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Federal government should listen to Canadians and restrain spending in upcoming budget

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4 minute read

From the Fraser Institute

By Grady Munro and Jake Fuss

The Trudeau government has repeatedly demonstrated a proclivity to increase spending and run deficits. Recent polling data shows that most Canadians are not in favour of this approach. When it tables its next budget on April 16, the government should listen to Canadians, restrain spending and provide a concrete plan to balance the budget.

The Trudeau government has increased spending substantially since taking office in 2015. When comparing the levels of inflation-adjusted, per-person program spending under every prime minister, Prime Minister Justin Trudeau has overseen the five-highest years of spending in the country’s history—even when COVID-related spending is excluded. Unsurprisingly, this proclivity to spend has resulted in eight consecutive deficits from 2015/16 to 2022/23, with another six planned from 2023/24 to 2028/29.

These eight years of borrowing have contributed to an $867.2 billion (or 82.0 per cent) increase in total gross government debt since 2014/15. Not only does this represent hundreds of billions that must be paid back by future generations, this debt run-up has also imposed significant costs on taxpayers through rising interest payments. In 2023/24, interest costs on federal government debt will reach a projected $46.5 billion—meaning more taxpayer dollars will go towards servicing debt than child-care benefits ($31.2 billion).

Again, while the Trudeau government was originally elected on the promise of higher spending for infrastructure and temporary deficits, recent polling data shows that Canadians are not happy with this approach—62.9 per cent of Canadians want the Trudeau government to cut spending. Conversely, less than a quarter (24.6 per cent) of respondents want the government to continue as planned (8.7 per cent want further increases in spending).

Of the respondents that feel the government should cut spending, 60.1 per cent want to use the savings to repay debt while 39.9 per cent want tax cuts. Debt reduction or tax relief would be a welcome development. But how much would the federal government need to cut spending to be in a position to balance the budget in the near future?

A recent study shows the federal government could simply limit the growth in annual program spending to 0.3 per cent for two years and balance the budget by 2026/27. In other words, the government could grow annual program spending by $2.9 billion from 2024/25 to 2026/27 and still balance the budget.

This is not to say the government wouldn’t face tough decisions in determining how to limit spending growth, and which areas of spending to target, but there’s a clear path to budget balance if the government wants to respect the wishes of most Canadians. And there are clear areas of spending where savings could be found.

For example, corporate welfare (i.e. government subsidies to businesses). Federal business subsidies nearly doubled from $6.5 billion in 2019 to $11.2 billion in 2022, yet research shows that they do little to promote economic growth and may actually harm the economy. Reducing or eliminating corporate welfare would help restrain overall spending.

After nearly a decade of growing spending and continuous deficits, Canadians have expressed a desire for the federal government to finally change its approach to fiscal policy. Through restrained spending there’s a clear path to a balanced budget that brings opportunities for debt reduction or tax relief—a path the Trudeau government can choose in its upcoming budget.

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2025 Federal Election

Fixing Canada’s immigration system should be next government’s top priority

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From the Fraser Institute

By John Ibbitson

Whichever party forms government after the April 28 election must put Canada’s broken immigration system at the top of the to-do list.

This country has one of the world’s lowest fertility rates. Were it not for immigration, our population would soon start to decline, just as it’s declining in dozens of other low-fertility countries around the world.

To avoid the social and economic tensions of an aging and declining population, the federal government should re-establish an immigration system that combines a high intake with strictly enforced regulations. Once Canadians see that program in place and working, public support for immigration should return.

Canada’s total fertility rate (the number of children, on average, a woman will have in her lifetime) has been declining, with the odd blip here and there, since the 1960s. In 1972, it fell below the replacement rate of 2.1.

According to Statistics Canada, the country’s fertility rate fell to a record low of 1.26 in 2023. That puts us in the company of other lowest-low fertility countries such as Italy (1.21), Japan (1.26) and South Korea (0.82).

Those three countries are all losing population. But Canada’s population continues to grow, with immigrants replacing the babies who aren’t born. The problem is that, in the years that followed the COVID-19 lockdowns, the population grew too much.

