Michael Taube: If the Feds Want to Tackle Inflation and the Affordability Crisis, Here Are Some Ideas

The West Block of Parliament Hill is seen through the window of the Sir John A. Macdonald building in Ottawa on May 11, 2022. The Canadian Press/Sean Kilpatrick

Commentary

Prime Minister Justin Trudeau recently met with his cabinet on a three-day retreat in Charlottetown, Prince Edward Island. The purpose was to discuss several issues that many Canadians have blamed him and his government for either causing or perpetuating, including high inflation rates, cost of living and affordable housing.

According to a Nanos Research poll for Bloomberg News, three in 10 Canadians believe government spending is the main cause for high consumer products. “For the average person, it is like an inflationary spiral one cannot escape,” pollster Nik Nanos said. “Government spending increases inflation, the Bank of Canada increases rates and businesses then increase prices to cover rising inputs into goods and services.”

Moreover, federal spending will cause the deficit to hit $40.1 billion in 2023. Increased levels of immigration have caused a housing shortage, and led the benchmark home price to reach a staggering $754,800. “While headline inflation was 3.3 per cent in July,” Bloomberg News’s Laura Dhillon Kane wrote on Aug. 21, “food prices were up 7.8 per cent and the central bank’s aggressive hikes mean mortgage interest costs have spiked 30.6 per cent.”

Is it any wonder many Canadians are currently experiencing a wide range of emotions?

Those who are living paycheque to paycheque are wondering how they’re going to put food on the table. Others can’t figure out how they’re going to buy a new house—or, in some cases, their first home—with skyrocketing housing prices and creeping mortgage rates. Still others don’t know how they’ll ever be able to put money aside for investment purposes, their retirement, or a rainy day fund.

The main reason for this economic uncertainty is ineffective leadership.

While the Liberals claim to have been fiscally responsible since first elected in 2015, the exact opposite has been true. They’ve consistently raised taxes, overspent on infrastructure projects, and hiked public spending. The feds have wasted the taxpayers’ money on programs like a federal carbon tax, national dental care, voluntary euthanasia, greenhouse gas emissions, single-use plastic, legalized marijuana, and so on. The amount of COVID-19 spending has been exorbitant, too.

As Jake Fuss, the Fraser Institute’s Director of Fiscal Studies, noted in a March 9 report, “Prime Minister Justin Trudeau is on track to record the five highest levels of per-person spending (2018 to 2022) in Canadian history.”

That’s why this country is facing high inflation and an affordability crisis. Many Canadians are looking to their government for either solutions or anything that sounds remotely positive.

It’s not looking too promising right now.

Here’s an example. Trudeau and his cabinet discussed the issue of rising housing costs. They claimed it will become one of the government’s core priorities. This is largely due to, one assumes, Conservative leader Pierre Poilievre’s success in tackling this issue in recent months. Yet, the Liberals left Charlottetown without, in the words of CTV News, “any concrete actions on that front.”

This is what Trudeau described as being part of a productive retreat? I’d hate to see one that was unproductive!

What can be done to bring down inflation, tackle affordability and stabilize the Canadian economy? Here are some ideas.

First, make fiscal prudence the main government priority. The PM must stop wasting our money on pet projects like the environment, and start focusing on necessary tax relief for individuals and corporations. Our economy has to get moving, and throwing even more money at an already-bloated state apparatus isn’t the answer.

Second, let the private sector play an important role in reviving our shattered economy. The Liberals’ nanny-state mentality needs to be shelved permanently. Private individuals and corporations must have a real seat at the table, and the marketplace has to be completely opened up to private competition.

Third, end restrictions on foreign ownership and encourage more international investment. Ottawa should use the free market to its advantage to give international investors the ability to start new businesses and/or buy into existing ones. There should also be new tax benefits for individuals and corporations that want to invest here.

Fourth, spend less time focusing on affordable housing, and concentrate instead on making housing more affordable. No one is suggesting the Liberals should ignore the former. At the same time, the only way to revive the entire housing market is to bring interest rates down, make things more affordable and get the economy moving. More Canadians will then believe that buying a new house isn’t a pipe dream, but a reality.

These four ideas (among others) would help reduce inflation and end the affordability crisis. These concepts are obviously foreign to Trudeau and the Liberals based on their political and ideological leanings. If they want to regain the people’s trust, they would be wise to start seriously considering them.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.