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Coles Notes Version. Canada is In Trouble… Thanks Justin


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Business investment down in Trudeau era

The Trudeau government presided over an alarming drop in private sector business investment in Canada in the five years before the COVID-19 pandemic hit in 2020, according to a new study by the Fraser Institute.

The report by Steven Globerman and Joel Emes says almost half of Canada’s major industries experienced an overall decline in investment during that period, endangering Canada’s international competitiveness, productivity and prosperity.

 

“From 2015 to 2019, despite the absence of a major recession (as Canada experienced in the early 1990s and 2008-2009), more domestic industries experienced decreases in capital investment than at any time since 1990,” the study says.

“While the oil and gas industry experienced the largest and most high-profile decline in investment (48%), other industries including agriculture, forestry and fishing (19%), utilities (19%) and retail trade (11%) also experienced meaningful declines.

It’s not as if the Trudeau government doesn’t know about the problem.

As then finance minister Bill Morneau told CTV’s Evan Solomon in 2018, “if businesses don’t invest to create great jobs, then we won’t have the future that we want in our country.”

Of the 15 major private sector industries surveyed in the report by the fiscally conservative think tank, “Industry-Level Private Sector Capital Expenditures in Canada: 1990-2019”, seven experienced drops in investment from 2014 to 2019, including agriculture; mining, quarrying and oil and gas extraction; utilities; retail trade; administrative services; accommodation and a final category called other services.

Eight had increases, including construction; manufacturing; wholesale trade; transportation; information and cultural industries; finance; professional and scientific services and arts and entertainment.

However, that ratio of eight sectors gaining investment while seven experienced declines from 2014-2019 was the worst performance in any five-year period going back to 1990-1995,  when 11 of the 15 sectors experienced investment increases, followed by all 15 sectors from 1995-2000, 12 of 15 from 2000- 2005, 11 from 2005-2010 and 13 from 2010- 2014.

The good news is that overall business investment has improved since 2014-2017, when two-thirds of Canada’s major private sector industries experienced investment declines.

The bad news is that in the key category of new investments in machinery, equipment and intellectual property products (such as software), which is most directly linked to productivity and wages, all but three major sectors — manufacturing; information and cultural industries and finance — showed declines from 2014-2019

The study says while political debate in Canada focuses mainly on well-publicized declines in investments in the oil and gas sector — which is hampered by a lack of pipeline capacity, meaning these resources have to be sold at a discount — the problem is far more widespread.

“In a troubling trend, a wide range of industries in Canada have experienced a decline in investment, which is bad news for the economy,” Globerman said.

“The country’s recent weak investment performance, especially in machinery and equipment plus intellectual property products, which is so critical to improving productivity, augurs poorly for future productivity growth in Canada’s private sector and underscores the urgency of tax and regulatory reforms to strengthen incentives for investment and entrepreneurship in Canada’s business sector.”

The report warns the Trudeau government, “is seriously underestimating the magnitude of Canada’s competitiveness problem, and that stronger measures should have been taken to improve Canada’s fiscal and regulatory environment for business and investment” including reducing corporate and personal taxes and eliminating regulatory red tape and legal restrictions, particularly for pipelines.

 

https://torontosun.com/opinion/columnists/goldstein-business-investment-down-in-trudeau-era-report

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Stephen Harper blasts woke culture in latest podcast appearance

July 28, 2021Linkedin
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Former Prime Minister of Canada Stephen Harper’s latest podcast appearance was filled with hard truths for Canadians. Harper tackled questions on the woke left, pandemic response, fiscal policy, China and globalization during his American Optimist interview with Joe Lonsdale.

“What’s so threatening about…the far woke left,” according to Harper, is that “its goal is authoritarianism.”

Harper connected the behaviour of the modern left to the totalitarianism at the root of Marx and Engels. Marx’s view was that his “opinions were not opinions, they were science… Therefore, since you’re arguing against facts, you get to the Soviet mentality that all dissent is essentially a mental illness or something that needs to be reeducated and corrected.”

This is a startling trend in today’s COVID-era, as activists and politicians have dismissed serious concerns about government-mandated lockdowns and questionable public health orders. The Trudeau government has often dismissed its critics by accusing them of spreading “misinformation” and “conspiracy theories.”  

 

Regarding Canada’s COVID-19 response, Harper said, “this is bad macroeconomic policy on an enormous scale” and that the government reaction has “been overkill.” Harper expressed concern over consumer inflation, asset inflation, bubbles and the inevitable interest rate hikes which will impact investment. 

