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Trudeau’s new tax package gets almost everything wrong

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From the Fraser Institute

By Ben Eisen and Jake Fuss

Recently, Prime Minister Justin Trudeau announced several short-term initiatives related to tax policy. Most notably, the package includes a two-month GST holiday on certain items and a one-time $250 cheque that will be sent to all Canadians with incomes under $150,000.

Unfortunately, the Trudeau government’s package is a grab bag of bad ideas that will not do anything to get Canada out of the long-term growth rut in which our economy is mired. There are too many to list all in one place, but here are four of the biggest problems with Prime Minister Trudeau’s tax plan.

  1. It reduces the wrong taxes. When it comes to economic growth, not all taxes are created equal. Some cause far more economic harm per dollar of government revenue raised than others. The government’s package creates a holiday on the GST for some items (only for two months) which is a mistake given that the GST is one of the least economically harmful components of the tax mix. Canada’s recent growth record is abysmal, and boosting growth should be a primary goal of any changes to tax policy. A GST cut of any duration fails this test relative to other tax cuts.
  2. Temporary tax holidays shift consumption in time, they don’t boost growth. The government’s GST reduction is actually a short-term tax holiday on certain items that will last two months. There are decades worth of economic research showing that when governments create short-term tax breaks, they may change the timing of consumption, but they won’t contribute to actual economic growth. Shifting consumption from the future to the present won’t help get Canada out of the economic doldrums. This is particularly true of the Trudeau tax holiday since purchases that Canadians may have made after the two-month holiday period will simply be shifted forward to take advantage of the absence of the GST. As noted above, there are better taxes to cut than the GST, but no matter what taxes we are talking about permanent reductions are vastly superior to temporary tax cuts like short-term holidays.
  3. One-time tax rebates don’t improve economic incentives. Perhaps the worst element of the Trudeau government’s announcement was a plan to send $250 cheques to all Canadians earning under $150,000. One-time tax rebates are a terrible way to provide tax relief. When you cut income tax rates, you improve incentives for people to work and invest because they get to keep a larger share of their earnings. This helps the economy grow. One-time rebates that you get regardless of the economic choices you make has no similar effect. This means that the rebate with its $4.7 billion price tag won’t help Canada’s poor growth performance.
  4. It borrows from the future to give to the present. The federal government is currently running a large deficit. This raises the question of who will have to pay the $4.7 billion bill for the one-time payments announced today. The answer is that the government will have to borrow the money and therefore future taxpayers will have to either pay it off or service the extra debt indefinitely. The money the Trudeau government will send out won’t come out of thin air, it’ll have to be borrowed with the burden falling on future taxpayers.

The Trudeau government got one thing conceptually right, which is that there are advantages to reducing the tax burden on Canadians. Unfortunately, the policy package it has put forward to provide tax relief gets everything wrong. It reduces the wrong taxes, shifts taxes temporally rather than cutting them, does nothing to improve economic incentives, and burdens future taxpayers. With the holiday season around the corner, this attempt at a gift to Canadian taxpayers is the economic equivalent of a lump of coal in the stocking.

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Agriculture

Saskatchewan potash vital for world food

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From Resource Works

Fertilizer Canada says the fertilizer industry contributes $23 billion a year to Canada’s economy and provides over 76,000 jobs.

A small potash extraction company in Manitoba calls Saskatchewan “the Niagara Falls of potash in Canada.”

The current 10 mines in Saskatchewan produced around 13 million tonnes in 2023, accounting for some 33% of global potash production, and exported 95% of it to more than 75 countries.

Potash mine No. 11 in Saskatchewan is working toward production in late 2026. That’s the $14-billion Jansen mine, owned by BHP, located 140 kilometres east of Saskatoon. It aims to produce around 8.5 million tonnes a year to start, and as much as 16–17 million tonnes a year in future stages.

With potash used primarily in agricultural fertilizers, Saskatchewan’s output is a key ingredient in global food security. Fertilizer is responsible for half of the world’s current food production.

As Real Agriculture points out: “Fertilizer production is not only an economic driver in Canada, but it is also a critical resource for customers around the world, especially in the United States.”

This is particularly important as Russia’s war on Ukraine has raised doubts about reliable supplies of potash from Russia, the world’s No. 2 producer, which produced 6.5 million tonnes in 2023.

In fertilizers, the potassium from potash increases plant growth and crop yields, strengthens roots, improves plants’ water efficiency, and increases pest and disease resistance. It improves the colour, texture, and taste of food. Natural Resources Canada adds: “Potassium is an essential element of the human diet, required for the growth and maintenance of tissues, muscles and organs, as well as the electrical activity of the heart.”

Canada’s federal government has included potash as one of 34 minerals and metals on its list of critical minerals.

Fertilizer Canada says the fertilizer industry contributes $23 billion a year to Canada’s economy and provides over 76,000 jobs.

The potash operations in Saskatchewan are in the Prairie Evaporite Deposit, the world’s largest known potash deposit, formed some 400 million years ago as an ancient inland sea evaporated. The deposits extend from central to south-central Saskatchewan into Manitoba and northern North Dakota. These deposits form the world’s largest potash reserves, at 1.1 billion tonnes.

Manitoba’s first potash mine is close to bringing its product to market. The PADCOM mine is 16 kilometres west of Russell, Manitoba, near the Manitoba-Saskatchewan border. The Gambler First Nation has acquired a one-fifth stake in the project.

PADCOM injects a heated mixture of water and salt underground to dissolve the potash, which is then pumped to the surface and crystallized. CEO Brian Clifford says this process is friendlier to the environment than the conventional method of mining underground and extracting ore from rock deposits.

Saskatchewan’s northern potash deposits are about 1,000 metres below the surface and are extracted using conventional mining techniques. To the south, deposits are anywhere from 1,500 to 2,400 metres deep and are mined using solution techniques.

