The Next Canadian Government

[QV]

According to the Globe and Mail's Editorial Board, Mark Carney, who is a pretty smart guy, has offered the current Liberal government some good, but likely unwelcome economic advice. I hope Pierre Poilievre takes note of it, too:

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The hard truth the Trudeau Liberals need to hear from Mark Carney
THE EDITORIAL BOARD

Mark Carney, the Liberal Party’s newly appointed economic-growth czar, made a couple of critical points on his way in to meet with the caucus this week.

The world is becoming a more “dangerous and divided place,” Mr. Carney ventured. Canada can no longer count on the rules-based international trade system that has underpinned growth in the West since the end of the Second World War. This country must become “an essential trading partner” with protectionism on the rise. And, he added, Canada “can’t win an industrial-policy arms race.”

That’s a good starting point for a diagnosis. The question is what cure Mr. Carney might prescribe. In announcing his appointment, the Liberals said the former Bank of Canada governor would come up with “new ideas for jobs and growth” ahead of next year’s expected federal election.

Sounds great, except for one small hitch: dealing with Canada’s economic woes requires a near-complete break with the current Liberal orthodoxy of rising taxes, soaring spending, big deficits and pricey industrial subsidies. A real program for revitalizing Canada’s economy surely starts with acknowledging the root problem – a continuing and worsening slide in productivity.

The latest Statistics Canada data on second-quarter economic growth are sobering: real gross domestic product per capita fell for the fifth quarter in a row. In the spring, when the streak was just three consecutive quarters, Finance Minister Chrystia Freeland’s budget shrugged it off as “a largely temporary, not systemic” problem that would fix itself.

Mr. Carney – who, in fairness, did criticize that budget for failing to focus enough on growth – could do great service to the Liberals, not to mention Canada, by making it clear that falling real GDP per capita is a real problem, and that it crystalizes not just our current economic underperformance but also the inherent threat of low productivity to Canadians’ longer-term prosperity.

A report released Thursday by Toronto-Dominion Bank lays out the stakes: living standards, as measured by real GDP per capita, were lower in 2023 than in 2014. The bank doesn’t state the obvious political conclusion, but here it is: Canadian living standards have fallen under the nine years of Liberal rule. Indictments of economic policies don’t get much sharper than that.

The consequences of failing to reverse this slide are unpalatable, to say the least. “Without improved productivity growth, workers will face stagnating wages and government revenues will not keep pace with spending commitments, requiring higher taxes or reduced public services,” the TD report states. That would be quite a legacy for a government that has prided itself on expanding social programs.

Acknowledging the problem is a necessary first step, but measuring it is also important. Ottawa needs to start assessing the impact of every budget measure on productivity (as it currently does for gender, for instance.) Additionally, the mandate of the Parliamentary Budget Officer should be expanded to scrutinize and monitor the impact of measures that impact productivity.

We’ll have more to say later in the week on international trade policy and domestic trade barriers, both key areas where Canada needs to take aggressive action. But the need is no less urgent on domestic fiscal policy.

In an interview, TD Chief Economist Beata Caranci said the start of any policy reform should be scrapping Canada’s habit of simply reacting to U.S. decisions in order to minimize the competitiveness gap. Instead, she said, Canada should pursue the much more audacious goal of becoming a more attractive business environment than the United States.

What might such an economic program look like? A sweeping reform of the tax code, including a single rate of corporate taxation. Restoring investment-friendly (and sector-agnostic) measures such as accelerated capital cost allowances that the government is allowing to wind down. Ending the dalliance with 1970s-era industrial policy subsidies that are already looking obsolete as technologies shift.

And, most of all, embracing the private sector (rather than, say, the Prime Minister’s Office) as the wellspring of Canadian investment, innovation and prosperity.

Mr. Carney certainly has the experience, reputation and intellectual heft to propose sweeping change. The question is whether he is willing to tell the Liberals some unwelcome truths – and, if he does, whether they will listen.

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One of the things Mr Carney ignored is that Canada remains one of the world's most resource rich countries and, despite climate change, we need to exploit those resources, including heavy oil and natural gas, and sell them to the world.

PP is saying exactly that.

 

[OldSolduer]

According to the Globe and Mail's Editorial Board, Mark Carney, who is a pretty smart guy, has offered the current Liberal government some good, but likely unwelcome economic advice. I hope Pierre Poilievre takes note of it, too:

----------​

The hard truth the Trudeau Liberals need to hear from Mark Carney
THE EDITORIAL BOARD

Mark Carney, the Liberal Party’s newly appointed economic-growth czar, made a couple of critical points on his way in to meet with the caucus this week.

