Because Ottawa Has Been ‘So Fiscally Responsible,’ Feds Can Provide More Economic Support: Trudeau

Prime Minister Justin Trudeau listens to a question during a media availability with reporters on the final day of the APEC Summit, in San Francisco, Calif., on Nov. 17, 2023. The Canadian Press/Adrian Wyld

Following a Statistics Canada report that Canada’s GDP fell in the third quarter of 2023, Prime Minister Justin Trudeau provided assurances that his government’s fiscal responsibility of recent years would allow Ottawa to provide Canadians facing “challenging times” with more assistance.

“We’re going to do it in a fiscally responsible way. Because we have been so fiscally responsible over the past years, we have room to respond if there is more to do,” Mr. Trudeau told reporters on Nov. 30 in regard to government spending.

“We know that Canadians are facing challenging times and have for a long stretch now. That’s why we’ve been stepping up with direct supports for Canadians—more investments in housing to create more supply in affordable housing and bring costs of rents and housing down across the country.

According to StatCan, Canada’s economy shrank by 0.3 percent in the three months leading up to September, wiping out the 0.3 percent growth seen in the previous quarter. Meanwhile, exports fell by 1.3 percent and imports declined by 0.2 percent.

“The decrease in international exports and slower inventory accumulation were partially offset by increases in government spending and housing investment,” said the StatCan report.

The Liberal government’s recent Fall Economic Statement claimed that Canada’s real rate of GDP growth for 2023 was 1.1 percent, with growth expected to fall to o.4 percent in 2024. It also found that Canada’s updated deficit for 2023 was $40 billion, with next year’s projected deficit to be $38.4 billion.

The federal Liberals are aiming to keep the spring budget projection of $40.1 billion, and lower the debt-to-GDP ratio in 2024–25 relative to the projection in the fall economic statement. The federal government made new commitments to keep deficits below 1 percent of GDP beginning in the 2026–2027 fiscal year.

Bank of Canada Governor Tiff Macklem recently said that the federal government’s new “fiscal guardrails” would be helpful for Canada’s monetary policy and not add any new inflationary pressures over the next few years.

The Bank of Canada has hiked its interest rates 10 times since March 2022 in an attempt to control inflation, which spiked to more than 8 percent last year. Mr. Macklem said while the tightening of monetary policy was working to reduce inflation, he expected the economy to “remain weak for the next few quarters.”

Trudeau Highlights Government Spending

Mr. Trudeau highlighted the federal government’s affordability measures such as giving out grocery rebates to 11 million Canadians. According to Food Banks Canada’s “HungerCount 2023” report, Canadian food banks saw over 1.9 million visits in March 2023, a 32 percent increase from March 2022 and a 78.5 percent increase compared to March 2019.

The prime minister also mentioned his government’s dental care plan, which will provide coverage for up to 9 million Canadians at a cost of $13 billion over the next five years and $4.4 billion in ongoing funding. He also brought up the statistics that Canada has the lowest deficit and best debt-to-GDP ratio in the G7, and that it continues to have a AAA rating among international bond rating agencies.

“We will continue to be there with a responsible plan to invest in Canadians while the Conservatives continue to propose cuts in services and programs as a way of creating growth, which makes absolutely no sense. We’re going keep investing in housing, in supporting families, in building a better future while we fight climate change,” he said.

In reaction to the news that Canada’s GDP shrunk in the third quarter of 2023, Conservative Leader Pierre Poilievre said the country was facing “high debt, low growth” after eight years of the Liberal government, adding that the prime minister was “not worth the cost.”