The federal Liberals are proving that big government does indeed impoverish the populations they govern.
Canada’s in the throes of a seemingly endless cost of living crisis, and while it’s doubtless a consequence of federal policies like mass immigration and the increasingly punitive carbon tax, the country’s over-inflated civil service is an outsized factor.
Since Justin Trudeau’s Liberals were elected in 2015, the federal public sector has swelled by 42 per cent to nearly 370,000 employees. But because the government doesn’t produce revenue for the economy, bureaucrats are remunerated in taxpayer dollars and freshly printed money.
In 2014, the prime minister infamously claimed “the budget will balance itself,” but his government’s reckless spending has maintained upward pressure on inflation — which Statistics Canada says surged by over 19 per cent between 2015 and 2022. During this period, 31 per cent more executive-level bureaucrats were hired, and their total compensation surged by 42 per cent from $1.4 billion to $1.9 billion, with their average salaries growing from $193,600 to $208,480.
The government confoundingly hired 635 new public executives between 2020 and 2021, when it shut down the economy because of COVID-19. At the same time, it printed billions in income subsidies that were often excessive or poorly targeted, In total, the Fraser Institute estimates that “COVID fiscal waste” will accumulate to $110 billion by 2032.
Moreover, the auditor general found in 2022 that $4.6 billion in Canadian Emergency Response Benefit (CERB) and other payments went to ineligible recipients (dead Canadians, prisoners and children), and $27.4 billion was deemed worthy of a government investigation. Another $9.9 billion in COVID subsidies was linked to more than 51,000 ineligible employers.
The federal government’s deficit per employed Canadian was $1,246 before 2015, but it’s since nearly tripled to $3,482. It’s worth noting the post-2015 deficit per employed person would be much higher without Canada’s recent population boom, prompting the question: are the feds bloating the population through immigration, even though it’s immiserating Canadians, because they’ve lost control of the deficit?
Whether through scandals like ArriveCan or generally pointless transfers, Liberals overspend with predictable results.
There is a causal link between unchecked spending and the price of consumer goods — the larger the former, the more expensive the latter. Moreover, as is the case with the carbon tax, consumer prices are increasing in Canada, and will continue to through 2030 when the tax reaches $170 per metric ton from today’s $80 per metric ton. This is affecting the production and transportation of everything from simple goods to livestock.
The latest StatCan data revealed consumers paid 2.4 per cent more for groceries in August than they did 12 months earlier, with meat and dairy increasing by 6.8 and 3.3 per cent, respectively, while beef prices grew by 7.4 per cent. The carbon tax raising livestock premiums is doubtless at play here.
Financial strain is metastasizing among Canadians, who are taxed to the hilt while their buying power is eroding. Credit rating agency Equifax, noting that consumer debt grew by $2.5 trillion year-over-year in the second quarter of 2024, surmises that multigenerational households are growing in number due to economic strife. The growth is preponderantly driven by credit card debt increasing by 13.7 per cent to $122 billion, averaging a 17-year high of more than $4,300 per consumer.
Consumers’ waning spending habits and mounting debt signifies they’re struggling to meet basic living needs, elucidating the depth of Canada’s cost of living crisis. But it didn’t occur in a vacuum.
In the wake of COVID-19, in tandem with generous income subsidies, the Bank of Canada plunged its policy rate to 25 basis points in March 2020. It remained there for 18 months, sparking a housing rush.
The rapid escalation in home prices was driven by asset-rich Canadians who were able to borrow for pennies on the dollar. And there were many more of them than previously thought, as household savings were in excess of $90 billion by November 2020. Moreover, the money used to inflate asset valuations can also be traced back to the federal government, which exercised little oversight when granting CERB and Canada Recovery Benefit payments.
And yet the Bank of Canada kept its policy rate at an historic low, even while the cost of living rose sharply.
Runaway inflation was the predictable outcome of so much money circulating in the economy for so long, and that eventually moved the Bank of Canada to hike its overnight lending rate 10 times beginning in March 2022. That, in turn, impelled small- and mid-sized businesses to implement hiring freezes before culling their workforces.
What’s curious is that Canada’s real GDP grew by 1.7 per cent during the first quarter of 2024, despite the living standard falling 0.2 per cent, an apparent ramification of Canada’s surging population. Labour productivity declined by 0.3 per cent during the quarter, followed by a 0.2 per cent decrease in the second quarter when 11 of 16 industries saw productivity fall.
But as the economy showed major strain, Canada’s population grew by 1,158,705 in the 12 months before July 2023, 98 per cent of which came from outside the country, even as the labour market buckled. Unsurprisingly, one-bedroom rentals in the Greater Toronto Area broke $3,000 per month in early 2023.
The Royal Bank of Canada reported in June that the national economy, adjusted for inflation and population growth, has regressed by about a decade. Outside of real estate and construction, investment in Canada’s economy has dropped and, therefore, flatlined wages.
Canada’s deindustrialization has been especially acute in the energy, mining and manufacturing sectors, with the latter’s contribution to Canada’s economy halving since 2000. Those private sector productivity shortfalls have adversely affected the country’s GDP and stripped Canadians’ earning potential.
But you wouldn’t know it looking at unemployment figures — and that’s because the government is juking the numbers by growing both the civil service and the country’s fleet of food delivery couriers, who are typically desperate newcomers. And in contrast to the former, the latter live in abject poverty like most of their new compatriots.
National Post