The world is becoming a more “dangerous and divided place,” Mr. Carney ventured. Canada can no longer count on the rules-based international trade system that has underpinned growth in the West since the end of the Second World War. This country must become “an essential trading partner” with protectionism on the rise. And, he added, Canada “can’t win an industrial-policy arms race.”

That’s a good starting point for a diagnosis. The question is what cure Mr. Carney might prescribe. In announcing his appointment, the Liberals said the former Bank of Canada governor would come up with “new ideas for jobs and growth” ahead of next year’s expected federal election.

Sounds great, except for one small hitch: dealing with Canada’s economic woes requires a near-complete break with the current Liberal orthodoxy of rising taxes, soaring spending, big deficits and pricey industrial subsidies. A real program for revitalizing Canada’s economy surely starts with acknowledging the root problem – a continuing and worsening slide in productivity.

The latest Statistics Canada data on second-quarter economic growth are sobering: real gross domestic product per capita fell for the fifth quarter in a row. In the spring, when the streak was just three consecutive quarters, Finance Minister Chrystia Freeland’s budget shrugged it off as “a largely temporary, not systemic” problem that would fix itself.

Mr. Carney – who, in fairness, did criticize that budget for failing to focus enough on growth – could do great service to the Liberals, not to mention Canada, by making it clear that falling real GDP per capita is a real problem, and that it crystalizes not just our current economic underperformance but also the inherent threat of low productivity to Canadians’ longer-term prosperity.

A report released Thursday by Toronto-Dominion Bank lays out the stakes: living standards, as measured by real GDP per capita, were lower in 2023 than in 2014. The bank doesn’t state the obvious political conclusion, but here it is: Canadian living standards have fallen under the nine years of Liberal rule. Indictments of economic policies don’t get much sharper than that.

The consequences of failing to reverse this slide are unpalatable, to say the least. “Without improved productivity growth, workers will face stagnating wages and government revenues will not keep pace with spending commitments, requiring higher taxes or reduced public services,” the TD report states. That would be quite a legacy for a government that has prided itself on expanding social programs.

Acknowledging the problem is a necessary first step, but measuring it is also important. Ottawa needs to start assessing the impact of every budget measure on productivity (as it currently does for gender, for instance.) Additionally, the mandate of the Parliamentary Budget Officer should be expanded to scrutinize and monitor the impact of measures that impact productivity.

We’ll have more to say later in the week on international trade policy and domestic trade barriers, both key areas where Canada needs to take aggressive action. But the need is no less urgent on domestic fiscal policy.

In an interview, TD Chief Economist Beata Caranci said the start of any policy reform should be scrapping Canada’s habit of simply reacting to U.S. decisions in order to minimize the competitiveness gap. Instead, she said, Canada should pursue the much more audacious goal of becoming a more attractive business environment than the United States.

What might such an economic program look like? A sweeping reform of the tax code, including a single rate of corporate taxation. Restoring investment-friendly (and sector-agnostic) measures such as accelerated capital cost allowances that the government is allowing to wind down. Ending the dalliance with 1970s-era industrial policy subsidies that are already looking obsolete as technologies shift.

And, most of all, embracing the private sector (rather than, say, the Prime Minister’s Office) as the wellspring of Canadian investment, innovation and prosperity.

Mr. Carney certainly has the experience, reputation and intellectual heft to propose sweeping change. The question is whether he is willing to tell the Liberals some unwelcome truths – and, if he does, whether they will listen.

----------​

One of the things Mr Carney ignored is that Canada remains one of the world's most resource rich countries and, despite climate change, we need to exploit those resources, including heavy oil and natural gas, and sell them to the world.

It will fall on deaf ears. The LPC has set a course, sailing away merrily despite the waterfalls downstream and won't change until they go over the falls. Then they will blame Canadians for their demise.

 

[Rifleman62]

One of the things Mr Carney ignored is that Canada remains one of the world's most resource rich countries and, despite climate change, we need to exploit those resources, including heavy oil and natural gas, and sell them to the world.

Except that, he is against pipelines in Canada, while Brookfield buildspipelines in other countries.

Carney is going to be an employee of the Liberal Party of Canada. Thus not subject to disclosure of his assets nor subject to ethics laws.

So we have an unelected person who can manipulate the Canadian economy as the DeFacto Finance Minister.

