This will mark the second budget delivered with Pierre Poilievre occupying the leader’s seat for the official Opposition and the third budget tabled under the Liberal-NDP confidence and supply agreement. There is also a remote possibility this may be the last budget before the next federal election. Pictured is Finance Minister Chrystia Freeland. Photo Credit: The Canadian Press/Adrian Wyld.
Finally, there’s some good news for Prime Minister Justin Trudeau. Of course, it’s through no fault of his own.
Inflation numbers are seemingly on a downward trajectory, putting Canada’s rate squarely back within the Bank of Canada’s target range for the first time since a brief drive-by last June.
As for cash-strapped consumers looking at mortgage renewals or watching their variable rate, this week’s news leaves the door open for Bank of Canada Governor Tiff Macklem to make good on his comments at the end of last year regarding the potential for rate cuts to enter the picture in 2024. When that will happen is now the million dollar question.
But beware the politician who attempts to capitalize on something as tricky as monetary policy. While economists and experts lauded the inflation rate climbdown, economic uncertainty continues to dominate business and political discourse.
One example that highlights the volatility that exists within the current climate is earning results from Canadian Tire released this week. Despite spanning the Christmas holiday shopping season, profits for the retailer dropped nearly 70 per cent, pointing to a protracted consumer pullback and the impact of high interest rates on household budgets.
According to the Bank, changes to interest policy rates usually take a year or longer to work their way through the economy. That’s what we are seeing now. All signs point to rate hikes doing their job.
Knowing what we know at this critical juncture, we need a response from our elected officials that is pragmatic and responsible. Even if better days may soon be on the horizon, the federal government must ensure it isn’t jumping the gun and spending our way into an ever larger black hole.
The Trudeau government is expected to introduce its ninth budget since coming to power in 2015. This will mark the second budget delivered with Pierre Poilievre occupying the leader’s seat for the official Opposition and the third budget tabled under the Liberal-NDP confidence and supply agreement. There is also a remote possibility this may be the last budget before the next federal election.
The headwinds haven’t changed much over the course of the post-COVID years. Canada is still facing unpredictable economic conditions, concerns about the increasing cost of living and geopolitical uncertainty. Layer in the fact the United States is gearing up for a presidential election in November that could create global headwinds and there isn’t much in the way of good news stories to herald in the opening pages of the fiscal document.
In last year’s budget, the government attempted to solve for affordability by offering up a one-time, $500 dollar “grocery rebate” that only a sliver of the Canadian population was eligible to receive.
While it is the type of retail politics that creates a snappy headline, these boutique cheques contribute to the kind of irresponsible spending that has led to a $40-billion deficit that costs billions to service.
Rather, the government should make good on its commitment to reduce government spending and get it back in line with pre-pandemic levels. While no one should hold their breath in anticipation of a plan to reduce the deficit and find a path back to balance, there are achievable measures that can be taken to demonstrate some goodwill on behalf of Canadians.
Band-aid solutions do nothing to solve the reality most face as they shelve dreams of starting a family or getting a foot in the housing market. Now more than ever, Canadians deserve to have their concerns heard and reflected back to them by the current government. Failure to recognize the gravity of the situation we find ourselves in means leaving entire generations behind.
Josie Sabatino is a Senior Consultant at Summa Strategies, focused on providing strategic insight and helping clients meet their objectives in an ever changing and complex political and regulatory environment. Prior to joining Summa, Josie spent nearly a decade in political communications and most recently served as the Director of Communications to the Hon. Erin O’Toole, former Leader of the Official Opposition.
