Business
Understanding the Nature of Canada’s Fiscal and Economic Challenges
From the Fraser Institute
By Jake Fuss and Jason Clemens
” between 2016 and 2019 (pre-COVID), growth in per-person GDP (inflation-adjusted) was an anemic 0.9 percent. According to one study, among the last five pre-recession periods in Canadian history, the Trudeau period (again, 2016 to 2019) recorded the weakest economic growth “
The Trudeau government was first elected in 2015 based in part on a new approach to government policy, which promised greater prosperity for Canadians based on short-term deficit spending (totaling $25.1 billion over three years), lower taxes for most Canadians (except higher-income earners), and a more active approach to economic development (LPC, 2015). This new policy direction stood in stark contrast to the consensus of the previous 20 years (Clemens and Palacios, 2017). The result has been a marked deterioration in the country’s finances, economic stagnation, and a collapse in business investment. If Canada is to restore its fiscal and economic health, Ottawa must enact fundamental policy reform.
Government spending, taxes, and debt
The Trudeau government has markedly increased spending to finance both new programs and increases in existing programs. Federal spending (excluding interest costs) increased from $256.3 billion in 2014-15 (the year before the Trudeau government took office) to $448.2 billion in 2022-23 (an increase of 74.9 percent) (Canada, 2023a) and a projected $453.0 billion in 2023-24 (Canada, 2023b). Not surprisingly, COVID-related spending contributed to increases in 2019-20 to 2021-22. But in 2022-23 and thereafter, there is no COVID-related spending.
The federal government has used tax increases and large increases in borrowing to finance these spending increases. In 2016, the federal government increased the top personal income tax rate imposed on entrepreneurs, professionals , and business owners from 29 percent to 33 percent. Consequently, the combined top personal income tax rate (federal and provincial) now exceeds 50 percent in eight provinces (with the remaining provinces only slightly below 50 percent) and in 2022 Canada had the 5th highest tax rate out of 38 OECD countries. This represents a serious competitive challenge for Canada’s ability to attract and retain entrepreneurs, investors, skilled professionals, and businesses.
And while the Trudeau government reduced the middle personal income tax rate, it also eliminated several tax credits. The combination of the two policy changes means that 86 percent of middle-income families now pay higher personal income taxes (Palacios et al., 2022). If the analysis also includes increases to the Canada Pension Plan contribution rate, almost all Canadians now pay higher taxes.
The Trudeau government also borrowed to finance its new spending. Figure 1 contrasts the originally
planned deficits with the actual deficits incurred by the Trudeau government (excluding COVID-related
spending) from 2016-17 to 2022-23. The actual borrowing exceeds the originally planned borrowing
every year (except 2021-22), often by significant margins, due to the government’s inability to control
spending growth.
The string of deficits means federal debt (measured as gross debt) has ballooned to $1.9 trillion
(2022-23) and is projected to reach $2.4 trillion by 2027/28, fueling a dramatic growth in interest costs,
which have grown by 53.2 percent (inflation-adjusted) between 2014/15 and 2023/24 and will reach
a projected $46.5 billion in 2023/24. Interest costs now consume substantial revenue that is then unavailable for government services or tax reduction.
Simply put, Trudeau government policy changes have produced large increases in government spending, taxes, and borrowing. Unfortunately, these policy changes have not resulted in a more robust and vibrant economy.
Weak economic growth and collapsing business investment
The broadest measure of living standards is GDP per person, which calculates the total value of all goods and services produced in the economy in a given year (adjusted by the population). As illustrated in Figure 2, between 2016 and 2019 (pre-COVID), growth in per-person GDP (inflation-adjusted) was an anemic 0.9 percent. According to one study, among the last five pre-recession periods in Canadian history, the Trudeau period (again, 2016 to 2019) recorded the weakest economic growth (Clemens, Palacios, and Veldhuis, 2021). Another study found that Canada’s per-person GDP growth from 2013 to 2022 was the weakest on record since the 1930s (Cross, 2023). And per-person GDP in 2022 (inflation-adjusted) had still not recovered from the pandemic losses and was basically stagnant at 2018 levels (see figure 2).