The Liberal government was unhappy that the pandemic had forced Canada to restrict immigration and concerned about post-pandemic labour shortages. To compensate, Ottawa set a target of 500,000 new permanent residents for 2025, double the already-high intake of about 250,000 a year that had served as a benchmark for the Conservative government of Stephen Harper and the Liberal governments of Paul Martin and Jean Chrétien.

Ottawa also loosened restrictions on temporary foreign worker permits and the admission of foreign students to colleges and universities. Both populations quickly exploded.

Employers preferred hiring workers from overseas rather than paying higher wages for native-born workers. Community colleges swelled their ranks with international students who were also issued work permits. Private colleges—Immigration Minister Marc Miller called them “puppy mills”—sprang up that offered no real education at all.

At the same time, the number of asylum claimants in Canada skyrocketed due to troubles overseas and relaxed entry procedures, reaching a total of 457,285 in 2024.

On January 1 of this year, Statistics Canada estimated that there were more than three million temporary residents in the country, pushing Canada’s population up above 41.5 million.

Their presence worsened housing shortages, suppressed wages and increased unemployment among younger workers. The public became alarmed at the huge influx of foreign residents.

For the first time in a quarter century, according to an Environics poll, a majority of Canadians believed there were too many immigrants coming into Canada.

Some may argue that the solution to Canada’s demographic challenges lie in adopting family-friendly policies that encourage couples to have children. But while governments improve parental supports and filter policies through a family-friendly lens—for example, houses with backyards are more family-friendly than high-rise towers—no government has been able to reverse declining fertility back up to the replacement rate of 2.1.

The steps to repairing Canada’s immigration mess lie in returning to first principles.

According to Statistics Canada, there were about 300,000 international students at postsecondary institutions when the Liberals came to power in 2015. Let’s return to those levels.

The temporary foreign worker program should be toughened up. The government recently implemented stricter Labour Market Impact Assessments, but even stricter rules may be needed to ensure that foreign workers are only brought in when local labour markets cannot meet employer needs, while paying workers a living wage.

New legislation should ensure that only asylum claimants who can demonstrate they are at risk of persecution or other harm in their home country are given refuge in Canada, and that the process for assessing claims is fair, swift and final. If necessary, the government should consider employing the Constitution’s notwithstanding clause to protect such legislation from court challenges.

Finally, the government should admit fewer permanent residents under the family reunification stream and more from the economic stream. And the total admitted should be kept to around 1 per cent of the total population. That would still permit an extremely robust intake of about 450,000 new Canadians each year.

Restoring public confidence in Canada’s immigration system will take much longer than it took to undermine that confidence. But there can be no higher priority for the federal government. The country’s demographic future is at stake.

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2025 Federal Election

The High Cost Of Continued Western Canadian Alienation

Published on

From EnergyNow.Ca

By Jim Warren

Energy Issues Carney Must Commit to if He Truly Cares About National Cohesion and be Different From Trudeau

If the stars fail to align in the majority of Western Canada’s favour and voters from Central Canada and the Maritimes re-elect a Liberal government on April 28, it will stand as a tragic rejection of the aspirations of the oil producing provinces and a threat to national cohesion.

As of today Mark Carney has not clearly and unequivocally promised to tear down the Liberal policy wall blocking growth in oil and gas exports. Yes, he recently claimed to favour energy corridors, but just two weeks earlier he backtracked on a similar commitment.

There are some promises Carney hopefully won’t honour. He has pledged to impose punitive emissions taxes on Canadian industry. But that’s supposedly alright because Carney has liberally sprinkled that promise with pixie dust. This will magically ensure any associated increases in the cost of living will disappear. Liberal wizardry will similarly vaporize any harm Carbon Tax 2.0 might do to the competitive capacity of Canadian exporters.

Carney has as also promised to impose border taxes on imports from countries that lack the Liberals’ zeal for saving the planet. These are not supposed to raise Canadians’ cost of living by much, but if they do we can take pride in doing our part to save the planet. We can feel good about ourselves while shopping for groceries we can’t afford to buy.

