2019 Election – High Stakes, Stark Choices
This fall Canada faces a consequential election, with high stakes and stark choices. They can opt to continue down Justin Trudeau’s “Sunny Ways, Postnational state” path (lacking core identity/identity politics driven) or shift to a down-to-earth, pragmatic one, like that espoused by the Conservative’s Andrew Scheer.
I am very concerned with the path Justin Trudeau is leading us down and here’s why:
Canadian economy is faltering
While the US economy has been red-hot over the last two years, ours languishes at approximately 65 per cent of US growth, and slowing. Comparing the US and Canadian stock markets (a good economic performance/outlook proxy), Canada’s TSX is up a paltry approximately 9 per cent (barely keeping pace with inflation) under Trudeau, vs. the US Dow Jones Index which is up approximately 47 per cent. Add in a slowing world economy (led by China), things are not looking good. Ten years since the last recession, and nothing to show for the record-high deficit spending. Now is not the time for growing deficits – $21.3 Billion in 2019/20, unbalanced until 2045 (vs. 2019 as promised). Compounding this, is shrinking Foreign Direct Investment (falling 65 per cent in 3 years), and lagging innovation (stemming from failing innovation policies). Canadians should demand more responsible fiscal management from government.
Canadian trade at risk
Over 66 per cent of our GDP is tied to trade, yet under Trudeau’s leadership, we have seen widening trade deficits ($2 Billion in November). The trajectory of our flawed climate/energy policies, a less business-friendly environment and the US becoming a net energy exporter, combine to create big economic headwinds. Sadly, Trudeau’s virtue signaling/criticisms of the US president have led to a deteriorated US administration relationship, despite it representing 76 per cent of our trade. Historically, Canada has had a small trade surplus with the US, but the new USMCA (NAFTA 2.0) could change all that. Only time will tell. However, there are real risks it could get worse, as US congressional approval is pending.
The necessity to diversify trade beyond the US is clear, but turning towards untrustworthy China, already our second largest trading partner, would be most unwise. They are communist, lack rule-of-law, abuse rights, steal intellectual property, and ignore WTO trade rules. Going decades unchecked, their actions drove rapid growth to become the number two global economy, and a 0.5 Trillion US$ global trade surplus. Canadians clearly understand this, witnessing China’s recent threats and abuse of our citizens over Huawei’s CFO arrest and their rejection to real security risks over its 5G networking gear. Team Trudeau continues to botch the China file, with the firing of Ambassador McCallum being just the latest debacle. The US, Japan, Australia and others don’t trust Huawei (under state control), and neither should we. Love him or hate him, Donald Trump deserves credit for being the only world leader to take strong actions to counter/change China’s decades of misbehaviour. In contrast, Trudeau has done little, perhaps worse if he chooses to “engage, deepen and improve our trading with them ”.
Beyond the US, Canada runs trade deficits with many countries making up the remaining 24 per cent of our trade, led by China ($36B), and the EU (approximately $14B despite a new 2016 trade agreement Trudeau signed). Confidence in his government to properly manage the trade file is diminished. We can only hope the recently ratified CPTPP turns out better for Canada.
Trudeau’s much hyped middle-class tax cuts never happened. Instead, taxes increased for most families, after quietly removing some tax credits and deductions. As for the tax increases on the top 1 per cent, instead of growing tax revenues as promised, they actually declined. It was a grand illusion.
Migration and refugee issues
Last year, approximately 68 million people were considered displaced (37 per cent refugees), historically centered in Europe, the Middle East and Africa, but now we see a growing Latin America migration crisis. To understand its scale, the failed socialist state Venezuela alone has seen 3 million flee, with 5 million more likely to follow. Combined with a porous US-Mexico border, the risks to the US and now Canada becomes evident. Trudeau’s naive and reckless tweeted invitation to “refugees” in early 2017 (virtue signaling to contrast himself to Trump) opened the flood-gates leading to a doubling of refugees to 49,000 in 2017, with 2018 to exceed 50,000. Over 36,000 avoided border checkpoints. The majority were from Nigeria, Haiti and Congo, so most should not qualify to stay under the Safe Third Country agreement, yet just one per cent have been removed. It will take years to process them, costing tax payers over $340 million last year (excluding provincial costs) and it continues to rise. It has made a mockery of our once admired immigration system.
Europe’s recent failed refugee experiment clearly demonstrated that welcoming too many too quickly, without adequate planning/resources, brings trouble and backlash. It was a primary factor leading to UK Brexit, the demise of Germany’s Chancellor, the collapse of left/centrist parties in Austria, Italy, France, Hungary, Poland, and rising anti-EU and nationalist sentiments across Europe. Trudeau’s vision lacks border respect, showing he learned little from the recent European and USA decades’ long immigration fiasco. Recklessly welcoming the world’s displaced people is not the answer to this crisis. More broadly, a discussion about long term sustainable immigration rates is overdue. I plan a future article on this important topic.
Flawed climate-change and energy policies
Trudeau’s “bold” climate-change action plan, with its carbon-tax center-piece (he disingenuously calls it “taxing pollution”) is a sham. Not surprising, since he along with other leaders were played in the Paris Climate Agreement by China – committing impossibly large carbon emissions reductions that will clearly hurt the economy, while letting the worst offenders (China and India and others) off entirely. There are much more responsible & effective actions than a symbolic carbon tax to drive CO2 emission reductions. Trudeau is flat wrong to claim fighting climate-change and growing the economy go “hand–in–hand”, significant costs and trade-offs are a reality.
So it turns out Justin Trudeau’s “Sunny Ways, Postnational state” was a “naive dream”, now exposed by a disappointing track record of few accomplishments, broken promises, and stumbling on important national and international files. Now is the time to start examining the leaders’ promises, plans and actions on issues that matter most. As for me, I’ve already decided. Facing an increasingly uncertain future, I will opt for a more pragmatic, realistic and less flashy PM.
Dave Wilkin is a UofT graduate with a Masters degree in Electrical Engineering, and a professional engineer. His career spans 40 years mostly in technology, consulting and banking. He has worked at IBM, Scotiabank, and a number of Canadian technology and professional services companies, in consulting or senior management roles. He is semi-retired, now living in Huntsville, but keeps active in consulting as a founding partner in a new consulting firm.
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