Prospects for the future, given current policies, are not encouraging. The OECD projects that Canada will record the lowest rate of per-person GDP growth among 32 advanced economies from 2020 to 2030 and from 2030 to 2060(OECD, 2021).Countries such as Estonia, South Korea, and New Zealand are expected to vault past Canada and achieve higher living standards by 2060.
According to a recent analysis, Canada’s economic growth crisis is due in part to the decline in business investment, which is critical to increasing living standards because it equips workers with tools and technologies to produce more higher-quality goods and services. This, in turn, fuels innovation and improved productivity (Cross, 2023). There are obvious explanations for the decline in business investment including regulatory barriers, particularly related to the energy and mining sectors (Globerman and Emes, 2021), and government deficits, which imply tax increases in the future, dampening investment today. Business investment (inflation-adjusted), excluding residential construction, has declined by 1.8 percent annually since 2014.
According to a 2023 study (Hill and Emes, 2023), between 2014 and 2021, business investment per worker (inflation-adjusted, excluding residential construction) decreased by $3,676 (to $14,687) compared to growth of $3,418 (to $26,751) in the United States. Put differently, in 2014, Canadian
businesses invested 79 cents per worker for every dollar invested in the United States. By 2021, that level of investment had declined to just 55 cents per worker.
Moreover, the amount of investment in Canada by foreigners has decreased while the amount of investment by Canadians outside of the country has increased. In 2008, the two levels were roughly comparable—$65.7 billion in foreign direct investment (FDI) in Canada vs. $84.6 billion in investment by Canadians outside of the country. However, a sizeable change began in 2015; by 2022, the amount of FDI ($64.6 billion) was significantly smaller than the amount of investment by Canadians outside the country ($102.3 billion).
Finally, while Canada’s labour market has consistently demonstrated its strength and resilience, the labour market numbers hide some concerning trends. For example, between February 2020 (when the pandemic began) and June 2023, private-sector job creation (net) was fairly weak at 3.3 percent compared to 11.8 percent job growth in the government sector (Eisen, Ryan and Palacios, 2023). In other words, the recovery and growth in the private sector following the pandemic has not been as strong as expected.
Conclusion: The Path Forward
There is reason for optimism, however, since many of Canada’s challenges are of the federal government’s own making. The Chrétien Liberals in the 1990s faced many of the same challenges that we do today (Veldhuis, Clemens, and Palacios, 2011). By shifting the focus to more prudent government spending, balanced budgets, debt reduction, and competitive tax rates, the Chrétien Liberals—followed in large measure by the Harper Tories—paved the way for two decades of prosperity when Canada outperformed other OECD countries on economic growth, job-creation, and business investment.
To help foster greater prosperity for Canadians today, the federal government can learn from the Chrétien Liberals, and the Harper Tories. The rest of this series identifies policy options that can increase living standards for Canadians by repairing federal finances, improving tax competitiveness, and lowering economic barriers. These reforms could help build a more prosperous country through the creation of good jobs which would lead to rising incomes for Canadians.
Authors:
From LifeSiteNews
The Center for Innovative Public Health Research’s website suggests teenage girls make their ‘own decisions’ about sex and not let their parents know if they don’t want to.
For almost a decade, the U.S. government funded a group that actively works to teach kids how to use sex toys and then keep them hidden from their parents to the tune of $22 million.
According to investigative reporter Hannah Grossman at the Manhattan Institute, The Center for Innovative Public Health Research (CIPHR) has been educating minors about sex toys with public funds.
Records show that the millions given to the group since 2016, according to its website, go toward “health education programs” that “promote positive human development.”
However, the actual contents of the programs, as can be seen from comments from CIPHR CEO Michele Ybarra, seem to suggest that its idea of “human” development is skewed toward radical sex education doctrine.
In 2017, CIPHR launched Girl2Girl, which is funded by federal money to promote “sex-ed program just for teen girls who are into girls.” Its website lets users, who are girls between ages 14 and 16, sign up for “daily text messages … about things like sex with girls and boys.”
The actual content of some of the messages is very concerning. Its website notes that some of the texts talk about “lube and sex toys” as well as “the different types of sex and ways to increase pleasure.”
The website actively calls upon teenage girls to make their “own decisions” and not let their parents know if they don’t want to.
