Philip Cross: Canada can\u2019t break its debt habit, and it\u2019s killing growth<\/a><\/li>\n<\/ul>\nThe Bank has also endorsed Ottawa\u2019s infrastructure financing plan, specifically the use of \u201cprivate\u201d pension plans to fund the spending. The argument, sound from a general economic perspective, is that the economy needs infrastructure and such spending helps boost demand. So far, though, the Trudeau government, while spending money on many things, has failed to deliver on infrastructure.<\/p>\n
Bank of Canada officials have dipped into other policy issues that are not areas that would normally draw central bank attention. The biggest dip occurred when Poloz waded into the childcare policy area with what amounted to a full endorsement of Quebec\u2019s universal childcare program.<\/p>\n
Addressing the female participation in the economy gap, Poloz delivered comments implying all of Canada should follow Quebec. \u201cHistory suggests that this gap can narrow,\u201d said Poloz. \u201cConsider Quebec, where, 20 years ago, the prime-age female participation rate was about 74 per cent. The provincial government identified barriers keeping women out of the workforce and acted to reduce them, particularly by lowering the cost of childcare and extending parental leave provisions. Within a few years, proportionately more prime-age Quebec women had jobs than women in the rest of Canada. Today, Quebec\u2019s prime-age female participation rate is about 87 per cent.\u201d<\/p>\n
To make his point, Poloz engaged in some simple arithmetic: \u201cIf we could simply bring the participation rate of prime-age women in the rest of Canada up to the level in Quebec, we could add almost 300,000 people to our country\u2019s workforce.\u201d The arithmetic might be good, but the economics would be another matter. No studies were cited to support the theory that universal free childcare was the direct cause of women working more in Quebec. Also missing is research into the economic effect of higher taxes paying for childcare.<\/p>\n
Poloz\u2019s enthusiasm for child benefits also appeared last July, when he waxed enthusiastic about Ottawa\u2019s child benefit program, saying it has been \u201chighly stimulative\u201d to the economy. \u201cYou can see that in the consumption figures. So we would not be where we are today if that had not occurred. We would be waiting longer for the output gap to close than later this year as we suggested.”<\/p>\n
The logical conclusion to be drawn by all politicians across Canada is that more government spending on children and infrastructure and just about anything else is good for the economy, boosts growth and creates jobs \u2014even if it does run up deficits and debt that will have to be repaid later at higher interest rates. So long as it looks manageable.<\/p>\n
Is this the right role for the Bank of Canada, which is charged by the Bank of Canada Act with tracking inflation and setting monetary policy? It suggests, among other things, that the governor is getting a little too cozy with the finance minister, with whom he meets regularly.<\/p>\n
More problematic is the risk that the Bank could lose some of its independence, considered essential to the proper function of a monetary authority. Its business is inflation targeting, interest rates, money supply and financial stability, rather than encouraging social policies and deficit spending that are designed to win elections for politicians, but can \u2013 in time \u2013 wreak havoc with monetary policy.<\/p>\n","protected":false},"excerpt":{"rendered":"
Why does Governor Stephen Poloz keep giving green lights to big spending governments?<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2737"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=2737"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2737\/revisions"}],"predecessor-version":[{"id":2738,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2737\/revisions\/2738"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=2737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=2737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=2737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}