The News Rundown

Canada Speeds Up Deficit Reduction in 2022 Budget: Key Takeaways

This Thursday marked budget day in Canada. The budget is still not balanced but the rate of new spending has decreased.
The Liberals plan to bring the budget deficit down to $8.4b by 2026. With this the debt to GDP ratio will fall to 41.5% of output by 2026. For comparison since 2008 our debt to GDP ratio has been hovering at just over 30% before the pandemic.
The NDP got their wish in that their subsidized dental care adds $5.3b to the budget over the next 5 years and they also got a one time increase on the Canada housing benefit that cost $475m.
For these additions the NDP will support the budget.
All other measures including a decreasing debt to GDP ratio and decreasing deficit over the projection period are reminiscent of the measures that the Trudeau majority would have passed.
The Conservatives called on the government to reduce spending to also reduce inflation.
Conservative leadership race contestant Pierre Poilevre said the new spending commitments brought forward in the budget could increase inflation.
Jean Charest who is also running sees a lack of “fiscal discipline” in the budget.
Inflation is simply the measure of the increase in price on a set basket of goods over a specific time period. The most common measure is the consumer price index which measures prices for goods like food, cars, education, and recreation.
Essentials like energy and fuel are often not included in the CPI.
Inflation can be caused by an increase in production costs which increase due to the rising prices of raw materials or wages.
Inflation can also be caused when demand increases across a sector.
Inflation can also be influenced by fiscal policy that increases the amount of income available for both producers and consumers.
Looking at the data for the last two years, all are true due to the energy price increases we’ve seen, supply chain disruptions causing increased raw material or secondary material prices, and government run stimulus that gave money to a good portion of the population during the pandemic that is now working its way through the economy.
Government can tap the brakes but the most effective control is key interest rates which are controlled by the Bank of Canada.
That is going to likely bring forward a double whammy to consumers, in particular in the housing market.
The budget plans to work on lowering the average house price in Canada which soared past $800,000 hitting $816,720 in February.
The government will ban foreign buyers from buying houses for two years, this could be longer and more aggressive since the Vancouver and Toronto real estate markets are largely responsible for this sky high average house price.
Refugees, international students on the path to permanent residence, as well as individuals with work permits would be exempt.
The problem with this is that with our immigration numbers rising beyond 400,000 in terms of new permanent residents this policy does not support our current immigration profile. Either we need more housing supply or the number of new Canadians coming in has to go down.
To address this problem the budget allocates $4b over 5 years for 100,000 net new homes which when looking at the immigration numbers does nothing.
They also have allocated $1.5b over two years to build 6,000 new affordable housing units with one quarter aimed towards women.
Phil Soper, chief executive at Royal LePage said, “The headline policy, a two-year ban on residential property purchases by foreigners, will have a negligible impact on home prices… We know from the pandemic period, when home prices escalated with virtually no foreign money, that our problem is made-in-Canada.”
The government is also creating a tax-free first home savings account which works like a RRSP (registered retirement savings program) but contributions would be tax-deductible and non-taxable like a regular TFSA (Tax free savings account).
The TFSA was something brought forward by the Harper government but plans to increase the amount able to be saved that were on track with annual economic growth and inflation were shelved by the Liberals.
This is effectively the same but required that they be used for housing. When coming to power Trudeau said that TFSAs were for the rich to hide money, does that mean that a tax free first home savings account is to help the rich as well? No journalist asked him this.
Soper of LePage says that the tax free savings account and other measures taken only increase the demand for housing in a low supply market and the policies likely will not work.
Changing gears to the military, NATO has requested that countries focus on increasing defence spending to 2% of GDP given the Russian invasion of Ukraine.
The budget says there will be $8b in new military spending over 5 years but details are nowhere to be found on what the money will actually buy.
Just last week NATO estimated that Canada spent 1.36% of the budget on military spending, if this new money flows it will see spending increase to 1.5% of GDP.
A true increase to 2% would represent an increase of about $16b which Defence Minister Anita Anand said she would be presenting in the budget back in March, but this was before the Liberal’s new deal with the NDP.
This budget is a Liberal budget that could’ve been put forward by a Liberal majority given how it looks and that should worry NDP supporters because while they do get dental care and an increase to the housing benefit, most of what makes the NDP their own entity are not present.
In a final bit of irony the finance Minister, Chrystia Freeland also detailed her trip to get new budget shoes and the shoes were expensive to the point that most Canadians could not afford them in today’s climate.
Freeland bought a pair of shoes from Zvelle, a company based out of Toronto for $295 before tax paid for on a credit card.
Something most Canadians wish they could only do (or not), and that is to spend $300+ on a pair of new shoes for a decades old tradition.
This shows how out of touch this budget is with Canada and what the country needs.
Supplementals:

One subject that hasn't gotten talked about much lately is BC's justice system, and how it has been handling a sharp rise in crime in BC during the two years of the pandemic. Officials from smaller towns, like Terrace in BC's northwest corridor, were at the legislature this past week, calling on the provincial government to help them with resources to curb crime waves that have hit local businesses.
The pleas are being seen as a last-ditch effort to ask for help as thefts and break-ins continue hitting businesses already negatively impacted during the pandemic. In one month, one particular Terrace business was robbed four times, forcing the owners to take drastic measures, such as sleeping in the store.
Terrace city councillor Sean Bujtas has heard similar stories over and over, which he calls "depressing and upsetting". He's been told by some businesses that major thefts would leave them on the brink of closing.
Business owners and councillors believe the problem isn't policing, but rather the courts’ revolving door. On Wednesday and Thursday, Bujtas joined Terrace Mayor Carole Leclerc in Victoria to meet with ministers and ask for help.
Leclerc said: "Our city's in a crisis. We could be any city in the province of British Columbia. We have problems with prolific offenders.”
Some of their asks included integrated provincial courts, mental health and addiction supports, and for Crown counsel to be at the table when looking for solutions. The province so far has not responded.
Bujtas said: "We need to prosecute repeat offenders. We need to get these prolific offenders off the streets of Terrace and have them stop terrorizing our municipality.”
The opposition BC Liberals have been taking John Horgan's NDP government to task for its failure to respond to the situation. During question period in the Legislative Assembly April 5, the MLAs wanted to know why the government was not taking action against crime and prolific offenders, and attorney general David Eby faced renewed questions about his government's continued perceived inaction.
Liberal MLAs argued that prolific offenders are being let back on the streets, where they continue to commit assaults, thefts, vandalism and murder. Failure to prosecute these offenders is causing more mayhem on the streets and ultimately resulting in the public losing faith in the justice system, they said.
Michael Lee, MLA for Vancouver-Langara, referenced two instances from Victoria in March – a fatal stabbing and an attack on a family on the street in his remarks: “Last week we were shocked to hear the attorney general deny the problem of escalating random assaults and prolific offenders. But in community after community across B.C., we are hearing the opposite.”
Eby reiterated his stand that the Crown counsel is being wrongly blamed for doing their job of implementing federal law and referenced Bill C-75, which talks about using a principle of restraint for police and courts to ensure that release at the earliest opportunity is favoured over detention.
Eby said no one was denying that there’s an issue with prolific offenders but he said there are other factors to consider before sentencing people, especially if they are grappling with mental health and addiction issues.
Kelowna-Mission MLA Rene Merrifield brought forward the case of 17-year-old Dallas Zackodnik suffering a fractured skull and collapsed lung after being attacked by two men. Four months after the attack, Merrifield said her constituent is still waiting for justice as the attackers face no charges. While Eby was not aware of the incident, he said his office was willing to look into the specific case if the victim wanted.
More concerns were placed before Eby during the question period including Vancouver’s Chinatown losing its tourism appeal due to vandalism and safety concerns, Vancouver businesses grappling with break and enters, broken windows, shoplifting and assaults, Williams Lake Search & Rescue losing a quarter-million-dollar specialized vehicle and businesses like McDonald’s closing in downtown Kamloops.
Members of the opposition called on the provincial government to accept there is a “massive crime problem” rather than continuing to ignore it. Kamloops MLA Peter Milobar claimed the number of no-charge recommendations between 2017 and 2020 had increased by 45 per cent. While Eby contested Milobar’s statistics, he did admit there was an increase in the number of no-charge decisions.
Eby replied: “I can say that in the year before the pandemic, 84% of charges were approved by Crown counsel. In 2020-21, the first year of the pandemic, that went to 77 percent. It is a decrease of 7 percent in charge approvals by Crown counsel in a single year.”
The attorney general went on to attribute the increase in no-charges trend to the pandemic as Crown counsel as well as judges were reluctant to sentence people to jail due to concerns of COVID-19 outbreaks.
Eby said: “Essentially sentencing someone to contract COVID was not something that the courts were willing to contemplate at that time for certain offences, especially people with compromised immune systems and so on, as you often see with people in provincial court.”
The attorney general told the MLAs he will further look into this issue and has asked the Crown counsel to provide him with information about these statistics.
Meanwhile, members of the opposition, such as Skeena BC Liberal MLA Ellis Ross dismiss the pandemic excuse provided by Eby and say that crime in cities has been rising steadily for the past five years, even before COVID-19.
In a phone call from Victoria, Ross also said that while Eby talks about federal law limiting Crown counsel from detaining prolific offenders, he fails to mention the fact that the provincial government, specifically the attorney general, has the power to direct the prosecution in terms of detention for some of these crimes.
“Right now, they’re blaming the federal laws, they’re blaming COVID, they’re finding every excuse in the book, except they’re not actually looking at their own powers of direction to the prosecution.”
Regardless of what the best way forward is on this issue, it's clear that the BC government needs to do something, and the first step is actually addressing that there is a problem, and that there needs to be changes made to curb the crime wave settling across BC. Summer is almost upon us, and if we want our tourist friendly image to stay intact, then this is a problem that cannot be ignored.
Supplementals:

NDP calls on Alberta government to stop the push to 'Americanize' public health care

The Alberta NDP are back in the news rallying forces in the public sector unions and ordinary Albertans under the fear that healthcare will be privatized in the province.
The accusation comes on a week when Dr. Verna Yiu was fired from Alberta Health Services in a move that is said to represent a shift of the healthcare system to pandemic recovery and renewal.
The other side of the coin says that Dr. Yiu was fired for decisions made during the pandemic.
Since her term ended early, she’ll receive a severance of one year’s salary of $574,000.
Dr. Yiu’s contract would have ended in June 2023 but the government wanted a fresh 5 year mandate to pursue the upcoming changes.
Health Minister Jason Copping said, “It is time to move forward with an ambitious agenda to improve and modernize the health system, and renewed leadership at Alberta Health Services will support delivering those changes.”
Underscoring the basics of this that all Albertans need to know is that the Canada Health Act ensures that care is available to everyone.
The throne speech detailed more private clinics coming online to do surgeries paid by the province and expansion of primary care networks, upgrades to continuous care, and constraint in the salaries and fee for health care workers.
Dr. Yiu was appointed by the NDP and given the fact the government is pushing to make changes, they likely wanted someone more onboard with their changes rather than a more independent AHS CEO.
The pandemic brought forward lessons that if a modest increase in hospital users requires society wide shutdowns, healthcare needs to be more independent or more efficient.
The dominant thought is that this is due to political changes on the way or the way the pandemic was handled.
But with all the noise on hand the media and those protesting changes to the health system or firing of Dr. Yiu are missing one key point: this is a government that acts quickly when it says it’s going to do something.
Healthcare like other contentious social issues is something that when talked about will always draw attention in Canada.
It’s the resistance to talk about it and general stigma against the American health care system that so many Canadians misunderstand that causes such strong reactions about any change.
Europe has many countries that utilize private healthcare with government funded insurance. We’ve talked about these before on the show and the goal is to increase competition and make the system run smoothly. In countries like Switzerland and the Netherlands most healthcare is private but paid for via public insurance.
This is in all likelihood the model that the UCP wants to emulate.
Americanize is used because of the stigma and general feeling of uncertainty that many feel when thinking about the American healthcare system.
This as a result allows anyone wanting to push back against any proposed healthcare change, an advantage on the linguistic front.
It’s unfortunate that so many feel this way and instead want to keep funneling money at the problem/
That can work for a time but eventually greater structural changes will be needed.
Calling any proposed changes before they happen “Americaniz[ing] the healthcare system” is the childhood equivalent of throwing a temper tantrum.
We will of course be watching when the proposed changes arrive (none have yet! which makes this story even more funny) and will offer commentary on them and whether or not they’re likely to address the problems we see in our system.
Until the changes are introduced, the NDP are doing nothing but fear mongering which is telling since that’s what their 2019 campaign was based on and it’s looking like 2023 will be the same.
Supplementals:

https://calgaryherald.com/opinion/columnists/braid-sudden-exit-of-ahs-boss-signals-big-changes-across-albertas-health-system

