance on every single issue Trudeau mentions, in order.

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On climate change, Canada ranks 58th of 63 jurisdictions in the global Climate Change Performance Index. The country page for Canada uses the words “very low” three times in the first two sentences.

On gender equality, the World Economic Forum (!) ranks Canada 30th behind a bunch of other G-20 members.

On global health, this article in Britain’s BMJ journal calls Canada “a high income country that frames itself as a global health leader yet became one of the most prominent hoarders of the limited global covid-19 vaccine supply.”

On inclusive growth, the United Nations Conference on Trade and Development has a composite indicator called the Inclusive Growth Index. Canada’s value is 64.1, just behind the United States (!) and Australia, further behind most of Europe, stomped by Norway at 76.9%.

On support for Ukraine, the German Kiel Institute think tank ranks Canadafifth in the world, and third as a share of GDP, for financial support; and 8th in the world, or 21st as a share of GDP, for military support.

Almost all of these results are easy enough to understand. A small number are quite honourable. But none reads to me as any kind of license to wander around, administering lessons to other countries. I just finished reading John Williams’ luminous 1965 novel about university life, Stoner. A minor character in the book mocks the lectures and his fellow students, and eventually stands unmasked as a poser who hasn’t done even the basic reading in his discipline. I found the character strangely familiar. You’d think that after nearly a decade in power, after the fiascos of the UN Security Council bid, the first India trip, the collegiate attempt to impress a schoolgirl with fake trees, the prime minister would have figured out that fewer and fewer people, at home or abroad, are persuaded by his talk.

But this is part of the Liberals’ problem, isn’t it. They still think their moves work. They keep announcing stuff — Digital adoption program! Growth fund! Investment tax credits! Indo-Pacific strategy! Special rapporteur! — and telling themselves Canadians would miss this stuff if it went away. Whereas it’s closer to the truth to say we can’t miss it because its effect was imperceptible when it showed up.

In a moment I’ve mentioned before because it fascinates me, the Liberals called their play a year ago, as soon as they knew they’d be facing Pierre Poilievre. “We are going to see two competing visions,” Randy Boissonault said in reply to Poilievre’s first Question Period question as the Conservative leader. The events of the parliamentary year would spontaneously construct a massive contrast ad. It was the oldest play in the book, first articulated by Pierre Trudeau’s staff 50 years ago: Don’t compare me to the almighty, compare me to the alternative. It doesn’t work as well if people decide they prefer the alternative. It really doesn’t work if the team running the play think it means, “We’re the almighty.”

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There may yet be years — two, anyway — before we get to vote in a general election. Obviously much can change. I’ve made it clear, just about every time I’ve written about specific Poilievre policies, that I’ve seen no reason to be optimistic that a change of government would guarantee any improvement in public administration. But what we’ve seen elsewhere — most spectacularly in provincial elections in Quebec and Ontario in 2018 — is that sometimes voters stop caring about that question. They have a simpler question: After a decade in power, does the government in place even notice large, obvious things?

I see the Liberal caucus will be in London, ON this week. Here’s a chance for them to practice noticing large, obvious things. MPs would do well to walk around the city’s downtown core after dark, east of Richmond St., between Dundas and York. If they travel in small groups they’ll probably be safe.

While they witness what a Canadian city looks like in 2023, they might remind themselves that their unofficial 2015 election slogan was “Better Is Always Possible.” And ask themselves how much trouble they’ll be in if voters still believe it.

Lately when I write about the Liberals I upset my Liberal subscribers and when I write about Conservatives I upset my Conservative subscribers. I know it can feel like shtick, but it reflects my conviction that the partisan joust, and the genuine feelings that underpin it, are easier to address than the wicked problems of a chaotic time. And therefore way too tempting to an entire generation of political leadership.

For the Liberals, the challenge has been obvious since 2019: Does Justin Trudeau learn? In 2015 he ran as a disruptor, a guy who had noticed large, obvious things — interest rates were low! Small deficits were more manageable than they had been in years ! — and was willing to be cheeky in ignoring the other parties’ orthodoxies. Stephen Harper and Tom Mulcair were reduced to sputtering outrage that the new kid was making so many cheeky promises on fighter procurement (whoops), electoral reform (never mind), admitting Syrian refugees, legalizing cannabis, and more.