Add in, he is the long-time personal friend of the PM and Finance Minister who he has apparently been advising for several years.

 

[Czech_pivo]

Except that, he is against pipelines in Canada, while Brookfield buildspipelines in other countries.

Carney is going to be an employee of the Liberal Party of Canada. Thus not subject to disclosure of his assets nor subject to ethics laws.

So we have an unelected person who can manipulate the Canadian economy as the DeFacto Finance Minister.

Add in, he is the long-time personal friend of the PM and Finance Minister who he has apparently been advising for several years.

Not saying that I'm for him or against him - but - having an individual in charge of the Min of Finance who actually understands the Financial system is always an overall benefit. Having a trained Journalist in charge is a complete and utter fail. Maybe that's why 1 in 4 dollars now collected in taxes will go directly to pay the interest on the Federal Debt and not towards any actual programs/services.....

 

[Edward Campbell]

I hope this visit is successful and I hope that Mr Poilievre meets with Mt Fadden and his team, publicly, when they return:

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Former Canadian security and defence officials headed to meet Taiwan government​

STEVEN CHASE SENIOR PARLIAMENTARY REPORTER
ROBERT FIFE OTTAWA BUREAU CHIEF

Ex-CSIS director Richard Fadden is leading a contingent of former Canadian security and defence officials on a trip to Taiwan next week in an effort to deepen informal relations with the self-governed island as it grapples with increasing efforts by China to diplomatically isolate the Asian democracy.

The visit, sponsored by the Taiwanese government, represents a substantial level of engagement between Taiwan and a group of private citizens who previously held senior jobs in the top echelons of Canada’s government, security agencies and military.

Canada and Taiwan do not have official diplomatic relations but the territory, claimed by Beijing, has been building robust informal relations with the West in order to protect itself. The U.S. has repeatedly said China is aiming to have the capacity to capture and annex Taiwan by 2027.

Mr. Fadden is a former director of the Canadian Security Intelligence Service who also served as national security adviser to Prime Minister Justin Trudeau and former Conservative prime minister Stephen Harper. He said those accompanying him to Taiwan will include Martin Green, former assistant secretary for intelligence assessment with the Privy Council Office; Gordon Venner, former associate deputy minister with the Department of National Defence; retired lieutenant-general Guy Thibault, former vice-chief of the defence staff; retired vice-admiral Mark Norman, former commander of the Royal Canadian Navy; retired lieutenant-general André Deschamps, former commander of the Royal Canadian Air Force; as well as Ian Burney, former Canadian ambassador to Japan.

Guy Saint-Jacques, a former ambassador to China, said to his knowledge such a high-powered group has never made such a trip to Taiwan and he presumes even if they won’t admit it, the Trudeau government has quietly okayed this visit. “I would say that there’s more tacit support for Taiwan in Ottawa than there used to be before the Meng Wanzhou crisis,” he said.

In late 2018, the Chinese government locked up two Canadians, Michael Kovrig and Michael Spavor, in apparent retaliation for Ottawa’s earlier arrest of Huawei executive Meng Wanzhou on a U.S. extradition request. The dispute chilled relations between Canada and China, and Mr. Kovrig and Mr. Spavor were ultimately jailed nearly three years in a case of what one Liberal cabinet minister termed hostage diplomacy.

Mr. Fadden said the visit will include meetings with representatives of Taiwan’s National Security Council, its Ministry of National Defence and Ministry of Foreign Affairs, as well as the Canadian Trade Office in Taipei, which functions as Canada’s de-facto embassy there.

“The people that I’m going with all share the view that Taiwan’s continued existence as an independent, or relatively independent, democracy is important to all of us – which is why we’re going,” Mr. Fadden said.

The Taiwan government is underwriting the trip but Mr. Fadden said “the Taiwanese have made it very clear that there’s no commitment” on the part of him or the other Canadians. “They’re hoping we’ll learn something, and they’re not asking us to do anything specific. So that was our starting point,” he said.

Canada has not recognized Taiwan as a sovereign state since 1970, when former prime minister Pierre Trudeau switched diplomatic relations to the Communist-led People’s Republic of China on the mainland. But Canada never accepted China’s claim on Taiwan, saying in the 1970 communiqué on the establishment of diplomatic relations with the PRC that it “takes note of this position.”