PADCOM aims to produce 100,000 tonnes of potash per year, eventually growing to 250,000 tonnes per year. However, PADCOM president Daymon Guillas notes that across the Manitoba-Saskatchewan border, the Nutrien potash mine near Rocanville, Saskatchewan, produces five to seven million tonnes per year.

“In 36 hours, they produce more than we do in a year. Saskatchewan is the Niagara Falls of potash in Canada. Our little project is a drip, just a small drip out of the faucet.”

(New Brunswick once had a small potash mine, but it closed in 2016.)

Real Agriculture says: “Canadian-produced potash remains vital to the U.S.’s ability to produce enough corn for feed, ethanol production, and export requirements, at a time when the U.S. heightens its focus on reducing exposure to international integrated supply chains in favour of U.S. domestic supply chains.”

Writer Shaun Haney continues: “For the U.S. corn farmer, Canadian-produced potash is critical for achieving the top yields. According to StoneX, over the past three years, Canada accounts for roughly 87 per cent of potash imports by the U.S., while Russia sits at 9.5%.”

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The Health Research Funding Scandal Costing Canadians Billions is Parading in Plain View

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The Audit

 David Clinton

Why Can’t We See the Canadian Institutes for Health Research-Funded Research We Pay For?

Right off the top I should acknowledge that a lot of the research funded by the Canadian Institutes for Health Research (CIHR) is creative, rigorous, and valuable. No matter which academic category I looked at during my explorations, at least a few study titles sparked a strong “well it’s about time” reaction.

But two things dampen my enthusiasm:

  1. Precious few of the more than 39,000 studies funded by CIHR since 2011 are available to the public. We’re generally permitted to see no more than brief and incomplete descriptions – and sometimes not even that.
  2. There’s often no visible evidence that the research ever actually took place. Considering how more than $16 billion in taxpayer funds has been spent on those studies over the past 13 years, that’s not a good thing.

If you’ve been reading The Audit for a while, you know that I’ll often identify systems that appear vulnerable to abuse. As a rule though, I’m reluctant to invoke the “s” word. But here’s one place where I can think of no better description: the vacuum where CIHR compliance and enforcement should be is a national scandal.

Keep these posts coming: subscribe to The Audit.

I’ve touched on these things before. And even in that earlier post I acknowledged how:

…as a country, we have an interest in investing in industry sectors where there’s a potential for high growth and where releasing proprietary secrets can be counter productive.

So we shouldn’t expect access to the full results of every single study. But that’s surely not true for the majority of research. And there’s absolutely no reason that CIHR shouldn’t provide evidence that something (anything!) productive was actually done with our money.

Because a well-chosen example can sometimes tell the story better than huge numbers, I’ll focus on one particular study in just a moment. But for context, here are some huge numbers. What follows is an AI-powered breakdown by topic of all 39,751 research grants awarded by CIHR since 2011:

Those numbers shouldn’t be taken as anything close to authoritative. The federal government data doesn’t provide even minimal program descriptions for many of the grants it covers. And many descriptions that are there contain meaningless boilerplate text. That’s why the “Other – Uncategorized” category represents 72 percent of all award dollars.

Ok. Let’s get to our in-the-weeds-level example. In March 2016, Greta R. Bauer and Margaret L. Lawson (principal investigators) won a $1,280,540 grant to study “Transgender youth in clinical care: A pan-Canadian cohort study of medical, social and family outcomes”.

Now that looks like vital and important research. This is especially true in light of recent bans on clinical transgender care for minors in many European countries following the release of the U.K.’s Cass report. Dr. Cass found that such treatment involved unacceptable health risks when weighed against poorly defined benefits.

A website associated with the Bauer-Lawson study (transyouthcan.ca) provides a brief update:

As of December of 2021, we have completed all of our planned 2-year follow up data collection. We want to say thanks so much to all our participants who have continued to share their information with us over these past years! We have been hard at work turning data into research results.

And then things get weird. That page leads to a link to another page containing study results, but that one doesn’t load due to an internal server error.

Before we move on, I should note that I come across a LOT of research-related web pages on potentially controversial topics that suddenly go off-line or unexpectedly retire behind pay walls. Those could, of course, just be a series of unfortunate coincidences. But I’ve seen so many such coincidences that it’s beginning to look more like a pattern.

The good news is that earlier versions of those lost pages are nearly always available through the Internet Archive’s WayBackMachine. And frankly, the stuff I find in those earlier versions is often much more – educational – than whatever intentional updates would show me.

In the case of transyouthcan.ca, archived versions included a valid link to a brief PDF document addressing external stressors (which were NOT the primary focus of the original grant application). That PDF includes an interesting acknowledgment:

This project is being paid for by a grant from the Canadian Institutes of Health Research (CIHR). This study is being done by a team of gender-affirming doctors and researchers who have many years of experience doing community-based trans research. Our team includes people who are also parents of trans children, trans adults, and allied researchers with a long history of working to support trans communities.

As most of the participants appear to have financial and professional interests in the research outcome, I can’t avoid wondering whether there might be at least the appearance of bias.

In any case, that’s where the evidence trail stopped. I couldn’t find any references to study results or even to the publication of a related academic paper. And it’s not like the lead investigators lack access to journals. Greta Bauer, for example, has 79 papers listed on PubMed – but none of them related directly to this study topic.

What happened here? Did the authors just walk off with $1.2 million of taxpayer funding? Did they do the research but then change their minds about publishing when the results came in because they don’t fit a preferred narrative?

But the darker question is why no one at CIHR appears to be even mildly curious about this story – and about many thousands of others that might be out there. Who’s in charge?

Keep these posts coming: subscribe to The Audit.

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