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Fall Economic Statement – Walking Even Faster to Economic Purgatory

Doubling down on failure

As the House of Commons reconvenes, the spotlight falls on the government’s Fall Economic Statement (FES) as the first item on the legislative agenda. It might seem old, but this government is having difficulty fitting all its repeated economic changes into bill formats that have to proceed through a normal legislative process. 

This Liberal government is addicted to spending – at all costs.  Forget about the effects of government spending on inflation.  They just keep doubling down on financial mayhem.

The latest iteration of this fiscal folly includes another $21 Billion in spending and the notion of NEVER balancing Canada’s finances. 

The Failed Economic Statement

The FES is eye-rolling in the Government’s use of selective and partial information that pats itself on the back – as if anyone can believe this government understands the Canadian economy. Terms like ‘net debt’ (which subtracts your pensions from the ever-mounting government debt) are misleading.  Likewise, the notion of attracting foreign capital (and ignoring the much larger investment dollars leaving Canada) is entirely dependent upon this government’s subsidization of chosen sectors – to the tune of over $4 million per job in ‘chosen’ opportunities – and some of these, ironically, require imported labour.  Of course, the buck will be paid by those Canadians working in less favoured sectors that actually pay taxes. 

The Liberal Fall Economic Statement is doubling down on failure. It is crucial for the government to reassess its priorities and redirect its resources to create a more balanced and sustainable economic future for all Canadians.

The Liberal economic illiteracy is illustrated throughout when the document states ‘nominal GDP is expected to be $32 billion higher than expected,  . . . but this growth is tempered by elevated interest rates’.  As if the higher interest rates aren’t a tool to address the inflation that impacts the very increase they tout.  They’re bragging about inflating nominal GDP, but criticizing the interest rate increases that are a function of high inflation.  All in, with almost 3% increase in population, largely through immigration, Canada’s GDP per capita is falling – which is a clear signal the economy is going in the wrong direction.

Fiscal Anchors Aweigh!

You will recall talk of a ‘fiscal anchor’ from previous budgets – being 40% of Debt/GDP – but that guardrail was crossed some time ago, so its reference is now largely fiction.  But the debt keeps growing.  And the fact that they are consistently missing this target, and growing further beyond it, is really a ruse to keep Canadians unfocused on the fact that the ratio was so much lower before this continued government spending onslaught.   I don’t subscribe to the worth of these metrics, as they are largely only for comparative purposes.  The country is at grave risk of debt escalation and runaway interest payments, should our country enter a financial downturn – which happens in every business cycle. 


I won’t comment on the ‘Housing Action Plan’.  If there is an area that illustrates how badly this government has failed Canadians, it is in reflected in the spiraling cost increases for housing.  New wrapping on an old approach is not going to solve this.  There needs to be wholesale change.  Matching the supply of housing with the fundamental needs of new Canadians has evidently been lost on this government.  The nonsense of the new approach was illustrated quickly, when the new Housing Minister celebrated the conversion of condos in mid-construction to rental units – thus fully utilizing the new tax expenditures.  But – no new housing was being built.  Spending taxpayer money, and NOT providing any new housing supply.

Matching the supply of housing with the fundamental needs of new Canadians has evidently been lost on this government.


There’s the usual virtue of doling out funds for such things as switching to heat pumps; of course, this will require more electricity, again, which is in shorter supply.  Lower supply matched with higher demand leads to price increases.  But electricity is an odd commodity, because in most jurisdictions (Alberta excepted) the price is buried, in whole or in part, by subsidies from various levels of government.  And Albertans have just had another yearly reminder of how close their electricity supply is to the limit when winter grips this province.  Furnaces still need electricity to run – but much of the heat comes from more efficient natural gas.  If it all came from electricity, the outcome for many Albertans in January’s cold spell would have been dire.

The government keeps stumbling forward on legislation for Carbon Capture, Utilization and Storage (CCUS).  Although a less effective measure than the one I proposed almost three years ago – that they voted against – it still needs to move forward. 

But any company that uses our province’s existing carbon capture pipeline won’t get any credits. This is because the reason for building this advanced infrastructure in the first place – to use the carbon storage to make light oil in a way that’s efficient, cheap, and good for the environment – is not allowed because of the Liberal ideology regarding resource production.

No other country does things this way.