China has ramped up efforts to isolate Taiwan from the international community, including denying it the chance to participate in global bodies such as the World Health Organization’s regular assemblies, and persuading those countries that recognize Taiwan as a sovereign country to sever relations. In 2000, Taiwan had diplomatic relations with 29 member states of the United Nations, as well as the Holy See, and today the number is down to 12 and the Vatican.

The Chinese Communist Party, which seized power in China in 1949, has never ruled Taiwan, where nationalist forces retreated after losing a civil war to Mao Zedong more than 70 years ago. Beijing’s authoritarian rulers, who consider Taiwan a breakaway province and have never renounced using force to annex the territory, have stepped up pressure on Taipei in recent years.

Taiwan rejects China’s claim on its territory and said it should be up to Taiwan’s 24 million people to decide their future.

Taiwan is Canada’s 12th-largest trading partner and its sixth largest in Asia. Total merchandise trade with Taiwan in 2022 was $12-billion, according to the Department of Global Affairs.

Mr. Fadden said he believes Canada should be more assertive in building ties.

China claims the Taiwan Strait between Taiwan and the PRC as inland waters but today it serves as a major global shipping corridor, with 44 per cent of the world’s container fleet moving through it in 2022, according to the U.S. Naval Institute. About 90 per cent of the world’s advanced semi-conductor manufacturing capacity is located in Taiwan.

“We do not wish, I think, to unnecessarily antagonize the People’s Republic of China,” Mr. Fadden said. “I tend to think that with our ‘One China’ policy, we’re being a bit timid and that we could do more.”

Other members of the Taiwan trip next week include Edison Stewart, a former assistant deputy minister with the Department of National Defence; James Boutilier, a former special adviser in international engagement with Canada’s Maritime Forces Pacific Headquarters; Ian Brodie, who once served as chief of staff to Stephen Harper when he was prime minister; and Jonathan Berkshire Miller, director of the foreign affairs, national defence and national-security program at the Macdonald-Laurier Institute, a think tank.

Mr. Saint-Jacques said this visit sends a very important message that we care about Taiwan. Still, he predicted, Beijing will protest it. “In China, they don’t make a distinction between current officials and former officials.”

Mr. Thibault, chair of the Conference of Defence Associations Institute, said the high-level group is not bringing any message from the Canadian government to Taiwan.

But he said the information that they pick from speaking to Taiwanese political, foreign and defence officials will be shared when they return to Ottawa.

“There has been no endeavour to use this trip to carry messages,” Mr. Thibault said. “We may come back with some fresh ideas to add to the thinking of what could be done in each of the aspects of national security.

“It would be a shame if we didn’t come back and use our collective experience with the visit to add our voice to consideration on how we can move forward with the government’s Indo Pacific strategy.”

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There are some really first rate people in that delegation .

 

[Brad Sallows]

On CBC.ca, a warning that our relative ability to consume is sliding.

"In 2002, Canada's GDP per capita was about 80 per cent of what the U.S. generated — although much of that country's wealth is concentrated in the hands of a relatively small number of people.

But by 2022, Canada's GDP per capita was just 72 per cent of that of its neighbour to the south, a decline that means the U.S. has an even bigger leg up over Canada when it comes to living standards."

I've written about this effect before. Eventually Canadians ought to notice, and it will bother most. If the US was half a world away it wouldn't matter so much, but as we've also discussed here, most Canadians live within an easy drive of a US border crossing and US communities.

 

[daftandbarmy]

On CBC.ca, a warning that our relative ability to consume is sliding.

"In 2002, Canada's GDP per capita was about 80 per cent of what the U.S. generated — although much of that country's wealth is concentrated in the hands of a relatively small number of people.

But by 2022, Canada's GDP per capita was just 72 per cent of that of its neighbour to the south, a decline that means the U.S. has an even bigger leg up over Canada when it comes to living standards."

I've written about this effect before. Eventually Canadians ought to notice, and it will bother most. If the US was half a world away it wouldn't matter so much, but as we've also discussed here, most Canadians live within an easy drive of a US border crossing and US communities.

Yup...

Canada’s recent growth record has received so much attention because it is, quite simply, abysmal. One recent analysis noted that due to weak total growth accompanied by a surging population Canada has actually been in a “per capita” recession for some time. Per-person GDP has declined by 3.4 per cent in inflation-adjusted terms between the second quarter of 2022 and the final quarter of 2023.

BLOG: Canada’s economic stagnation—a big problem for Canadians

Under Prime Minister Trudeau, annual per-person economic growth has averaged just 0.3 per cent.

www.fraserinstitute.org