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Vancouver Sun
20 hours ago
- Business
- Vancouver Sun
Federal government's spending review is 'flawed' and too narrow: report
OTTAWA — The federal government's 'comprehensive spending review' is too narrow and won't save enough tax dollars to put Ottawa back on solid footing, a new report will conclude. The report, to be released Thursday by the C.D. Howe Institute, says the Carney government's spending review will only include about one-third of all federal program spending and is expected to save no more than $22 billion by 2028-29. The think tank says that's less than half the $50 billion in savings that are needed to return federal government coffers to 'a fair and prudent path' that would see Ottawa's debt-to-GDP ratio stop climbing. The report, called 'Federal Expenditure Review: Welcome, But Flawed,' says that the problem with focusing only on limited areas of federal spending is that it reduces the scope for improving the quality of spending and ensures that some programs that endure cuts will be superior to some that aren't touched. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. It's better to review broadly and eliminate programs that aren't working well, the report says, instead of across-the-board cuts that don't assess program success. John Lester, the report's author, said governments often opt for the across-the-board approach because it's easier than evaluating countless programs and can realize tangible results more quickly. 'You need some time to evaluate those programs,' said Lester, a former federal government economist, during an interview. 'It's a big job.' Lester recommends expanding the review to cover the missing two-thirds of program spending, imposing a multi-year cap on operating costs to deliver immediate restraint, and then assessing programs through a value-for-money lens. He also calls for transparent goals and clear communication to build public consensus around the various options. The government's spending review follows years of hefty deficits that have left Ottawa and future generations with mountains of debt. National Post reported last month on an earlier C.D. Howe report that forecasted that t he Carney government is poised to post a massive deficit of more than $92 billion during this fiscal year, almost double what was forecast just a few months ago by a non-partisan officer of Parliament. Just four months ago, the Parliamentary Budget Officer projected that the federal deficit would fall to $50.1 billion during this fiscal year, a slight improvement over the $61.9 billion shortfall recorded in 2023-24. The PBO also said at that time that federal deficits would continue to fall in the ensuring years, unless there were new measures to cut revenue or increase spending. If this fiscal year's deficit turns out to be as hefty as projected, it would be the second-largest deficit in Canadian history, topped only by the $327.7 billion shortfall from the pandemic year of 2020-21. That earlier report also forecasted deficits of more than $77 billion a year over the next four years, also huge increases over what had been expected. The decline in Ottawa's fiscal health is largely a result of increased spending on defence and other items, the economic effects of the Trump tariffs, cuts to personal income tax and the GST for first-time homebuyers, and the elimination of the digital services tax. But the federal government's fiscal situation is unclear because there hasn't been a budget in well over a year. The government took the highly unusual step this year of waiting until the fall to release its annual budget, more than half-way through the fiscal year. National Post Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
Hamilton Spectator
25-07-2025
- Business
- Hamilton Spectator
Waiting for interest rates to drop? Here's what Canadians need to know before renewing their mortgage
Canadians with pending mortgage renewals will be watching the Bank of Canada's next interest rate announcement on July 30 to see if they'll get some payment relief. The overnight lending rate, which impacts credit products such as variable rate mortgages, adjustable rates, and home equity lines of credit, has remained at 2.75 per cent since March. With Canada's inflation rate sitting at 1.9 per cent in June, well within the Bank of Canada's goal of 1 to 3 per cent, a rate drop aimed to tame inflation appears unlikely. But a study by TD Economics suggests ongoing softness in Canada's labour market could open the door to potential rate cuts later this year. In a new report, the C.D. Howe Institute's Monetary Policy Council urged the Bank of Canada to leave its benchmark interest rate unchanged at 2.75 per cent on July 30, but lower the rate to 2.5 per cent in September and leave it there until next July. National home sales fell 4.8 per cent in March compared to February, according to the Canadian Real Estate Association . The MLS Home Price Index, which tracks neighbourhoods' home price levels and trends, also fell 1 per cent during the same period. A study by TD Economics shows 60 per cent of outstanding mortgages are slated for renewal between now and 2026 and 40 per cent are expected to be renewed at higher rates. In a recent commentary , TD Economist Rishi Sondhi said consumers have shied away from major purchases like homes as they worry about possible job losses or economic uncertainty from U.S. tariffs. 'U.S.-Canada trade tensions and job markets are significant factors that can affect housing demand and prices,' Sondhi said. 'So, even if housing sales levels improve, they are likely to remain subdued compared to peak pandemic levels due to this market uncertainty, particularly in B.C. and Ontario.' While the housing market has slowed in many parts of the country, homeowners shouldn't blindly renew their mortgage with their current lender without shopping around for a better deal, according to , a website that helps consumers compare rates for various financial products. 'The slow housing market of late means that lenders are currently competing for mortgage business and there is incentive to retain customers,' said Victor Tran, mortgage and real estate expert in a release. Tran noted Canadians could find better rates or more attractive policy terms available compared to those publicly posted or initially offered at renewal. 'Homeowners should also review their policies to ensure that they are suitable for the life plans they may have during the duration of the mortgage, which can help save money,' Tran added. For example, renewing with a mortgage term of five years with penalty clauses for breaking the mortgage early may be costly for a homeowner planning to move in less than five years. If your mortgage is up for renewal, offers the following tips. Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .
