It’s not unfair to dismiss the Trudeau government’s Speech from the Throne on Tuesday as a regurgitation of recent Liberal promises, and devoid of anything resembling a new vision. You couldn’t even say it achieved the more modest goals of being somewhat newish, or sort of fresh.
Instead, the speech delivered by Governor-General Mary Simon could easily have been written a year ago, what with its focus on reconciliation, climate change, vaccinations and, as its title put it, “building a resilient economy” in the postpandemic era.
If anything, the Throne Speech by the second straight Trudeau minority government cements the notion that the election the Prime Minister called in August might as well not have happened, for all the change it wrought.
Perhaps, then, the only way to make the speech interesting is to look at what wasn’t in it – sort of the way Sovietologists used to examine who wasn’t standing next to Stalin during the May Day parade in Moscow, in order to better understand what was going on behind the walls of the Kremlin.
Based on that kind of analysis, the Trudeau government is squarely in the camp of those who are betting that the soaring inflation rate in Canada is a transitory result of the COVID-19 pandemic, and doesn’t require a response.
The Throne Speech mentioned “inflation” only once, and in doing so made sure to call it “a challenge that countries around the world are facing,” just in case anyone thought it was a problem peculiar to Canada.
Fair enough. The supply chain issues brought on by the pandemic, and the jump in energy prices and in consumer demand as COVID-19 restrictions have been eased, are global in scale.
But the government’s two Throne Speech planks in its effort to “keep tackling the rising cost of living” – housing and child care – are responses to issues of affordability that were conceived prior to this year’s jump in the headline inflation rate.
The $10-a-day child-care program that, as of Wednesday, Ottawa had negotiated with every province except Ontario and New Brunswick, would be happening whether inflation was a concern or not. They are unrelated issues, even if it’s true that lower child-care costs will help many Canadian parents balance their budgets as other prices rise.
The Liberals’ housing plans, meanwhile, could actually contribute to inflation. The programs mentioned in the Throne Speech – a First-Time Home Buyer Incentive, a Rent-to-Own program and efforts to reduce closing costs for first-time buyers – make it easier to buy in a hot market by lowering borrowing and administrative costs, which in turn potentially creates more demand and higher prices.
In short, the Throne Speech does little more than grudgingly acknowledge that people are talking about inflation.
That includes the Conservative Opposition, which has been hammering away at the issue, right down to the rising cost of breakfast fare.
But it also includes the Bank of Canada, whose deputy governor Paul Beaudry said in a speech on Tuesday that Canadians could be hit with higher debt-servicing costs as the pandemic fades. Economists expect the central bank to raise its policy interest rate next year in response to recent jumps in inflation.
Canada’s Consumer Price Index (CPI) rose 4.7 per cent on a year-over-year basis in October, up from a 4.4 per cent increase in September. October was the largest gain since February, 2003, according to Statistics Canada.
As worrisome as those numbers are, it is still unclear how long-term the inflation problem will prove to be.
For instance, gasoline prices have risen dramatically, but their current inflation is in part because of a sharp drop in those same prices through most of 2020. If gas prices are stripped out of October’s numbers, the CPI drops to 3.3 per cent, which isn’t that far from the Bank of Canada’s target inflation rate of between 1 and 3 per cent.
If the Throne Speech tells us anything, it’s that the Liberal government is among those hoping inflation will sort itself out in 2022, and won’t turn into an issue that could hurt it at the polls, or affect its own borrowing plans.
We may know more when the government releases a financial update later this fall and has to use a word that got even less play in the Throne Speech: deficits.
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