On Parliament Hill

Why Canadian Standard of Living is in Decline

  • Ted Falk, Author
  • Member of Parliament, Provencher

The Liberal Government loves to tout numbers that show Canada’s economy is growing.

Finance Minister Chrystia Freeland regularly states, “both the IMF [International Monetary Fund] and the OECD [Organization for Economic Cooperation and Development] have forecast Canada will have the strongest economic growth in the G7 this year and next year.”

However, when we dig into the numbers, we find this claim is not only misleading, but that Liberal policies are contributing, to the decline of our economic potential and to a significant decline in the standard of living for Canadians.

To understand this economic sleight-of-hand by the Trudeau Government, we must understand the difference between two economic metrics: GDP and GDP per capita.

Freeland’s “growth” projections are based on Canada’s Gross Domestic Product (GDP). GDP is the measure of the market value of all the goods and services a country produces.

GDP per capita is the country’s GDP divided by its population (the piece of the GDP pie, theoretically, enjoyed by each Canadian citizen).

It is true, if we look at Canada’s overall GDP rate, it appears our economy is growing. However, when we factor in GDP per-capita we see quite the opposite.

Using this metric, the OECD projects that over the next forty years Canada will be the worst performing economy of all 38 OECD countries. That between now and 2060, Canada will see a GDP per capita growth of a meagre 0.7% (the current rate is 0.4%). When compared to the average rate of growth enjoyed by other advanced economies (currently 1.4%) our economic growth is essentially stagnant.

There are two main reasons for this stagnation, one a more long-term problem (though certainly exacerbated by the current government’s policies) and one more recent and entirely of Trudeau’s own making.

First, much of the Canadian economy is composed of protected oligopolies – where control over an industry lies in the hands of a few large sellers who own a dominant share of the market – such as airlines, grocery giants, or telecom firms. As a result, these firms don’t need to be as competitive to stay in business. This lack of competition means they can set/fix higher than average prices for consumers. This lack of competition also means these companies tend to spend less money on research and development resulting in less innovation. This in turn makes them less competitive in global markets so they rely on protectionist policies and subsidies from government. To provide these subsidies, governments must assume additional debt, the cost of which is then passed on to the taxpayers. While this approach has existed for decades, these Liberals have taken things to a whole new level.

Their brand of cronyism, government hand-outs to big business – essentially picking the winners (the big chains) and the losers (mom-and-pop small local businesses) – and red tape (government interference in the supposedly free market) has all but ensured stagnancy in our economy and that wages (and the buying power of those wages) stay low. Add half-a-trillion dollars in unnecessary deficit spending and money printing driving inflation, the already diminished buying power of Canadian consumers drops further still.

Second, this government’s irresponsible and unsustainable approach to immigration.

Part of the reason Canadians are feeling the pinch, particularly when it comes to housing – substitute health care, social services, etc. – is that our supply simply cannot keep up with the rate at which the Trudeau Government is bringing in new immigrants. When you bring in a million new people a year, demand dramatically surpasses supply, and the piece of that per-capita GDP pie gets a little smaller for every Canadian family.

To be clear, Canada’s economy needs immigrants to function. Canada’s low birth rate necessitates this need.

Strategic immigration – targeting skilled workers in key sectors – could and should help drive our economy to greater growth, but this opportunity has been squandered by these incompetent Liberals. Instead of being a boon to our economy and sharing in it, immigrants (through no fault of their own) become a drain because we have failed to set them up for success.

Three of Canada’s major banks, TD, BMO, and the National Bank of Canada, have echoed this concern, recently.

“The federal government’s decision to open the immigration floodgates during the most aggressive monetary tightening cycle in a generation has created a record imbalance between housing and demand.”

According to TD bank, continuing this approach to immigration would “widen the housing shortfall by [an additional] half-a-million homes within just two years.”

Even former immigration minister Sean Fraser suggested capping admissions to Canada – perhaps the only positive, common-sense contribution he made during his disastrous tenure at IRCC.

Sadly, there is no place for common-sense in Trudeau-world.

In Trudeau-world, to raise questions about immigration levels or policies, one is immediately branded a “racist”.

Unlike Justin Trudeau, Conservatives have more to offer Canadians than cheap smears and a failed status quo.

Conservatives have a concrete plan to fix our economy: An economic approach that fosters innovation by promoting competition and common sense. A plan to give Canadians back the standard of living they once believed they could enjoy.