Sooner or later, he said, Canadians will come to realize that all of this supposed “affordable government spending is not so affordable.” 

Canada’s federal debt surpassed $1 trillion dollars this year following a frenzy of pandemic spending by the ruling Liberal government. Further, in its latest budget, the government revealed a whopping deficit of $354 billion with no plan to pay down the debt and balance the books.

Harper is hardly the first to criticize the Liberal spending throughout the COVID-19 pandemic. Economists from the Fraser Institute released a study in June 2020 saying that “stimulus spending will likely harm Canadian economy—not help it.”

Harper struck at the root of the issue, saying that “what’s happening right now… [is that these] bastardized Keynesian fiscal policy guys or modern monetary theorists [are] trying to convince the population that the fundamental principle of economic science is untrue.”

Harper goes on to discuss the problems of globalization: “At the end of the cold war, all common sense on economic interaction related to national security went out the window, and we just assumed everybody … is going to be a friend … so we can trust them with anything. That has to change.”

One of the most criticized aspects of Canada’s COVID-19 pandemic response has been the Liberal government’s trust in China. While multiple countries were developing vaccines, the Canadian government chose to only pre-order doses from CanSino Biologics. The government even sent the company a cash advance for vaccines that were never delivered to Canada.

According to Harper, we must ensure our supply chains do not depend on unreliable countries and that “we have redundancy in terms of sources of supply.”

Despite his concerns, Harper believes that Canada has a “great future.” Still, Canadians must realize that “the adolescent ego of the woke university crowd is not an alternative governing philosophy for any society.” 

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Ottawa could be posting budget deficits until 2070

ADDITIONAL SPENDING PROGRAMS COME AT A HEFTY PRICE, BUDGET OFFICER REPORT SAYS

  • Calgary Herald
  • 29 Jul 2021
  • JESSE SNYDERA

The federal government could be running budget deficits until 2070 if current spending plans are not altered, according to estimates by the Parliamentary Budget Officer that have spurred warning calls over Canada's fiscal position.

The Liberal government under Prime Minister Justin Trudeau has heaped on numerous new permanent spending programs in recent years, including a planned national childcare program, expanded Employment Insurance, increased elderly benefits and bigger transfers to provinces for infrastructure, among other things.

That, along with drastically weakened fiscal positions in the provinces and territories due to the COVID-19 pandemic, has substantially extended the timeline for when Ottawa might return to balance, according to the PBO'S Fiscal Sustainability Report (FSR). Reaching surplus could now take until 2070, up from 2023 just months before the pandemic struck.

The FSR report does not present a real-world expectation that Canada will not post a single surplus for almost 50 years, as individual governments could return to balance by cutting spending or hiking taxes. Instead, the PBO says, it seeks to illuminate the public on what would happen if Canada's current fiscal plans were extended over a long period of time.

The PBO report, released earlier this month, determined that Ottawa's fiscal situation remains ultimately “sustainable,” but also raised deep concerns about Canada's fiscal health, particularly amid ballooning elderly benefits costs and a massive fiscal gap in the provinces and territories.

“Overall, it paints a picture of unsustainability for finances, both federal and provincial combined,” Parliamentary Budget Officer Yves Giroux said in an interview. “And that is the big elephant in the room that nobody seems to be worried about or wanting to address.”

Sizable new social spending plans by Trudeau, including an estimated $30-billion childcare program over five years, have limited the federal government's ability to support lower orders of government, he said.

And that trajectory is expected to persist well beyond the COVID-19 pandemic. The PBO projects that temporary spending programs introduced during the pandemic to aid people and businesses, which caused federal spending levels to spike, will quickly fall as public lockdowns are eased.

“The federal government's fiscal room has been eaten up by additional successive spending initiatives at the federal level, which has not relieved the pressure at the provincial level,” he said.

Still, as long as new spending measures are not introduced, long-term debt projections are expected to fall. Canada's net debt is projected to fall through 2038, according to the report, down to 37.3 per cent of gross domestic product from around 50 per cent today.

But longer-term issues like Canada's aging population will continue to weigh on public finances. The PBO expects that annual costs for elderly benefits will peak in 2032 at $115 billion, doubling from $56 billion in 2020. Elderly benefits costs as a percentage of GDP would in turn increase to 3.1 per cent, up from 2.6 per cent today.