Hamilton Spectator
22-07-2025
- Business
- Hamilton Spectator
Ontario, Alberta and Saskatchewan premiers unify in push for energy independence amid U.S. tariff threats. Here's what Canadians should know
Conservative premiers in Ontario, Saskatchewan and Alberta have set their sights on a pipeline from Alberta to Ontario to boost Canada's energy independence and reduce the country's reliance on the United States. Ontario Premier Doug Ford, Alberta Premier Danielle Smith and Saskatchewan Premier Scott Moe signed a memorandum of understanding (MOU) on Tuesday, July 22, aiming to expand Canadian energy markets and make it easier to ship exports to global markets. Canada's premiers are meeting at Deerhurst Resort in Huntsville, Ont., this week, to discuss interprovincial trade and tariff threats from U.S. President Donald Trump. The premiers are also meeting with Prime Minister Mark Carney on Tuesday to discuss energy independence and nation-building projects. Today, I'll be meeting with the premiers in Huntsville to talk about building up our industries and getting big, nation-building projects off the ground. Together, we're moving from reliance to resilience, and building one strong, Canadian economy. Posting to X on Tuesday, Carney noted, 'Together, we're moving from reliance to resilience, and building one strong, Canadian economy.' Ford said the MOU between Ontario, Saskatchewan and Alberta sends a clear message that Canada is ready to build pipelines and other energy infrastructure to ship crude oil, critical minerals and natural gas across the country while reducing Canada's reliance on the U.S. Canada currently lacks domestic pipeline capacity to process its own crude oil and sends the bulk of its Alberta crude to refineries in Texas. An analysis by the C.D. Howe Institute found Canada shipped US$100 billion in oil and gas to the United States in 2023. Crude oil exports to the U.S. increased in 2024. 'This new agreement will help move western oil and gas to new and existing refineries in southern Ontario and to northern tidewater, in deep sea port, in James Bay,' said Ford. 'It will connect Ontario's critical minerals in the Ring of Fire region to new ports in Western Canada, helping to build a true, end-to-end critical mineral supply chain.' The Ring of Fire is a 500-square-kilometre area northeast of Thunder Bay that includes critical minerals such as nickel, cobalt, copper, platinum group elements and refined uranium. Smith said the agreement aims to cut red tape and expand Canada's export capabilities with global trade partners. 'This agreement will see our three provinces advance pipelines and pathways to boost exports of homegrown energy, potash, critical minerals and agricultural products to markets across Canada and across the world,' she said. Smith called upon the federal government and Carney to remove 'federal barriers' for pipelines, rail lines and other infrastructure projects. The Alberta premier listed Bill C-69, the oil and gas emissions cap, the tanker ban, the net-zero vehicle and net-zero electricity mandates. 'Removing these anti-resource, anti-development laws will allow Alberta, Saskatchewan and Ontario to attract the investment and project partners we need to get shovels in the ground, grow industries and create jobs,' said Smith. Citing Trump's trade war and his threat to impose 35 per cent tariffs on Canadian imports starting Aug. 1, Ford said the U.S. can no longer be relied on to refine Canadian crude oil. 'We have to start diversifying. We need to unleash every tool in our Canadian tool box,' Ford said. Moe compared Canada's energy dependence on the U.S. to the European Union's reliance on gas from Russia. According to the European Commission , the EU has dropped its share of Russian gas imports from 45 per cent to 19 per cent and has developed a road map to ensure it fully ends its dependency on Russian energy. Moe said Canada should also distance itself from U.S. energy. 'To the oil industry, from an economic perspective, that is the priority,' he said. 'We need to have Canadian access to the refineries in Eastern Canada and I think that would be important to those that live in central and Eastern Canada as well, so that we have that energy security as a country.' In a news release , the provincial government said Ontario exported $183.9 billion worth of goods and services to other provinces and territories in 2023 and imported $142.7 billion, resulting in two-way trade of $326.6 billion and a trade surplus of $41.2 billion. On Monday, July 21, Ford joined B.C. Premier David Eby Yukon Premier Mike Pemberton, Northwest Territories Premier R.J. Simpson and Nunavut Premier P.J. Akeeagok to sign an MOU that aims to boost internal trade, improve labour mobility and remove trade barriers. Tuesday's media briefing was available on the Premier of Ontario YouTube channel . Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .
Calgary Herald
21-07-2025
- Business
- Calgary Herald
The pandemic drove up inflation. How come, years later, we're still paying more?
Article content A new report from the C.D. Howe Institute concluded that the Trudeau government's spending splurges played a major role in fuelling inflation during the pandemic. The report pointed the finger at Ottawa's unfunded spending spree — more than the Bank of Canada's monetary policies — that acted as 'helicopter drops' of money for the private sector. Article content In 2020, about 20.7 million Canadians out of an adult population of 30.3 million received income from one of the federal pandemic-related programs, according to a 2022 report. During that year alone, the programs are estimated to have cost $270 billion — about 12.5 per cent of Canada's gross domestic product (GDP) — and cumulatively have cost about $360 billion to date. Article content While the programs broadly succeeded in providing relief to individuals and businesses and creating a cushion for the economy during a crisis, the C.D. Howe Institute noted that injecting that much extra money into an economy while unemployment is low results in inflation. Article content Article content David Andolfatto, chair of the department of economics at the University of Miami and an international fellow at the C.D. Howe Institute, said inflation should be expected when governments add that much extra demand to the economy. 'Of course prices went up,' he said. 'There's no such thing as a free lunch. Somebody will have to pay.' Article content And not only do consumers pay higher prices but they must then pay again with the higher interest rates the central bank then implemented to try bringing those prices back down. In 2020, interest rates were down to 0.25 per cent as the Bank of Canada aimed to cushion the blow from the pandemic; by 2023, the rate had risen 20-fold, to five per cent. Article content Jean-Francois Perrault, chief economist at the Bank of Nova Scotia, estimated in a November 2023 report that government spending and pandemic-era transfers to Canadians were responsible for about 42 per cent (200 of the 475 basis points) of the increase in the Bank of Canada's prime interest rate during that period. About one-third of those interest rate hikes can be traced back to provincial governments, he calculated. Article content Article content Since the start of 2023, inflation has remained at less than four per cent, just over the Bank of Canada's preferred band of between one and three per cent, but a big decrease from the peak of pandemic-era inflation. Article content And, at least for now, it's largely under control. Statistics Canada reported last week that Canada's inflation rate accelerated to 1.9 per cent in June, up from 1.7 per cent the previous month. Article content Why have some prices kept rising since the pandemic? Article content When the pandemic subsided, it removed a number of shocks and disruptions to markets. But not all of them. Article content The Russian invasion of Ukraine, for example, still hasn't been resolved. Many of the people who started working from home during the pandemic still do so, either part-time or full-time, which puts a little more money in most of their pockets. The glut of baby boomers is also at the stage of life where many are retiring, having saved up their money, and now want to spend it.
Edmonton Journal
21-07-2025
- Business
- Edmonton Journal
The pandemic drove up inflation. How come, years later, we're still paying more?
Article content Gasoline was among the products hit hardest by inflation, with a price increase of more than 50 per cent over that two-year period. Food and transportation jumped between 15 and 20 per cent, while appliances and rent each increased by between 10 and 15 per cent. Article content Prices at any time are, in general terms, a function of supply and demand. In short, the pandemic caused both simultaneous supply shocks and increased consumer demand. Article content Barring innovation that leads to productivity improvements and lower costs, that formula will almost always mean price hikes. Article content On the supply side, some products were being produced less or not at all due to factories being closed or experiencing reduced hours, particularly in Asia. There were also shortages of some raw materials, such as lumber and metals, which also contributed to inflation. Article content Article content And costs for many suppliers went up because transportation became more expensive due to shipping delays, congestion at many ports and the rising cost of fuel, which affects the prices of most products. Article content There were also supply problems that had little or nothing to do with the pandemic. Article content Russia invaded Ukraine in early 2022, reducing the global supply of energy products, fertilizer and some grains. Article content Some important agricultural areas also suffered from poor weather. In 2021, Western Canadian farmers were hit with the worst drought in 19 years, leading to wheat stocks to drop 38.7 per cent compared to the previous year. By April 2022, food manufacturers were paying more than double for wheat than they had been paying just two years earlier. Article content And as usual, those costs were borne by consumers. According to Statistics Canada, consumers had to spend considerably more on bread (+12.2 per cent), pasta (+19.6 per cent) and cereals (+13.9 per cent) than they had a year earlier. Article content Article content On the demand side, consumers' lives had changed because many started working from home, going out less and not travelling. That meant they were unintentionally saving money. Lower interest rates and billions of dollars in government support programs also put more money into consumers' pockets. Article content Some employees, meanwhile, were getting fatter paycheques because