Since about 2017, inevitably, the Trudeau government has undergone a transition that’s common when disruptors become incumbents. He is increasingly forced to defend the state of things, rather than announcing he’s come to change it. He’s changed positions from forward to goal. All his opponents need to do is notice the big, obvious things he seems unable to see. The biggest: It’s become punishingly difficult for too many Canadians to put a roof over their head.

The old Trudeau would have done big, surprising things to show he could see such a thing. The Trudeau who ejected every senator from the Liberal caucus and broke a decade’s taboo against deficit spending would shut down the failed Canada Infrastructure Bank this week and put the savings into a national crisis housing fund. Or, I don’t know, some damned thing.

But of course, the surprising Trudeau of 2015 hadn’t been prime minister yet, had he? This hints at a question a few Liberals are starting to ask themselves. Does he have any juice left in him for more than pieties? He might still have some fight in him, but does he still have the job in him?

He’s already been in the job for longer than Pearson and Diefenbaker were. His indispensable right hand has been chief of staff longer than anyone who ever held the job. They have, for years, already been noticeably eager to administer lessons to others. Would they view a Liberal election defeat as their failure — or ours?

Would a prime minister who views a G-20 summit as a learning opportunity for every country except Canada view an election defeat as anything but further proof that Canada never really deserved him anyway?

 

 

 

 

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Here’s what pundits and analysts get wrong about the Carney government’s first budget

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From the Fraser Institute

By Jason Clemens and Jake Fuss

Under the new budget plan, this wedge between what the government collects in revenues versus what is actually spent on programs will rise to 13.0 per cent by 2029/30. Put differently, slightly more than one in every eight dollars sent to Ottawa will be used to pay interest on debt for past spending.

The Carney government’s much-anticipated first budget landed on Nov. 4. There’s been much discussion by pundits and analysts on the increase in the deficit and borrowing, the emphasis on infrastructure spending (broadly defined), and the continued activist approach of Ottawa. There are, however, several critically important aspects of the budget that are consistently being misstated or misinterpreted, which makes it harder for average Canadians to fully appreciate the consequences and costs of the budget.

One issue in need of greater clarity is the cost of Canada’s indebtedness. Like regular Canadians and businesses, the government must pay interest on federal debt. According to the budget plan, total federal debt will reach an expected $2.9 trillion in 2029/30. For reference, total federal debt stood at $1.0 trillion when the Trudeau government took office in 2015. The interest costs on that debt will rise from $53.4 billion last year to an expected $76.1 billion by 2029/30. Several analyses have noted this means federal interest costs will rise from 1.7 per cent of GDP to 2.1 per cent.

These are all worrying statistics about the indebtedness of the federal government. However, they ignore a key statistic—interest costs as a share of revenues. When the Trudeau government took office, interest costs consumed 7.5 per cent of revenues. This means taxpayers were foregoing 7.5 per cent of the resources they sent to Ottawa (in terms of spending on actual programs) because these monies were used to pay interest on debt accumulated from previous spending.

Under the new budget plan, this wedge between what the government collects in revenues versus what is actually spent on programs will rise to 13.0 per cent by 2029/30. Put differently, slightly more than one in every eight dollars sent to Ottawa will be used to pay interest on debt for past spending. This is one way governments get into financial problems, even crises, by continually increasing the share of revenues consumed by interest payments.

A second and fairly consistently misrepresented aspect of the budget pertains to large spending initiatives such as Build Canada Homes and Build Communities Strong Fund. The former is meant to increase the number of new homes, particularly affordable homes, being built annually and the latter is intended to provide funding to provincial governments (and through them, municipalities) for infrastructure spending. But few analysts question whether or not these programs will produce actual new spending for homebuilding or simply replace or “crowd-out” existing spending by the private sector.

