By Dave Wilkin
The recent Canadian Federal budget was heavily promoted across the country by PM Trudeau and his ministers weeks prior to budget day, and it continues. Yet, according to recent polls, there has been no budget bump for the Liberals. Instead, support continues to erode as the Conservative lead has grown to over 20 points. The response to the budget was underwhelming, and according to an Ipsos poll, the number who called the budget bad outnumbered those who rated it good by over two to one. In response, we now see PM Trudeau attempting to manage expectations, saying the uptick in national support hoped for now won’t happen until next year.
Is that likely? In my view, it’s not.
According to a recent Abacus poll, rising costs and housing affordability are the two top issues. Note that in that poll, the Liberal government’s signature file, climate change, didn’t even make the top five. Little wonder then to see the budget’s main focus was on these top issues and, in particular, their impacts on the younger generations.
On housing, the budget earmarked $8.5 billion in new spending to help address the roughly 3.5 million home shortfall the CMHC forecasts by 2030 (about 45 percent is in Ontario). That works out to about $2,400 per home, which, using the current average national home price of $710,000, represents just 0.34 percent of the cost. For context, national new home building inflation was 6 percent last year.
Other budget measures also targeted housing affordability, including 30-year mortgages and an increase in the amount that can be borrowed from RRSPs for first-time new home buyers. Both of these will do little to boost affordability, but they may increase demand in a supply-constrained market, putting even more upward pressure on prices. They also come with consequences for purchasers’ financial future.
Most Canadians know that Liberal immigration policy drove Canada’s rapid population growth, which expanded 1.3 million in the past year alone while placing Canada near the top growth rate globally. It also pushed a tight housing market deeper into crisis. In Ontario, house prices doubled in just eight years.
There are no quick fixes, and certainly not by next year. Most Canadians have figured out that the budget will have no material impact on boosting housing supply and affordability.
The government also attempted to project some budget fiscal discipline by paying for its big spending increases with an increase in capital gains taxes. Trudeau characterized it as targeting the ultra-rich, claiming that it impacted just 40,000 Canadians. That turned out to be false. It will impact millions of Canadians who own investment/vacation property and over 1.3 million corporations, including doctors that incorporated. In total, it probably ticked off well over a third of Canadian voters, including many Liberals. The vast majority of them probably do not consider themselves to be ultra-rich, and many likely found it insulting. It’s also widely seen as yet another headwind for entrepreneurism and business investment.
The government is hoping that increased spending will help ease the pain of high and still rising costs. But when combined with growing provincial/municipal government spending & deficits, it’s making the Bank of Canada’s goal of lowering interest rates to ease the economic pain from elevated debt levels much harder.
Lastly, noticeably absent from the budget was a focus on improving productivity and lagging business investment. The Bank of Canada calls it an emergency, and without improvements, Canadian prosperity will continue to erode.
It’s little surprise then that the budget didn’t improve Liberal polling. It’s hard to understand why they thought it would. Desperation perhaps?
This is a guest commentary by Dave Wilkin
Dave Wilkin is a Professional Engineer, with a master’s degree in Electrical Engineering from the University of Toronto. His career spans over 40 years in Information Technology, banking, energy, and consulting. A former resident of Huntsville, Ontario, he now lives in Burlington but still spends time at his Huntsville area cottage.
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Let’s be honest. When we vote, the only choice we have is no choice.
You vote for the person/party that you think will create the least damage.
Yet you compare Canada to the United States, Canada looks good!
Damned if we do and damned if we don’t! Politics driven by greed and profit.
The rich and upper class never suffer only the working class and poor.
Dave, Canada’s current problems are not unique, and Canada is managing them as well or better than most other countries. The US has the same or worse problems with immigration, housing, inflation, energy, emissions etc. And their climate crisis continues to accelerate. Of course, its in the interest of political opponents to amplify those problems but let’s check out some facts.
• What’s wrong with asking the top10% to pay a little more towards stabilizing the climate, defense, etc. Or is it better to just leave the top 10% alone and charge those who have no investments, no secondary residence, or no hope of having a primary residence? The few countries that appear to be doing better than Canada all have a more equitable playing field. Their top 10% pay more sales tax (up to 25% in Europe), and yes more capital gains tax. Check out the data.
• Opposition parties complained about Canada being too slow absorbing refugees from Siria, Afghanistan, the Ukraine, etc. and then complained again when immigration was speeded up. What are their magic solutions?
• Housing costs went up 60% under Harper, and 55% under Trudeau. But do the provinces not claim responsibility for housing and resist loudly when the feds try to help?
• Defense spending was frozen under Harper and increased substantially under Trudeau.
• The Liberals are investing to get in on the ground floor of the clean energy, transportation, and industrial systems of the future. The early bird gets the worm. And they built the Trans Mountain and Coastal Gas Link pipelines, so Canada can share our resources with less fortunate countries while they make their own transition. Those early investments will pay off handsomely in our GDP, productivity, and national reputation.
Poilievre’s divisive and backward approach of clinging to old energy, environmental practices, and economic thinking would take our much-envied country sharply backwards in reputation as well as economic performance. Let’s hope voters wake up before its too late. However, its unlikely any of the other 4 parties will agree to form a government with the hyper-abrasive Mr. Poilievre. The only poll that counts is on election day.
It seems the writing is on the wall for the federal Liberals and their NDP crutch. Have always been a Conservative but am surely not a fan of Poilievre. Sound bites and bluster and not any visible plan. But the country sure is adrift with no real plans or focus. A Conservative majority is suggested, maybe even assure.
We are all aware of and have suffered from majority governments, both Liberal and Conservative. Majorities seem to be the result of voter repulsion of the party in power rather than the opposition having good plan and policy. Trudeau had a few majorities in a row but now we can see there was a ‘best before date’.
One sore point in today’s environment is the lack of housing. Something our provincial leader was going to put an end to. We can see how that is turning out. It’s the market that dictates in that field and the government be damned. Premier Ford has found that out in spades. So I don’t necessarily see that as a Federal shortcoming, though their immigration policy isn’t helping.
But in a couple of years, with our new Conservative majority, all our problems are to be swept away? Almost guaranteed according to some opinions here on Doppler. There will be a home on every lot and “a chicken in every pot” so to speak. We can hope, but I see a pretty tough job for our next federal government, no matter what party. Our ‘provincial majority’ isn’t any bright and shining star.
Guess we’ll just have to wait and see. And watch for the ‘best before date’ on another majority government.