Trudeau Says Not Slowing Down on Supports Amid Economic Warnings

Prime Minister Justin Trudeau, joined by members of the Liberal Cabinet, speaks to the media at the McMaster Automotive Resource Centre, in Hamilton, Ont., during the final day of meetings at the Liberal Cabinet retreat, on January 25, 2023. (Nick Iwanyshyn/The Canadian Press)

Flanked by all his ministers on the last day of the cabinet retreat in Hamilton on Jan. 25, Prime Minister Justin Trudeau enumerated the supports his government provided to Canadians amidst the cost-of-living crisis and said more would be coming amidst rising interest rates and economic uncertainty.

“We’ve done a lot to deliver for Canadians over the past few months, and we’re not going to slow down,” Trudeau said from McMaster University.

The prime minister said a top issue discussed by his cabinet over the past three days was the “struggles” that families are facing due to rising prices and he went over all the measures put in place by his government over the last month intended to address the issue.

Those include doubling the GST tax credit for a portion of Canadians and implementing dental care for children under 12.

Trudeau also touted the strength of the economy with historic low unemployment and record high participation of women in the economy.

“All of this is keeping our economy and the middle class strong and empowering more people than ever. We know there’s still more work to do to ensure that everyone is benefiting,” he said.

The next big spending item will involve striking a deal over increased health transfers to provinces.

Trudeau said he invited premiers to Ottawa on Feb. 7 to move the discussions forward and that no deal had been reached yet.

He said good deals should be able to be made in the following weeks.

Premiers had been pressing to jointly meet with Trudeau on healthcare, but he had dismissed the idea in late 2022 if no prior deal had been reached.

“When people see premiers meet, it will be to announce that we’re going to improve the system together,” he said on Dec. 20.

Uncertainty

The upbeat tone from Trudeau and the commitment to maintain the current policy direction comes after a number of economists have warned about the coming months.

Some of those economists attended the cabinet retreat to provide their assessment.

“There are some serious risks for the next year as the economy’s most likely scenario is we hit a soft spot,” said University of British Columbia economist Kevin Milligan in speaking to reporters.

“That’s going to impact interest rates, it’s going to impact inflation, it’s going to impact government revenues and the budget situation, so I think we ought to be aware of those short-run pressures.”

Trudeau said on Jan. 25 that targeted supports and the current investments done by his government would lead to longstanding “sustainable economic growth.”

“We can support Canadians without endangering the track that the Bank of Canada has put us on to reduce inflation,” he said.

The Bank raised its policy rate by 25 basis point on Jan. 25 to reach 4.5 percent and said the economy is still in a state of excess demand.

‘Less Fiscal Room’

Finance Minister Chrystia Freeland was less optimistic than Trudeau when she addressed reporters on Jan. 24, saying some budget items would be cut if there is “less fiscal room.”

Associate Finance Minister Randy Boissonnault also said on Jan. 24 that 2023 would be a “turbulent” year for the economy, but that “our task is to fulfill the promises we made to Canadians, meanwhile keeping tabs on inflation.”

“For us its very clear we'll continue with our promises and also have a responsible budget to continue with fiscal prudence.”

Peter Wilson contributed to this report.