There is ample bad news in what Carney has promised to do. No less disturbing is what he has not agreed to do. Oil and gas sector leaders have been telling Carney what needs to be done, but that doesn’t mean he’s been listening.

The Build Canada Now action plan announced last week by western energy industry leaders lays out a concise five-point plan for growing the oil and gas sector. If Mark Carney wants to convince his more skeptical detractors that he is truly concerned about Canadian prosperity, he should consider getting a tattoo that celebrates the five points.

Yet, if he got onside with the five points and could be trusted, would it not be a step in the right direction? Sure, but it would also be great if unicorns were real.

The purpose of the Build Canada Now action plan couldn’t be much more clearly and concisely stated. “For the oil and natural gas sector to expand and energy infrastructure to be built, Canada’s federal political leaders can create an environment that will:

1. Simplify regulation. The federal government’s Impact Assessment Act and West Coast tanker ban are impeding development and need to be overhauled and simplified. Regulatory processes need to be streamlined, and decisions need to withstand judicial challenges.

2. Commit to firm deadlines for project approvals. The federal government needs to reduce regulatory timelines so that major projects are approved within 6 months of application.

3. Grow production. The federal government’s unlegislated cap on emissions must be eliminated to allow the sector to reach its full potential.

4. Attract investment. The federal carbon levy on large emitters is not globally cost competitive and should be repealed to allow provincial governments to set more suitable carbon regulations.

5. Incent Indigenous co-investment opportunities. The federal government needs to provide Indigenous loan guarantees at scale so industry may create infrastructure ownership opportunities to increase prosperity for communities and to ensure that Indigenous communities benefit from development.”

As they say the devil is often in the details. But it would be an error to complicate the message with too much detail in the context of an election campaign. We want to avoid sacrificing the good on behalf of the perfect. The plan needs to be readily understandable to voters and the media. We live in the age of the ten second sound bite so the plan has to be something that can be communicated succinctly.

Nevertheless, there is much more to be done. If Carney hopes to feel welcome in large sections of the west he needs to back away from many of promises he’s already made. And there are many Liberal policies besides Bill C-69 and C-48 that need to be rescinded or significantly modified.

Liberal imposed limitations on free speech have to go. In a free society publicizing the improvements oil and gas companies are making on behalf of environmental protection should not be a crime.

There is a morass of emissions reduction regulations, mandates, targets and deadlines that need to be rethought and/or rescinded. These include measures like the emissions cap, the clean electricity standard, EV mandates and carbon taxes. Similarly, plans for imposing restrictions on industries besides oil and gas, such as agriculture, need to be dropped. These include mandatory reductions in the use of nitrogen fertilizer and attacks (thus far only rhetorical) on cattle ranching.

A good starting point for addressing these issues would be meaningful federal-provincial negotiations. But that won’t work if the Liberals allow Quebec to veto energy projects that are in the national interest. If Quebec insists on being obstructive, the producing provinces in the west will insist that its equalization welfare be reduced or cancelled.

Virtually all of the Liberal policy measures noted above are inflationary and reduce the profitability and competitive capacity of our exporters. Adding to Canada’s already high cost of living on behalf of overly zealous, unachievable emissions reduction goals is unnecessary as well as socially unacceptable.

We probably all have our own policy change preferences. One of my personal favourites would require the federal government to cease funding environmental organizations that disrupt energy projects with unlawful protests and file frivolous slap suits to block pipelines.

Admittedly, it is a rare thing to have all of one’s policy preferences satisfied in a democracy. And it is wise to stick to a short wish list during a federal election campaign. Putting some of the foregoing issues on the back burner is okay provided we don’t forget them there.

But what if few or any of the oil and gas producing provinces’ demands are accepted by Carney and he still manages to become prime minister?

We are currently confronted by a dangerous level of geopolitical uncertainty. The prospects of a global trade war and its effects on an export-reliant country like Canada are daunting to say the least.

Dividing the country further by once again stifling the legitimate aspirations of the majority of people in Alberta and Saskatchewan will not be helpful. (I could add voters from the northeast and interior of B.C., and southwestern Manitoba to the club of the seriously disgruntled.)

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