The Canada Growth Fund

This is the latest boondoggle. Allocating $7 billion (of a $15 billion allotment) for ‘carbon contracts for difference’ is the next manipulation in ‘sustainable finance’ doctrine –which is just a manner of obfuscating the economic cost of projects.

And for a government that is bent on increasing carbon taxes, this latest missive is another in a long list of subsidies, credits, regulations, expenditures, contracts, and taxes, to arrive at an equation that will otherwise not compute. As much as some Alberta projects will be allocated funding, it does not excuse the non-sensical approach to publicly financing developments with nebulous outcomes.

But the government’s commitment to financial manipulation is solid:  they have openly stated that the metrics for investment will differ project by project – which means the habitual practice of picking winners, with no accountability metrics, and foisting that cost and risk onto taxpayers.  I strongly disagree with this economic manipulation.

In addition, from a pure governance perspective, there is absolutely no accountability for this new Fund. The government is moving the allocation of $15 Billion directly into another fund for easy distribution.  No mandate; no metrics; no aims or objectives – just a blank cheque.  What could go wrong?

Pension Manipulation Creates Retirement Risks

If you’re worried about how politics might affect your pension, pay attention! The government is getting rid of a rule that used to protect your pension. This rule said that Canadian pensions could only invest 30% of their money in any Canadian project. This was a safe way to ensure diversification of risk.

Currently, this vast pool of managed funds is investing the bulk of their investments offshore. If you look at the websites of your pension manager (Canada Pension Plan Investment Board, for instance), you can see clearly that the returns are broken down by investment jurisdiction – and the lowest returns come from investments in Canada and Europe.  The investment managers’ job is to ensure there is enough money in the pool of funds to payout your pension when it is due, so they allocate your invested capital accordingly.  (Recall that I used to work as a fund manager). There is no secret why they are avoiding investing more of your pension savings in Canada under this government.  Projects don’t proceed.  Returns on investment are lower.  That’s quite an accomplishment!  Perhaps, the government can manipulate a different outcome with your retirement savings?

In addition, your pensions will now be governed by the Office of the Superintendent of Financial Institutions (OSFI) – so, more regulatory oversight of an industry that is doing well without that additional costly regulatory burden.  Have you seen the ‘sustainable finance’ norms OSFI is progressively enforcing on Canadian banks?  This proposed change to your pensions is intended to increase manipulation of our financial system to meet esoteric, value-distracting efforts of a burdensome regulatory system.  With higher costs and lower expected returns, this will affect Canadians’ pension returns!

Sustainable Finance Action!

Now this is priceless nonsense:

“Canada is a world leader in climate finance. (financial obfuscation?)  The federal government wants to keep this advantage, including by moving towards mandatory reporting of climate-related financial risks across a broad spectrum of the Canadian economy.”

We know you can’t manage what you don’t measure, and this government has been very selective about what emissions it measures.  But the bigger issue is the transfer of Canadian wealth to well-funded organizations – many of them offshore.  These organizations have nebulous outcomes for the environment, and their use of Canadian taxpayer subsidies results in no Canadian participation in any potential technology outcome.  The transfer of wealth from taxpayers to large corporations, many of which are international, represents billions of dollars moving from working Canadians to these stakeholders.  All while providing solutions that will cost Canadians more in the outcome.  We’re paying twice.  That’s what makes this type of finance ‘sustainable’ for these entities – just not for Canadian taxpayers.

In finance (before the vogue of adding ‘sustainable’ to the practice), the rule is always: ‘Follow the Money’.  ‘Sustainable finance’ mechanisms try to obfuscate this flow of funds – but the beneficiaries of this less obvious government-dictated largesse are getting rich at the expense of Canadian taxpayers.


The Liberal Fall Economic Statement is doubling down on failure. It is crucial for the government to reassess its priorities and redirect its resources to create a more balanced and sustainable economic future for all Canadians. Examine what is clearly not working and adjust or revert.  The essence of good governance lies not in how much is spent, but in how wisely it is spent.

Despite warnings from the Bank of Canada that government spending is the main contributor to Canada’s high inflation, the Finance Minister ignored the calls for moderation and yet again decided to spend on the backs of Canadians, fueling inflation and keeping interest rates high. With these 21 billion dollars of costly new spending, it’s clear that the Minister has not learned from the obvious negative impacts of her reckless spending.  Kicking the growing debt problem down the road has significant effects in the future, but also in the present.  Canada needs a Finance Minister that understands financial principles and the Canadian economy.  This gap has gone unfilled for too long.