44th Parl. 1st Sess.
April 25, 2023 10:00AM
Mr. Speaker, our economy is stagnating, and that is not just in the last year or two, that has been going on for years. Let me explain. Average per capita gross domestic product is stagnating. In other words, average national income has not been growing. Per capita output has not increased in years. In fact, last year it was roughly the same as it was five years ago, in 2017. Flat per capita output, in the face of skyrocketing prices for assets like housing, in the face of skyrocketing prices for consumables like groceries, is the reason why households are struggling to pay the bills. It is the reason why Canadians are feeling the pinch. It is the reason why Canadian families are taking on ever-increasing amounts of household debt just to make ends meet.
Canada's flat per capita GDP is in marked contrast with what is going on in other advanced economies, which are rocketing ahead of us. Research by John Cochrane and Jon Hartley at Stanford shows that real GDP in Canada was just under $44,000 U.S. per person in 2021. In the United States, it was $61,000. That is shocking. American per capita GDP is now fully 40% higher than here in Canada.
However, even worse than the government's record over the last several years is the projection for the future. The OECD projects that Canada will only achieve 0.7% GDP growth this decade, putting us dead last among advanced economies. This projection is an indictment of the government's economic policies over the last eight years, and the government's own budget documents admit to this.
One chart in last year's budget, budget 2022, chart 28 on page 25, speaks a thousand words. It is titled “Average Potential Annual Growth in Real GDP per capita, Selected OECD Countries, 2020-2060”. The chart says that Canada's projected real GDP growth per capita will be dead last among advanced economies. That chart is in the government's own budget documents.
The budget in front of us, budget 2023, does nothing to change this trajectory. The budget in front of us is the seventh budget. It should have been the eighth, but instead of the government presenting a budget in 2020, it proposed an unprecedented power grab by proposing to give the PMO the power to approve taxation and spending for an unprecedented year and a half. While the Liberals backed off from that power grab, they set a dubious record for the longest period in Canadian history without introducing a government budget, and their lack of budgetary planning is beginning to show.
The budget in front of us proposes billions in new spending in the form of consumption rather than investments for things like dental programs that are often covered by existing employer and provincial plans. Rather than meeting our international commitments to the rules-based international order by making much-needed investments in our defence and our military, the government has chosen to spread more consumption in the form of programs that will further fuel inflation.
The budget also proposes billions in new spending in the form of massive industrial subsidies. Failing to heed the lessons of the past, the massive industrial subsidies do not work. In fact, the finance minister said as much last month in Washington. She voiced concerns about large industrial subsidies and warned against “a new mutually sabotaging competition to provide ever richer corporate subsidies”. That was last month.
This month, the government has introduced massive new industrial subsidies in the billions of dollars for large corporations. None of these policies, gobs of new spending on consumption rather than investment and gobs of new spending for massive industrial subsidies, are working. Canadians' standard of living continues to decline, and many economists are now ringing the alarm bells.
I want to quote from a piece published by Jonathan Deslauriers, executive director at the Walter J. Somers Foundation, and Robert Gagné, a professor at the Université de Montréal. It states:
In 1981, Canadians enjoyed a $3,000 higher per capita standard of living than the major Western economies.... Forty years later, Canada was $5,000 below that same average. If the trajectory continues, the gap will be nearly $18,000 by 2060.
This is an alarming analysis. In light of the recent $13-billion subsidy announced for Volkswagen, I would like to quote another part of their analysis. The article states:
Canada now remains stuck in an interventionist logic dedicated to protecting the immediate interests of Canadian companies. Successive governments have failed to move on from protectionist reflexes and impose the necessary reforms: they should have adjusted the regulatory framework to stimulate the competitiveness of Canadian companies in the domestic market. Instead, Canadian companies continue to operate within an outdated institutional framework that does not value competitive forces.
Here is what the authors conclude if the federal government does not change course:
[G]rowth will remain inadequate and our standard of living will continue to quietly decline unless we put competition back at the heart of Canada’s economic strategy.
None of this should surprise us. Massive industrial subsidies never worked in the past and they will not work now. They distort the price of capital, leading to a less efficient allocation of capital with the attendant declines in productivity and wage growth. Low productivity is the path to poverty. The only long-run determinant of prosperity is high productivity.
With respect to our aggregate GDP, our top-line numbers do not look too bad. However, our overall GDP growth is underwritten by Canada's massive population growth. We have one of the highest population growth rates in the world, including in the developing world. That massive population growth is masking low per-capita GDP growth. If the population goes up 3% but GDP only goes up 2%, people are getting poorer.
The master-of-the-universe types, the CEO types and the hedge-fund types are all fine with flat if not declining per-capita GDP growth, provided we have high population growth, because it means more customers for them by the millions, even if that average customer's disposable income is flat and if not declining, because the number of customers times the disposable revenue per customer equals total revenues. What the exact value of the number of customers is and what the exact value of the disposable income per customer is do not really matter if the multiplication of these two values is higher revenues because on the profit-and-loss statement higher revenues means higher profits, which means higher pay and bonuses for the master-of-the-universe types. Meanwhile, ordinary Canadians suffer to pay the bills as their per-capita income stagnates.