Firing Line

Federal government approves controversial Bay du Nord oil project

Federal Environment Minister Steven Guilbeault formally approved the Bay du Nord offshore oil megaproject this week. The decision comes despite disagreement within Prime Minister Justin Trudeau's Liberal cabinet. In February, it was reported that cabinet members from Quebec, Ontario and British Columbia were opposed to its approval.
It’s a politically risky move for Prime Minister Justin Trudeau that complicates his efforts to hit aggressive emission targets for the oil and gas sector and could potentially alienate the pro-environment bloc within the governing Liberal Party. Yet Russia’s invasion of Ukraine has also prompted policy-makers to reconsider the importance of the nation’s vast oil reserves to Canada’s economic security.
In a statement Wednesday evening, Norwegian oil company Equinor, the company heading the project, called the federal environmental decision "an important milestone" for the project: "We now look forward to progressing this key investment in Canada – which has the potential to produce the lowest carbon oil in the country," said the company's statement. We'll get to the bit about the "lowest carbon oil in the country" a little later. But first, some background on Bay du Nord, and what it's actually all about.
Equinor and its partners plan to develop the oil field at the Flemish Pass, about 500 kilometres east of St. John's. The coast of Newfoundland has rich oil reserves, and offshore developments over the past decades have kept the Newfoundland economy afloat so to speak, and have provided many jobs for the province's workers.
Bay du Nord will be the first project to move the offshore oil industry into such deep waters, with drilling to go more than a kilometre underwater. The Equinor plan is to use a massive floating production, storage and offloading vessel, commonly known as an FPSO, capable of producing up to 200,000 barrels daily.
The project will be Newfoundland and Labrador's fifth offshore oil field to move into production since Hibernia launched in 1997. Bay du Nord would begin pumping oil as early as 2028. Bay du Nord — seen as an economic lifeline to Newfoundland and Labrador, whose economy has been dependent on offshore oil royalties and labour — has been years in the making.
Equinor deferred the project in 2020 after oil prices plummeted in the early months of the COVID-19 pandemic, but announced it was forging ahead in 2021. The company says the project, which it has not yet officially sanctioned, will produce about 300 million barrels of oil, generate $3.5 billion in government revenues, and create thousands of jobs.
The Newfoundland and Labrador government has fiercely championed the project, with Premier Andrew Furey lobbying fellow Liberals for months. Furey called the approval a "giant step forward" for the project, and a key part of an economic recovery for the government, which is facing sky-high debt. Furey, whose government released a budget on Thursday — the same day as the federal government (which we talked about earlier), said: "We poured all our energy into making sure that all parties involved provincially, nationally and internationally understood the value of this project."
Furey said the approval is evidence of a collaborative relationship between the provincial and federal governments, and he personally called Trudeau to promote the merits of the project. However, Furey said there were no negotiations between the two governments, and the provincial government didn't have to agree to any terms in order to secure approval of Bay du Nord.
Guilbeault's decision on whether Bay du Nord would proceed was originally scheduled for December, but was delayed until March 6. Guilbeault missed that deadline too, and the federal government said it needed more time to assess whether the project is likely to cause "significant adverse environmental effects." The federal government last week released a climate plan that included measures to reduce emissions from oil and gas, but stopped short of limiting plans for production.
Environmental activists and climate scientists have long panned the proposed Bay du Nord development, saying it flies in the face of the federal government's climate goals. The N.L. government and proponents in the oil industry have touted the so-called "low-carbon" content of the oil that would be produced by Bay du Nord, calling the project a crucial part of a transition to renewable energy.
However, it should be noted that while the offshore oil projects do emit fewer emissions (around 70% less) during extraction than other producers, extraction only accounts for about 15% of a barrel's total emissions. When that oil is burned for energy, it produces just 6% less carbon than diluted bitumen from Alberta's oil sands.
This is the problem with government spin. While Alberta's oil often gets labelled as dirty, Newfoundland's is being labelled as clean, despite not really that much difference between the two oils. The difference lies in where in the country the oil is located, and where the government prioritizes its economic recovery.
When Justin Trudeau came to power in 2015, he made a choice to not only not assist in the economic recovery of Alberta by supporting the construction of interprovincial pipelines to get Canada's natural resources to market, instead he cancelled the Northern Gateway, which would have sent Alberta oil through Northern BC to the coast, and he also passed Bill C-48, the Oil Tanker Moratorium Act, which effectively banned all tanker traffic from Northern BC, killing any chance that an increase of oil could be shipped to market through Canada's west coast.
These decisions, among others, sent signals to businesses that Canada was not open for development of its resources, and did not want to work with companies to grow the economy and provide jobs for workers in the natural resources sectors. These signals led to the cancellation of Energy East, which would have sent Alberta oil east to Ontario and Quebec. Instead, the only routes it has are going through the Trans Mountain Pipeline to Vancouver (much of which gets used domestically) or through pipelines to the US, leaving our economy at mercy of the US government's whims.
So now, Trudeau has approved an oil project in Newfoundland, despite environmental pleas, to help the economy of Newfoundland (which, surprise surprise, tends to vote overwhelmingly Liberal in federal elections), while ignoring any support for development in the West. And that is an angle that few in the mainstream media have explored.
Supplementals:

https://financialpost.com/commodities/energy/oil-gas/trudeau-approves-equinors-12-billion-oil-project-cbc-says

Quote of the Week

“The headline policy, a two-year ban on residential property purchases by foreigners, will have a negligible impact on home prices… We know from the pandemic period, when home prices escalated with virtually no foreign money, that our problem is made-in-Canada.” - Phil Soper, chief executive at Royal LePage on the housing affordability crisis

Word of the Week

Prolific - present in large numbers or quantities; plentiful

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Show Data

Episode Title: Prolific Problems

Teaser: Trudeau releases his 2022 budget, BC experiences an increase in crime, and the UCP makes healthcare changes. Also, the Newfoundland offshore oil project Bay du Nord has been approved.

Recorded Date: April 8, 2022

Release Date: April 10, 2022

Duration: 57:20

Edit Notes: None

Podcast Summary Notes

Duration: XX:XX