Grossman shared a video clip on X of Ybarra explaining how they educate minors about the use of “sex toys” and dealing with their parents if they are found out.
The clip, from a 2022 Brown University webinar, shows Ybarra telling researchers how to prepare “young person(s)” for her research.
She said if they are doing “focus groups,” she will ask them, “Okay, so what happens if somebody comes into the room and sees words like penis and sex toys on your screen — on your computer screen or on your phone? What if it’s your mom?’”
In 2023, CIPHR launched Transcendent Health, which is a sex-education program for minors who are gender confused. This initiative received $1.3 million of federal grant money that expired last month.
Grossman observed that the federal government “should not fund programs that send sexually explicit messages to minors and encourage them to conceal these communications from parents.”
She noted that in order to protect children and “prevent further harm,” U.S. President Donald Trump’s Department of Health and Human Services “should immediately cancel CIPHR’s active contract and deny its future grant applications.”
“By doing so, the Trump administration can send a clear message: Taxpayers will no longer foot the bill for perverted ‘research’ projects,” she noted.
The Trump administration has thus far, through the Department of Government Efficiency (DOGE), exposed billions in government waste and fraud. Many such uses of taxpayer dollars are currently under review by the administration, including pro-abortion and pro-censorship activity through USAID, “Diversity, Equity, and Inclusion and neo-Marxist class warfare propaganda” through the National Science Foundation, and billions to left-wing “green energy” nonprofits through the Environmental Protection Agency.
Business
Canadian Police Raid Sophisticated Vancouver Fentanyl Labs, But Insist Millions of Pills Not Destined for U.S.
Sam Cooper
Mounties say labs outfitted with high-grade chemistry equipment and a trained chemist reveal transnational crime groups are advancing in technical sophistication and drug production capacity
Amid a growing trade war between Washington and Beijing, Canada—targeted alongside Mexico and China for special tariffs related to Chinese fentanyl supply chains—has dismantled a sophisticated network of fentanyl labs across British Columbia and arrested an academic lab chemist, the RCMP said Thursday.
At a press conference in Vancouver, senior investigators stood behind seized lab equipment and fentanyl supplies, telling reporters the operation had prevented millions of potentially lethal pills from reaching the streets.
“This interdiction has prevented several million potentially lethal doses of fentanyl from being produced and distributed across Canada,” said Cpl. Arash Seyed. But the presence of commercial-grade laboratory equipment at each of the sites—paired with the arrest of a suspect believed to have formal training in chemistry—signals an evolution in the capabilities of organized crime networks, with “progressively enhanced scientific and technical expertise among transnational organized crime groups involved in the production and distribution of illicit drugs,” Seyed added.
This investigation is ongoing, while the seized drugs, precursor chemicals, and other evidence continue to be processed, police said.
Recent Canadian data confirms the country has become an exporter of fentanyl, and experts identify British Columbia as the epicenter of clandestine labs supplied by Chinese precursors and linked to Mexican cartel distributors upstream.
In a statement that appears politically responsive to the evolving Trump trade threats, Assistant Commissioner David Teboul said, “There continues to be no evidence, in this case and others, that these labs are producing fentanyl for exportation into the United States.”
In late March, during coordinated raids across the suburban municipalities of Pitt Meadows, Mission, Aldergrove, Langley, and Richmond, investigators took down three clandestine fentanyl production sites.
The labs were described by the RCMP as “equipped with specialized chemical processing equipment often found in academic and professional research facilities.” Photos released by authorities show stainless steel reaction vessels, industrial filters, and what appear to be commercial-scale tablet presses and drying trays—pointing to mass production capabilities.
The takedown comes as Canada finds itself in the crosshairs of intensifying geopolitical tension.
Fentanyl remains the leading cause of drug-related deaths in Canada, with toxic supply chains increasingly linked to hybrid transnational networks involving Chinese chemical brokers and domestic Canadian producers.
RCMP said the sprawling B.C. lab probe was launched in the summer of 2023, with teams initiating an investigation into the importation of unregulated chemicals and commercial laboratory equipment that could be used for synthesizing illicit drugs including fentanyl, MDMA, and GHB.
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