There are a lot of things we wish the Trudeau government would do.
We wish it would level with Canadians and the House of Commons about what police asked it to do earlier this year before it invoked the Emergencies Act.
We wish it would do a better job of managing long delays at airports, and even longer delays to get a passport. We wish it would fix the refugee adjudication system so that claims were decided quickly, giving speedy asylum to genuine refugees and speedy deportation to economic migrants.
We wish it would create the national pharmacare program it’s been promising since 2015.
The to-do list is long. And yet, when Finance Minister and Deputy Prime Minister Chrystia Freeland on Thursday delivered a keynote speech widely expected to involve new spending to help Canadians dealing with inflation, our hope was that she would do nothing.
And nothing is, thankfully, what Ms. Freeland delivered. Instead of writing billions of dollars in new cheques to Canadians, and pretending that was somehow connected to lowering inflation, her “affordability plan” was a long list of existing programs and commitments – all permanent and none specifically about fighting inflation.
We come not to criticize Ms. Freeland’s targeted inaction, but to praise it.
The politically convenient way to be seen to be addressing rising prices is by giving voters money. That’s what Premier François Legault’s government has done in Quebec, sending $500-a-person cheques and promising another round if re-elected. The payments are financed by borrowed money, as are Ontario Premier Doug Ford’s rebate cheques to drivers and cuts to the gas tax.
When treating a patient, the old medical maxim is, “first, do no harm.” Dropping helicopter money on voters may be politically rewarding, but in a time of inflation, it’s economically counterproductive.
The current inflation is partly about commodity prices and overseas supply-chain blockages, which are far beyond the reach of Canadian politicians. But the rest is caused by an excess of consumer demand – too much money chasing too few goods and services. As such, sending more borrowed government cash to rich and poor alike is a bit like trying to address someone’s high blood pressure by prescribing pills that raise their blood pressure. Or trying to make homes more affordable by giving buyers a purse of taxpayer money to further bid up prices.
The Bank of Canada is raising interest rates to lower demand for goods and services; upping demand by sending voters “anti-inflation” cheques is dipping an oar and paddling in the opposite direction. So a finance minister who announces that the spending in her new anti-inflation “affordability plan” is actually the old, preinflation affordability plan, which is about long-term affordability and which will be around long after inflation passes, is to be congratulated.
For example, expanding low-cost child care and early learning, from coast to coast, will significantly lower parents’ costs. But the idea, in the works for decades, isn’t a temporary scheme to put money in pockets during a bout of inflation. It’s a permanent plan to make it easier for more women to stay in the work force, thereby boosting the economy, while lowering the cost of child care and, hopefully, giving at-risk kids an early educational boost.
It’s a similar story with previously announced enhancements to the Canada Workers Benefit. These payments to the lowest-income workers are a permanent poverty-reduction measure, and effective whether prices are rising or falling.
Ditto the plan for federally financed dental care for low- and middle-income Canadians. A lot of people don’t visit the dentist because they lack dental insurance, and that results in big medical bills and poor health later in life. It’s a long-standing problem, and this is an attempt at a permanent fix. It’s not a temporary anti-inflation measure.
Some of what the government is doing is misguided; for example, the Liberals last year announced that Old Age Security recipients aged 75 and older would get a permanent 10-per-cent increase in their monthly OAS payment starting this summer. It’s pure vote chasing, as much of the money will go to middle- and upper-income seniors.
Some problems can be solved by throwing money at them. Inflation is not one of them.
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