That will in turn put immense strain on provincial health care systems, which are currently not equipped to handle a sharp uptick in demand for services.

The oil-dependent provinces of Alberta, Saskatchewan, and Newfoundland face the most difficult fiscal prospects of the provinces, after commodity markets crashed in mid-2014, sending prices into a nosedive before they began to improve again in 2021.

Newfoundland faces a particularly dire fiscal outlook, and recently commissioned a group of experts to propose “transformational” changes that might help get the province back on track.

Combined, all provincial and territorial governments in Canada would need to cut spending or raise taxes by $18 billion in order to close their fiscal gap, which has widened significantly as pandemic lockdowns dried up government revenues.

The broader financial situation in Canada prompted the Canadian Taxpayers Federation (CTF) last week to call for better fiscal prudence from Ottawa, citing the PBO'S estimate for deficits until 2070.

Finance Minister Chrystia Freeland has declined to present a long-term plan to return to balance or cut spending, saying the government has instead been focused on ensuring federal stimulus dollars help spur an economic recovery.

“If things don't change, Canadians will lose out on a tonne of money to the bond fund managers because of government debt interest charges. That money can't go to health care or lower taxes because of these huge debt interest costs,” CTF director Franco Terrazzano said in a statement. “Politicians should not be OK with five decades of red ink and families shouldn't be forced to pay for all the overspending, so we need the feds to roll-up their sleeves and save some money.”

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The thing that has me a little unsettled is that most of the young professionals I know who have their **bleep** together are actively planning to leave Canada. From hunting down grandpa's EU birth certificate to seeking jobs with international companies that they could transfer abroad within.

It reminds me of a South African I used to work with who's high school reunion was in suburban London because his entire graduating class had just left over the intervening decades and most of them were living in or around London. These weren't hardcore ideological Afrikaners, it was a pretty liberal school primarily attended by english and jewish students and they left because the economy was a mess and their opportunities were poor relative to anywhere else in the world.

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Rex Murphy: Starship Canada takes the federal budget where it's never gone before

No balanced budget until 2070? No worries. There won't be an economy by then, anyway

Author of the article:
Rex Murphy
Publishing date:
Jul 28, 2021  •  1 day ago  •  3 minute read  •   713 Comments
 

Justin Trudeau, dressed as Han Solo from Star Wars, holds his son Hadrien as his wife, Sophie Trudeau-Gregoire, dressed as Princess Leia, looks on, while trick-or-treating on Halloween in Ottawa in 2015. Rex Murphy says Starship Canada is taking federal budgets places budgets have never gone before. Justin Trudeau, dressed as Han Solo from Star Wars, holds his son Hadrien as his wife, Sophie Trudeau-Gregoire, dressed as Princess Leia, looks on, while trick-or-treating on Halloween in Ottawa in 2015. Rex Murphy says Starship Canada is taking federal budgets places budgets have never gone before. PHOTO BY JUSTIN TANG/THE CANADIAN PRESS

Article content

I saw a most interesting headline in the National Post, the burden of which is that we, Canada, could possibly not see a balanced budget till 2070. (I’m all for “long-term planning” but this seems a little extreme.)

Rex Murphy: Starship Canada takes the federal budget where it's never gone before | National Post

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Not surprised by the trend of educated professionals in “clean tech” bailing for more lucrative waters……this was from 2018:

Quote

Canada’s best and brightest computer engineering graduates are leaving for jobs in Silicon Valley at alarmingly high rates, fuelling a worse “brain drain” than the mass exodus by Canadian doctors two decades ago, according to a new study.

The study, led by Zachary Spicer, a senior associate with the Munk School of Global Affairs’ Innovation Policy Lab at University of Toronto, found one-in-four recent science, technology, engineering and math (STEM) graduates from three of the country’s top universities – University of Waterloo, University of British Columbia and U of T – were working outside Canada.

The numbers were higher for graduates of computer engineering and computer science (30 per cent), engineering science (27 per cent) and software engineering, where two out three graduates were working outside Canada, mostly in the United States. Nearly 44 per cent of those working abroad were employed as software engineers, with Microsoft, Google, Facebook and Amazon listed as top employers.

https://www.theglobeandmail.com/business/technology/article-canada-facing-brain-drain-as-young-tech-talent-leaves-for-silicon/
 

I don’t imagine things have slowed considering the lack of investment capital and the deficit spending which has become a way of life for the government. The slogan “make the rich pay” is not lost on a young professional that has options.

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