FINA Committee Report

Conservative Pre-Budget Consultations Dissenting Report

Conservative members of the committee cannot support the pre-budget consultation report as it fails to bring home powerful paycheques, lower prices, or homes Canadians can afford. After eight years of failed economic policies, increasing tax hikes and out-of-control deficit spending, Justin Trudeau and his Liberal – NDP government have left Canadians with a cost-of-living crisis and a housing hell. 

Therefore, Conservative members recommend:

1: Axe the carbon tax.

The Governor of the Bank of Canada, Tiff Macklem, admits that the carbon taxes are inflationary and that by cutting the carbon tax inflation would come down by 0.6 per cent, bringing CPI within the Bank’s target range.

The government has an opportunity to start with the carbon tax on farmers. The Common Sense Conservative Bill C-234 should be passed immediately in its original form to take the tax off farmers and to help lower food prices.

It’s time to axe the failed and inflationary carbon tax that makes gas, groceries, and home heating more expensive.

2: No new taxes.

This includes cancelling all planned tax hikes, such as the quadrupling of the carbon tax, the luxury tax, the escalator tax on alcohol, and payroll tax increases. 

3: Stop the inflationary spending. 

A dollar of new spending must be matched by a dollar of savings. This policy, as proposed by the Official Opposition, was endorsed by Minister Freeland in a letter to her own Ministers before last year’s Fall Economic Statement.

This Liberal government must reign in their inflationary deficit spending and address their ballooning debt. The federal government cannot burden future generations with borrowing costs for spending and must work towards a balanced budget.

Background:

After eight years, Canadians are out of money and this Liberal-NDP government is out of touch. Excessive government deficit spending has fueled inflation, forcing the Bank of Canada to raise interest rates 10 times in the last two years. These are the fastest interest rate hikes in Canadian history. Rates are the highest that they have been in over 20 years. The cost of this Liberal-NDP government is driving up the cost of everything for Canadians. 

At the Finance Committee, the Governor of the Bank of Canada confirmed that fiscal policy is rowing in the opposite direction of monetary policy, which played a role in maintaining interest rates at 5 per cent [1] Governor Macklem admitted that upward pressures on inflation are more domestic in nature, such as housing cost, rents, mortgages, food prices; all goods and services affected by the federal government’s policies and spending. [2] His warning that interest rates will remain higher for longer comes as no surprise.

Canadians already cannot afford food, heating, or homes. Those who already own homes are at risk of losing them due to rising mortgage costs and weaker paycheques. More inflation and pain from high interest rates will undoubtedly make things worse.

Goldy Hyder, CEO of the Business Council of Canada, wrote an open letter to Minister Freeland urging her to “adopt a new and credible fiscal anchor, one which would limit debt servicing costs to a maximum of 10 per cent of revenue going forward.” [3]

In fact, the current debt servicing cost, according to the Liberal-NDP government’s own Fall Economic Statement will be $52.4 billion in 2024-25, 10.8 per cent of the federal government’s revenue for the same fiscal year. [4] That means more tax dollars going to bankers and bond holders than to services Canadians rely on.  In fact, Canadians will pay more servicing the debt than on health transfers (health transfers for fiscal year 2024-25 are projected to be $52.1 billion). [5]

Trudeau’s tax hikes and inflation have weakened Canadians’ paycheques and have skyrocketed the price of goods.

According to Canada’s Food Price Report 2024, the total grocery bill for a family of four in Canada is projected to be $16,297 in 2024. That is a $702 increase from 2023. [6] That increase can be attributed to the Liberal – NDP carbon taxes. When you tax the farmer who grows the food, the trucker who ships the food, and the store who sells the food, you tax everyone who buys the food.

The Governor of the Bank of Canada reiterated at committee that axing the carbon tax would lower inflation 0.6 per cent. The Governor has also testified that the carbon tax contributes 15% each year to the upward pressure on inflation. [7] By axing the tax, inflation could ease and slow down the increase in the cost of fuel for farmers and truckers and the overall cost of food, giving much needed relief to the thousands of Canadians who are struggling to make ends meet.

In fact, the Liberal – NDP cost-of-living crisis has had such a negative effect on food prices that Canada now sees 2 million visits to a food bank in a single month, a third of them children. [8] A study conducted by Agri-Food Analytics Lab at Dalhousie University found that nearly half of Canadians are prioritizing the cost of food over nutritional value, while 63% are worried “that compromising on nutrition due to high food prices may have adverse long-term effects on their health. [9]

Another tax cut that could help lower prices for Canadians is the cancelling of the automatic Escalator Tax which increases excise duties on beer, wine, and liquor. This automatic tax increase happens every year without a vote in Parliament and is tied to inflation. Thanks to Trudeau’s inflation, the increase on April 1, 2024, will be 4.7%. [10]

Great concern has been expressed by Beer Canada, Wine Growers Canada, Restaurants Canada, the beer brewing industry, wine producers, distillers, restaurant and bar owners, and the tourism and hospitality industry, that such a large tax increase will directly impact the bottom lines of Canadian businesses, and the pocketbooks of Canadians. It also risks Canadian jobs and other industries that rely on the restaurant, bar, tourism, and hospitality sectors.  

