Enjoy the Decline

Canada was once a stable economy:

When a country has had a population surge as Canada has, economists say measuring by person gives a better picture of its standard of living, and according to a new study by Fraser Institute that standard is headed for its biggest decline in 40 years.

The study by Grady Munro, Jason Clemens, and Milagros Palacios looks at the three worst periods of decline and recovery of real GDP per person in the country since 1985. They are between 1989 and 1994, years that included a recession, between 2008 and 2011, the aftermath of the great financial crisis,  and this last that began in 2019.

This latest period is unique because even though GDP per person recovered for one quarter in mid-2022, it immediately began to decline again, and by the end of 2023 was well below where it was in 2019.

“This lack of meaningful recovery suggests that since mid-2019, Canada has experienced one of the longest and deepest declines in real GDP per person since 1985,” said the study’s authors.

Between April of 2019 and the end of 2023, when the last data was available, inflation-adjusted per-person GDP fell 3 per cent from $59,905 to $58,111. That is surpassed only by the declines in 1989 to 1992, when GDP per person fell 5.3 per cent and in the financial crisis, when it fell 5.2 per cent, says the study.

The latest decline has lasted 18 quarters, making it the second longest in the past 40 years. Only the decline of 1989 to 1994, which lasted 21 quarters, was longer.

Key, though, are signs that it is not over yet. GDP per person in the fourth quarter of 2023 was down 0.8 per cent from the quarter before, suggesting it is still on a downward track, said the study.

“The decline in incomes since Q2 2019 is ongoing, and may still exceed the downturn of the late 1980s and early 1990s in length and depth of decline,” said the authors.

“If per-capita GDP does not recover in 2024, this period may be the longest and largest decline in per-person GDP over the last four decades.”

Fraser Institute is not alone in flagging this problem. In a recent article for the Financial Times, Ruchir Sharma, chair of Rockefeller International, identified Canada as one of the countries that has suffered a steep decline in real per-capita income growth and a drop in their share of global GDP.

**

If the Liberals wanted to free up another $19.4 billion, all they had to do was to slightly curb the new spending announcements in Budget 2024.

The budget pledged $53 billion in new spending over the next five years. In other words, if the Liberals had simply kept last year’s budget and added a still-high $32.9 billion in new spending promises — any need for the capital gains hike would have been eliminated.

As to which of those new spending promises could have gotten the axe in order to free up $19.4 billion, Ottawa could start by nixing a new $2.4 billion program to ”secure Canada’s AI advantage.” Cancel a poorly planned $2 billion gun buyback, and they’d already be 22 per cent of the way towards avoiding the need for a capital gains hike.

**

Chickens with their heads cut off run around in circles. In politics, the federal Liberals are starting to exhibit this post-mortem behaviour.

Their electoral chances are as good as dead, and their head, Prime Minister Justin Trudeau, seems only tenuously attached to his party.

Article content

Still, they dash around crazily, patching this and launching that, all while sticking to their unpopular policies, ministers and leader.

Article content

Environment and Climate Change Minister Steven Guilbeault, the core cabinet fowl who said no new roads should be built in Canada, continues to press his climate extremism.

The result is political fiasco.

Alberta and Saskatchewan have always been bitterly opposed to many measures. But Guilbeault is now losing support from the public, provincial governments that once were at least neutral and, crucially, the powerful climate action lobby.

The disasters are self-inflicted. Trudeau and Guilbeault stuck to the carbon tax even after the policy’s disastrous deflation by the “carve out” for home heating oil, a benefit mainly to Atlantic Canada.

Their faux-tough response — nobody else gets that, dammit! — actually cost farmers a break that had been planned, but suddenly looked like another exemption. ...

Now, Guilbeault has introduced amendments to the Impact Assessment Act, allegedly bringing it into line with the Supreme Court ruling that found the law seriously intrudes on powers rightly belonging to the provinces.

Guilbeault has never acknowledged this was a defeat. He treats the ruling as a simple policy problem rather than a 5-2 thumping by judges not usually known for hostility to federal power grabs.

Alberta was predictably furious about the amendments. Premier Danielle Smith always said Guilbeault would make a gesture and proceed as usual, forcing yet another court challenge.

“When you look at the unconstitutionality of the first draft, you can’t just make tweaks and bring this in line with the Constitution,” says Rebecca Schulz, Alberta’s minister for environment and protected areas.

“That’s really the issue here. Minister Guilbeault still has the ability to involve himself in projects that are within provincial jurisdiction.

“In the end, this piece of legislation remains unconstitutional. We are going to be taking this back to court and I’m confident in our position, because their changes don’t actually address the issues that we’ve raised.”

**

That is not going to happen:

Canada’s access to information watchdog says she is facing a $700,000 budget shortfall that will hamstring her ability to hold the government to account and is calling on the Liberals to fix the “unacceptable predicament.”

Other tid-bits from the most "transparent" government in the country's history:

Liberal MPs yesterday opposed disclosure of payments to pharmaceutical companies for “safe supply” opioids. Police confirm narcotics bought at taxpayers’ expense are being diverted to the black market at drug dealers’ profit: “Is this true?”

**

Managers in Foreign Affairs Minister Mélanie Joly’s department yesterday dismissed an internal audit that found they breached contracting rules 26 percent of the time. “We generally do comply,” one executive told MPs: “We can do better.”