I should be used to this by now, but each time another government moves to mess up the economy, I am once again astounded. To say that the third budget from Trudeau the Junior is harmful for the economy is an understatement. It is as if this government does not have any idea how the Canadian economy works. The fact that either the current government does not understand how the economy works, or does not care, is reprehensible.
The Canadian economy is fundamentally no different than any other (non-communist) economy. What makes it go around are millions of transactions by millions of people. I have long been a strong believer that this means it is impossible to micromanage the Canadian economy. Instead what is needed is a consistent set of rules that fosters confidence in the economy. Some of those millions of transactions involve business investment, which is essential for any economy to keep operating in an efficient manner.
Instead of fostering an environment that encourages business investment, we seem to be setting a course which actually discourages investment in the Canadian economy. According to the Conference Board of Canada, among a group of 17 industrialized countries, Canada now has the second lowest level of business investment as a share of GDP.
The central problem stems from an absolute refusal to set any timetable for a return to a balanced budget. This in itself undermines confidence in the economy. But it also weakens the economy. Budget deficits have already led to the need for more revenue, which has led to an increase in taxes. The fact that we are adding to the federal debt at an alarming rate means that more tax increases will occur in the future. How quickly we forget the terrible state that Trudeau the Senior left the economy in when he finally limped from office.
Of course, it does not help that many of the provinces have raised the cost of doing business in Canada by also increasing taxes as well as imposing new regulations on carbon emissions and raising minimum wages, all of which make Canada look like a poor economy to invest in. It also does not help us that the United States has instituted tax reform that now makes the U.S. a more attractive place to invest.
So, instead of helping the Canadian economy, what have we done? The current government spends a lot of time obsessing about gender equality and income redistribution. In a recent article in the National Post, Conrad Black lamented about Canada’s slipping stature in the world. Mr. Black nicely summarized the problems by stating, “Costumed navel-gazing, endless debate about daycare and robotic repetition of the pieties of gender equality were not what inspired the builders of this country, and will not get us to the place of excellence where we belong.” I am reminded of the saying that Nero fiddled while Rome burned. In Canada, Mr. Trudeau navel gazes while the economy deteriorates.
Frank Atkins is a senior fellow at the Frontier Centre for Public Policy.