The average rent for a two-bedroom apartment across Canada’s 10-biggest cities is now over $2,300 a month and a one-bedroom is over $1,900. That is compared to almost $1,200 a month and $970 a month, respectively, in 2015. [11] The national average house price in Canada remains 32.2 per cent higher than pre-pandemic prices which were already significantly higher than when this Liberal government took power. [12]

Housing costs take up 69 per cent of Canadians’ paycheques, while monthly payments on mortgages have doubled since 2015. Consumer debt has skyrocketed. Rising interest rates caused by inflationary deficits means that this debt costs even more. In fact, Canadian households have more debt than Canada’s entire GDP, more than any other G7 country. [13] CMHC estimates roughly 75 per cent of household debt is from mortgages. [14]

Canada needs more housing supply, especially as population continues to grow at a record pace. However, housing starts in Canada were 7% down in 2023 and the Canadian Home Builders’ Association warns home construction will slow again in 2024 “unless drastic changes are made.” [15] [16] CIBC projects that Canada will need 5 million new homes by 2030, over the homes already projected to be built each year. [17] That is 1.5 million more new homes needed than what CMHC projected using population data that did not account for the increase in population growth.

On top of taxes, rising prices, and the housing hell created by Justin Trudeau’s policies, Canadians are also facing declining GDP per capita. Since September 2022, GDP per capita in Canada has been declining and is lower than it was in the second quarter of 2018. [18]

The tragic reality is that Canada’s real economic growth is the worst it has been since the Great Depression. [19] From 2016 to 2021, the US had a GDP per capita growth rate of 47.4 per cent, while Canada grew by 4.3 per cent. [20] Canada ranks last among OECD countries for GDP per capita growth.

Former Liberal PMO and Finance adviser Robert Asselin warned the committee, “Canada's GDP per capita has been trending down for several quarters, and without our natural resources, Canada's trade deficit would be structural and significant.” [21]

The uncertainty and red tape created by the Liberals’ environmental, labour, and economic policies, and the burdensome tax code, makes it less attractive for businesses to invest in Canada. Business investment in Canada has been weak since 2015 and the gap between business investments in Canada and the US and other OECD countries has widened significantly. [22]

This is the result of eight years of Justin Trudeau’s taxes, economic malpractice, and failed policies. He’s not worth the cost.

Conservative members are greatly concerned that the pre-budget consultation process failed to prioritize the need to restore fiscal responsibility and affordability for Canadians. None of the recommendations in the report call on the government to fix the budget or address the massive federal debt that shows no sign of shrinking.

As Carleton University Professor Vivek Dehejia told the committee:

“We need a combination of sensible tax cuts and spending cuts that help us balance the government's books in a prudent manner while lifting the burden on average Canadians. We need to hold the Bank of Canada accountable for its mandate to protect the value of our currency and not allow loose, irresponsible monetary policies that have created our present inflation and affordability crisis. Finally, we need to pare back excessive government interference in the economy, which kills entrepreneurship and holds the economy back.”[23]

For all the reasons mentioned above, Conservative members have chosen to write a dissenting report to outline the desperate situation Canada finds itself in after 8 years of Justin Trudeau and to offer our recommendations for this upcoming budget and the future.

Instead of continued inflationary deficit spending and tax hikes, a Common Sense Conservative government will focus on accomplishing four priorities.

1.      Axe the Tax

Conservatives will axe the carbon tax to bring down the price of gas, groceries and home heating. Our Common Sense Conservative Leader Pierre Poilievre has committed to addressing climate change with technology rather than unhelpful and burdensome taxes.

A Conservative government will green light green projects and unleash Canada’s clean and responsible natural resources such as natural gas to displace dirty dictator oil and coal. We will stop sending tax dollars to countries like Venezuela or Saudi Arabia and instead bring home powerful paycheques for Canadian workers.

2.      Build More Homes

Unlike the Liberals plan to fund more photo ops and balloon the bureaucracy, Conservatives will focus on firing the gatekeepers that keep homes from being built and incentivizing municipalities to increase permitting so developers and homebuilders can build, build, build.

Pierre Poilievre’s Build Homes Not Bureaucracy Act outlines the common sense plan Conservatives have to increase housing starts and to build homes Canadians can actually afford. We will make infrastructure dollars to municipalities conditional on whether they can increase the number of new permits per year by 15 per cent.

3.      Fix the Budget

There is only one way to fix the budget: end the out of control, out of touch Liberal-NDP inflationary deficit spending.

Conservatives will fire the $20 billion worth of Liberal insiders and consultants with cushy contracts.

We will put an end to Liberal waste such as the ArriveScam app, the Canada Infrastructure Bank that has built zero projects, as well as the Green Slush Fund that paid out hundreds of thousands of dollars in corrupt grants to Liberal connected board members, and we will end the Canada Growth Fund that advances Trudeau’s UnJust Transition that kills good paying Canadian jobs.

Conservatives will end the Liberal media handouts, including defunding media support measures and the CBC/Radio-Canada.

We will end Trudeau’s tax hikes, such as the escalator tax on alcohol and the luxury tax.

4.      Stop the Crime

 After 8 years of Justin Trudeau, violent crime is up 39 per cent and car thefts are up 34 per cent across Canada thanks to his soft on crime, revolving door justice system.

Under Stephen Harper’s Common Sense Conservative government, violent crime decreased, and car thefts were cut by 50 per cent.

Under Stephen Harper, CBSA grew to 14,000 officers, a 2,000 person increase over the Paul Martin Liberal government. Under Trudeau, taxpayers pay more for CBSA, receive worse service, and end up paying more for management consultants who do nothing to stop the crime.

Conservatives will bring in jail and not bail to keep violent offenders off the streets. We will bring in tougher sentences for violent and repeat criminals, including 3 years for 3 cars stolen.

We will fire the management consultants at CBSA and invest in 75 new officers and 24 new scanners at Canada’s ports to stop stolen vehicles being smuggled out and stop drugs and illegal weapons from being smuggled in.

Conservatives will also respect our law abiding responsible firearms owners, such as farmers, first nations, hunters, and sports shooters, by ending the Liberal attacks on them and instead focusing on stopping 

In conclusion, this pre-budget consultation report fails to address the cost- of-living crisis created by the Liberal - NDP government and their failed economic policies. For all these reasons, Conservatives cannot support the report.