there was greater demand for their services. Health care workers were pulling overtime shifts, for example. Also, as people adjusted to staying at home and renovated or bought new houses, construction workers were in high demand. Article content As consumers responded to the shapes of their new lives there was increased demand for real estate, furniture, exercise equipment and home entertainment gadgets . Article content A new report from the C.D. Howe Institute concluded that the Trudeau government's spending splurges played a major role in fuelling inflation during the pandemic. The report pointed the finger at Ottawa's unfunded spending spree — more than the Bank of Canada's monetary policies — that acted as 'helicopter drops' of money for the private sector. Article content In 2020, about 20.7 million Canadians out of an adult population of 30.3 million received income from one of the federal pandemic-related programs, according to a 2022 report. During that year alone, the programs are estimated to have cost $270 billion — about 12.5 per cent of Canada's gross domestic product (GDP) — and cumulatively have cost about $360 billion to date. Article content While the programs broadly succeeded in providing relief to individuals and businesses and creating a cushion for the economy during a crisis, the C.D. Howe Institute noted that injecting that much extra money into an economy while unemployment is low results in inflation. Article content David Andolfatto, chair of the department of economics at the University of Miami and an international fellow at the C.D. Howe Institute, said inflation should be expected when governments add that much extra demand to the economy. 'Of course prices went up,' he said. 'There's no such thing as a free lunch. Somebody will have to pay.' Article content And not only do consumers pay higher prices but they must then pay again with the higher interest rates the central bank then implemented to try bringing those prices back down. In 2020, interest rates were down to 0.25 per cent as the Bank of Canada aimed to cushion the blow from the pandemic; by 2023, the rate had risen 20-fold, to five per cent. Article content Jean-Francois Perrault, chief economist at the Bank of Nova Scotia, estimated in a November 2023 report that government spending and pandemic-era transfers to Canadians were responsible for about 42 per cent (200 of the 475 basis points) of the increase in the Bank of Canada's prime interest rate during that period. About one-third of those interest rate hikes can be traced back to provincial governments, he calculated. Article content Since the start of 2023, inflation has remained at less than four per cent, just over the Bank of Canada's preferred band of between one and three per cent, but a big decrease from the peak of pandemic-era inflation. Article content Why have some prices kept rising since the pandemic? Article content The Russian invasion of Ukraine, for example, still hasn't been resolved. Many of the people who started working from home during the pandemic still do so, either part-time or full-time, which puts a little more money in most of their pockets. The glut of baby boomers is also at the stage of life where many are retiring, having saved up their money, and now want to spend it. Article content Katherine Judge, senior economist at CIBC Capital Markets said consumer markets are also still getting a boost from pent-up demand and extra savings that consumers accumulated during the pandemic. Article content Wages, meanwhile, have actually been growing faster than inflation since mid-2024, so household purchasing power has also increased. Article content In recent months, the tariff wars launched by U.S. President Donald Trump have started to put upward pressure on inflation in both components and finished goods and will continue to do so unless they are resolved. Article content Economists say that prices don't normally drop — or even approach inflation of less than one per cent — unless demand falls because the economy is in a recession or governments adopt severe cost-cutting measures. Article content Neither has happened since the pandemic. The federal government kept running large deficits in spending. And while it has spoken recently about cutting costs in the bureaucracy, it also plans to boost outlays on defence and infrastructure projects. Article content Article content As poor weather played a role in fuelling inflation during the pandemic, it's still a major factor. Article content A new study by a team of international scientists led by Maximillian Kotz, a postdoctoral fellow at the Barcelona Supercomputing Center, found that foods affected by heat, drought, floods and other climatic extremes contributed directly to higher consumer prices. Article content This summer, for example, farmers in southwestern Saskatchewan have been hit by wildfires, heat waves and drought, driving up prices in the wheat market. But weather isn't just affecting the Canadian Prairies. Article content Severe weather events are also causing higher prices for Japanese rice and Spanish olive oil. In a phenomenon dubbed 'heatflation,' the report also documents that South Korean cabbage prices rose 70 per cent last year after a period of hot weather and drought, and that seafood prices increased because rising water temperatures has meant fishermen have had smaller catches. Article content Article content Is there a chance that some of the pandemic spike in prices could still be eliminated if the world enjoys a period of relative peace, with no disruptive shocks? Article content Andolfatto, at the University of Miami, said prices could in theory still come down in some markets, but that would be a function of changes in supply and demand at that time, not anything to do with what occurred during the pandemic. Article content Article content Article content