Let’s first explore the homebuilding initiative. At any point in time, there are a limited number of skilled workers, raw materials, land, etc. available for homebuilding. When the federal government, or any government, initiates its own homebuilding program, it directly competes with private companies for that skilled labour (carpenters, electricians, etc.), raw materials (timber, concrete, etc.) and the land needed for development. Put simply, government homebuilding crowds out private-sector activity.

Moreover, there’s a strong argument that the crowding out by government results in less homebuilding than would otherwise be the case, because the incentives for private-sector homebuilding are dramatically different than government incentives. For example, private firms risk their own wealth and wellbeing (and the wellbeing of their employees) so they have very strong incentives to deliver homes demanded by people on time and at a reasonable price. Government bureaucrats and politicians, on the other hand, face no such incentives. They pay no price, in terms of personal wealth or wellbeing if homes, are late, not what consumers demand, or even produce less than expected. Put simply, homebuilding by Ottawa could easily result in less homes being built than if government had stayed out of the way of entrepreneurs, businessowners and developers.

Similarly, it’s debatable that infrastructure spending by Ottawa—specifically, providing funds to the provinces and municipalities—results in an actual increase in total infrastructure spending. There are numerous historical examples, including reports by the auditor general, detailing how similar infrastructure spending initiatives by the federal government were plagued by mismanagement. And in many circumstances, the provinces simply reduced their own infrastructure spending to save money, such that the actual incremental increase in overall infrastructure spending was negligible.

In reality, some of the major and large spending initiatives announced or expanded in the Carney government’s first budget, which will accelerate the deterioration of federal finances, may not deliver anything close to what the government suggests. Canadians should understand the real risks and challenges in these federal spending initiatives, along with the debt being accumulated, and the limited potential benefits.

Jason Clemens

Executive Vice President, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute
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Carney budget continues misguided ‘Build Canada Homes’ approach

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From the Fraser Institute

By Jake Fuss and Austin Thompson

The Carney government’s first budget tabled on Tuesday promises to “supercharge” homebuilding across the country. But Ottawa’s flagship housing initiative—a new federal agency, Build Canada Homes (BCH)—risks “supercharging” federal debt instead while doing little to boost construction.

The budget accurately diagnoses the root cause of Canada’s housing shortage—costly red tape on housing projects, sky-high taxes on homebuilders, and weak productivity growth in the construction sector. But the proposed cure, BCH, does nothing to fix these problems despite receiving a five-year budget of $13 billion.

BCH’s core mandate is to build and finance affordable housing projects. But this mission is muddled by competing political priorities to preference Canadian building materials and prioritize “sustainable” construction materials. Any product that needs a government preference to be used is clearly not the most cost-effective option. The result—BCH’s “affordable” homes will cost more than they needed to, meaning more tax dollars wasted.

Ottawa claims BCH will improve construction productivity by “generating demand” (read: splashing out tax dollars) for factory-built housing. This logic is faulty—where factory-built housing is a cost-effective and desirable option, private developers are already building it. “Prioritizing” factory-built homes amounts to Ottawa trying to pick winners and losers—a strategy that reliably wastes taxpayer dollars. The civil servants running BCH lack the market knowledge and cost-cutting incentives of private homebuilders, who are far better positioned to identify which technologies will deliver the affordable homes Canadians need.

The government also insists BCH projects will attract more private investment for housing. The opposite is more likely—BCH projects will compete with private developers for limited investment dollars and construction labour. Ottawa’s intrusion into housing development could ultimately mean fewer private-sector housing projects—those driven by the real needs of homebuyers and renters, not the Carney government’s political priorities.

Despite its huge budget and broad mandate, BCH still lacks clear goals. Its only commitment so far is to “build affordable housing at scale,” with no concrete targets for how many new homes or how affordable they’ll be. Without measurable outcomes, neither Ottawa nor taxpayers will know whether BCH delivers value for money.

You can’t solve Canada’s housing crisis with yet another federal program. Ottawa should resist the temptation to act as a housing developer and instead create fiscal and economic conditions that allow the private sector to build more homes.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute
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