Let me finish by saying this: My parents immigrated to Canada. My father immigrated as a Chinese immigrant from Hong Kong in 1952. My mother immigrated as a Dutch immigrant from the Netherlands in the 1960s. They both left poorer countries and places to come to a much wealthier, more prosperous country. Decades later, the reverse is true. We are in big trouble. We are falling behind big time and we have a government that is utterly incapable of arresting this decline in our standard of living.
For all the reasons I have outlined, I cannot support the government's budget and I cannot support the current government.
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Mr. Speaker, not once in my speech did I mention government debt or deficits. I focused on our declining standard of living.
In the five-year period from 2017 to 2021, economic output per capita was flat. We have not had any per capita growth, and that is why Canadians are struggling to pay the bills. The government has focused its economic agenda on consumption rather than investment. In the long run, only through investment, whether private sector investment or government investment in public infrastructure, are we going to get to higher levels of productivity, with the attendant increases in wages and prosperity for all Canadians, but the government has not been doing that.
In fact, it has been doing the opposite, which is why our per capita GDP is now much lower than that in the United States. Per capita GDP here is $44,000 U.S., while it is $61,000 U.S. south of the border. The American economy now has fully 40% higher output, per capita, than we have here in Canada, and that is affecting our ability to pay for social programs, such as health care and education.
That is what the government does not get and is incapable of addressing.
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Madam Speaker, that is an excellent question. There is actually a really good answer to it. NATO, and the U.S. in particular, is asking all countries to spend 2% of their GDP. The problem is that not every country measures that in the same way. For example, the U.K. includes pensions in its 2%. The United States includes their Coast Guard because it has armed vessels. In Canada, our Coast Guard does not have armed vessels, so we do not include it in our 2%.
The other thing it does not account for is what I talked about before, and that is the incredible value that Canada has. We punch above our weight compared with the dollar value of our military capacity. When Canada goes abroad, our troops are so well regarded, as I indicated, that other nations want to line up and be part of the Canadian brigade because of the reputation we have. That is priceless. One cannot put a price on that.
I respect the fact that NATO is trying to get somewhere by saying everybody should spend 2%. However, for starters, it is very difficult to measure. Moreover, the reality is that when trying to measure it, one can exclude things like the value that a country has outside of the monetary portion.
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Mr. Speaker, I will remind the member for Winnipeg North that they are going backward, not forward. They went from 1.34% down to under 1.29% of GDP this year.
They have also gotten very creative with their accounting. They added in veterans' pensions, Global Affairs Canada costs and Coast Guard costs, which we never added in. If we added all of those things in when we were government, we would probably have had 1.5% during the time that we were in Afghanistan.
Yes, we did take a bit of a fall in spending after we pulled out because we were balancing the books, something that the government has no plans of ever doing as it continues to saddle our kids and our grandchildren with its reckless spending.
I will just say this on Ukraine: This budget only has $200 million in it. It is nothing for Ukraine. We supported everything that the government has done in the past, but it is doing nothing in this budget, and that is shameful.
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Madam Speaker, that member is unequivocally incorrect. Conservatives allowed that measure to be expedited, so he should apologize and retract that statement, because it is untrue. If we want to talk about revisionist history, it was the finance minister on those Liberal benches who said, only last year, that we would never see an increase to the debt-to-GDP ratio in this country. What happened? Obviously, they were either untruthful or they did not understand the economic reality. Canadians can judge for themselves. When it comes to the reality Canadians face, they were not doing well before COVID, they suffered during COVID, and they continue to suffer now. For the Liberals to suggest otherwise is untrue.
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Madam Speaker, our emotional colleague gave a very interesting speech.
He told us that Canada is not yet in a recession because the GDP is going up. He is inventing some sort of recession that he calls a “functional” recession, where he tells us the per capita GDP is going down. That means, in his opinion, that the Canadian population is growing too quickly.
First, if we receive too many immigrants, it is likely a sign of economic success. Then, according to the calculation he pulled out of thin air, is he not saying that he thinks Canada's immigration targets are too high?
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Mr. Speaker, in the budget, the debt-to-GDP ratio continues to increase because of the current government's choices. Part of the debt consists of a credit for Quebeckers' pensions. It is included in the calculation of the debt. It is a credit accruing to the government.
Does my colleague believe that it is fair to include Quebeckers' pensions in the calculation of the national debt?
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- Apr/25/23 10:42:04 p.m.
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Mr. Speaker, emergency debates like tonight's are important because they reassure people that the government is doing its job when a crisis arises like the one we are discussing tonight.
We talked about the long term. We know that Canada is not a military or economic power. However, it can play a humanitarian role and provide international development assistance. The UN asks countries like Canada to allocate 0.7% of their GDP to international development. This government is not even at 0.3%. It is doing less than Stephen Harper's government, which was at 0.33%. I am not kidding. When it comes to international development, we are falling short of what the Conservative government did from 2011 to 2015. There is a humanitarian crisis on the horizon in Sudan, and it will be very serious. Despite that, Canada is not doing its part. Will we eventually make the monetary contribution to international development that the UN is asking for?
OECD countries are sitting at 0.42%. Canada is at 0.27%. How can we be worse than Stephen Harper's government when it comes to international development?
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