Economy
Finance minister misleading Canadians about economic growth
From the Fraser Institute
By Jake Fuss and Grady Munro
Finance Minister Chrystia Freeland recently said Canada will have “the strongest economic growth in the G7.” But is that true? And are Canadians better off because of it?
The Trudeau government regularly uses comparisons among G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) to gauge Canada’s economic performance. And when comparing economic growth in the aggregate (meaning overall growth, as measured by GDP), Minister Freeland is correct that Canada’s economy performs well compared to the rest of the G7.
Specifically, from 2000 to 2023, Canada’s average GDP growth (adjusted for inflation) was second-highest in the G7 at 1.8 per cent annually (only behind the U.S.). And in a recent report, the International Monetary Fund projected that Canada’s overall GDP growth will be second-highest in 2024, and lead the G7 in 2025.
But there’s a serious problem with these measures—they fail to account for population growth rates in each country and therefore don’t measure whether or not individuals are actually better off.
Simply put, economies grow when there are more people producing goods and services (i.e. the population grows) or when people are able to produce more per hour worked (i.e. productivity increases). In recent years, the Canadian economy has grown almost exclusively due to population growth, which has grown at historic rates due to record levels of immigration, while productivity has declined to the point it’s now considered an emergency.
In fact, from 2000 to 2023, Canada led the G7 in average annual population growth, which has served to inflate the country’s rate of aggregate GDP growth.
So, to more accurately measure Canada’s economic performance relative to other countries, economists use GDP per person, which accounts for differing population growth rates. This measure is a much better indicator of individual incomes and living standards.
On this measure, Canada is an economic laggard. Canada’s average annual growth rate in GDP per person (inflation-adjusted) from 2000 to 2023 was 0.7 per cent—tied for second-last in the G7, above only Italy (0.1 per cent).
If you include a broader subset of advanced economies, and focus on the Trudeau government’s tenure, the picture is even worse. From 2014 to 2022 (the latest year of available data), Canada was tied for the third-lowest average annual growth rate in inflation-adjusted GDP per person out of 30 countries in the Organisation for Economic Cooperation and Development (OECD). Canada’s average growth rate during that period (0.6 per cent) was only ahead of Luxembourg (0.5 per cent) and Mexico (0.4 per cent).
Looking ahead, Canada’s long-term economic prospects are similarly dismal. According to the OECD, Canada is expected to see the lowest average annual growth rate in GDP per person in the OECD, from 2020 to 2030 and 2030 to 2060.
When Minister Freeland boasts about aggregate GDP numbers—while ignoring how historic levels of population growth fuelled by record-high immigration inflate the numbers—she’s misleading Canadians. In reality, Canadian living standards are falling behind the rest of the developed world, and are expected to fall further behind in years to come.
Authors:
The Canadian Taxpayers Federation applauds Conservative Party Leader Pierre Poilievre’s income tax cut, which will save a two-income family up to an estimated $1,800.
“Poilievre is providing significant tax relief for people working hard to make ends meet,” said Franco Terrazzano, CTF Federal Director. “The best way the government can make life more affordable is to let people keep more of their own money and Poilievre’s tax cut would do just that.”
Today, Poilievre announced he would cut the lowest income tax bracket from 15 to 12.75 per cent. Poilievre estimates this would save a two-income family up to $1,800.
“We will free up money for this tax cut by eliminating waste, cutting bureaucracy and consultants and capping spending with a dollar-for-dollar law,” Poilievre said.
Poilievre’s tax cut is more than double the income tax cut promised by Liberal Party Leader Mark Carney.
Carney announced he would cut the lowest income tax bracket by one percentage point. Carney estimates that would save a two-income family up to $825.
“It’s great to see the two major parties dueling over who can cut taxes the most and Poilievre is providing twice as much income tax relief as Carney,” Terrazzano said. “Now we need to see big tax cuts for Canadian businesses to make them more competitive in the wake of American tariffs.
News release from The Coalition of Concerned Manufacturers and Businesses of Canada
“Trump Endorses Carney, Poilievre Endorses Canada”
The Coalition of Concerned Manufacturers and Businesses of Canada (CCMBC) strongly supports the election of Pierre Poilievre as the next Prime Minister of Canada. CCMBC President Catherine Swift stated “Canadian business has been undermined for 10 years by the post-national, anti-business Liberal agenda, and the ability of our members to create well-paying jobs has been seriously impaired. Mark Carney, who has been a key advisor to the Trudeau Liberals for years, will continue this destructive approach.”
International Monetary Fund data show Canada has had the worst growth per capita among developed nations for the last decade, directly as a result of Liberal government policies. Many analysts are referring to this period as Canada’s lost decade, which will merely be extended by a Carney-led government. Swift added “We have never seen any concern for the small- and medium-sized business (SME) community, which represents half of Canada’s GDP, from Carney. His globalist policies only involve large crony capitalists and top-down regulatory overload to the detriment of SMEs.”
It is not surprising that US President Trump recently stated that he would prefer to deal with a Liberal Prime Minister, as Trump would prefer the weaker economy the Liberals have created and which will continue under Carney’s anti-free market agenda. Poilievre has committed to unleashing Canada’s resource wealth and eliminating the industrial carbon tax, essential elements for a Canadian economic revival. Swift concluded “Where Trump endorses Carney, Pierre Poilievre endorses Canada. We firmly believe a Poilievre government will build a stronger Canada, where businesses can succeed and Canadians thrive. This is why we are endorsing Pierre Poilievre for Prime Minister.”
The CCMBC was formed in 2016 with a mandate to advocate for proactive and innovative policies that are conducive to manufacturing and business retention and safeguarding job growth in Canada.
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