Economic issues from inflation to housing and the cost of a tank of gas were the top concern for opposition parties Wednesday as they grilled Prime Minister Justin Trudeau in the first Question Period since June and against the backdrop of rising consumer prices.
Parliament’s return this week coincides with the biggest consumer price surge in nearly two decades that is eating away at the purchasing power of a dollar and eroding wages. The resulting affordability concerns are being seized on by all parties in the House of Commons as the Liberals seek to show they are working on solutions while the opposition tries to pin some of the blame for the pocketbook stress on the Prime Minister.
Mr. Trudeau was derided by Conservative Leader Erin O’Toole’s front bench on his grasp of the issues at stake for ordinary people, as deputy leader Candice Bergen challenged him to name the price of common goods such as bread and bacon and beans, and of surf boards – one of the Prime Minister’s favoured vacation activities.
“The Prime Minister says he doesn’t think much about monetary policy. That’s no surprise, after all it’s Justin-flation,” Conservative finance critic Pierre Poilievre added. “Has he had time, since he got off the surf board, to think a little bit more about monetary policy?” he asked Mr. Trudeau.
The Prime Minister dismissed the digs, made in both official languages, as “silly partisan games” while the Liberals focus on Canadians.
“We are extremely concerned about the rising costs of living brought to people by inflation,” he said.
“If the member for Carleton spent more time doing his homework and less time with puns, he might understand that the whole world is dealing with an inflation crisis,” Mr. Trudeau said. In the hour-long exchange with MPs, he repeatedly highlighted his government’s plans to address affordability concerns, increasing the supply of housing and cutting child-care costs.
“That is real help that the Conservatives here in this House have stood against,” he said.
On the way out of the Liberal Party’s caucus meeting on Wednesday, Toronto MP John McKay said inflation is a “serious problem” and a “legitimate concern” for his constituents, but added it’s not at a “light your hair on fire” level.
Canada’s annual rate of inflation hit an 18-year high of 4.7 per cent in October, and has been above the Bank of Canada’s inflation target range of 1 per cent to 3 per cent since April.
The central bank, which is responsible for keeping a lid on inflation, attributes the rise in prices largely to a surge in energy prices and global supply chain bottlenecks. Other factors include a rebound in demand for services that were shuttered by the pandemic, and a drought that hit the Prairies, devastating crops and animal herds and pushing up the price of food. The floods in British Columbia last week that knocked out critical transportation infrastructure could make the supply chain situation worse.
“Clearly people are concerned about the cost of living. … The challenge [for opposition politicians] is whether people think this is something that Trudeau has somehow caused,” said Ken Boessenkool, a lecturer at McGill University’s Max Bell School of Public Policy and former Conservative economic adviser.
“Justin Trudeau didn’t cause the floods in B.C. He didn’t cause the ports to jam up in China. And while you may think it would be good if he did more to stop those things, I don’t think people off the top are going to blame him for it,” Prof. Boessenkool said.
The strength and persistence of high inflation – which is being experienced by countries around the world – caught the Bank of Canada and other central banks by surprise. Bank of Canada Governor Tiff Macklem acknowledged this month that high inflation would be “transitory but not short-lived.”
It has also prompted central banks to start tightening monetary policy sooner than expected. The Bank of Canada ended its government bond-buying program last month and now expects to start raising interest rates in the middle quarters of next year.
Still, inflationary pressures are expected to persist for some time. The central bank expects inflation will remain close to 5 per cent for the rest of the year, and average 3.4 per cent next year.
Opposition MPs also focused on housing affordability, a perennial concern that has become worse over the past year as real estate prices have surged. The average home price has jumped more than 30 per cent since the start of the pandemic. On Tuesday, Bank of Canada deputy governor Paul Beaudry warned that highly indebted households pose a risk to economic stability as interest rates rise, and said that a jump in real estate speculation during the pandemic has increased the chance of a housing market correction.
Canadians are seeing the “forces of speculation driving up the cost of housing and this federal government and previous governments haven’t invested enough money in building homes that people can actually afford,” NDP Leader Jagmeet Singh said Wednesday.
“Housing is a major priority for this government and we will deliver,” Mr. Trudeau said, highlighting the government’s pledge to help municipalities build more housing units, increase access to affordable housing and make it easier for first-time buyers to get into the market.
Economists and housing market experts have expressed skepticism about some of the Liberals’ housing plans, particularly those aimed at putting money in the pockets of real estate buyers.
“It is even more unlikely that promised housing measures would provide near-term relief to inflationary pressures. In fact, housing markets could be stoked at the margins by new demand-side measures,” Rebekah Young, Bank of Nova Scotia’s director of fiscal and provincial economics, wrote in a note to clients following the Speech from the Throne on Tuesday.
“Nevertheless, the government’s housing supply ambitions are laudable – and essential to a more balanced supply-demand housing environment in Canada,” she wrote.
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