Let\u2019s set climate change aside for another time; existential threats warrant columns of their own. Of the other three, competitiveness and debt probably are the most urgent, if only because bold decisions made in another era left Canada with a social safety net that so far has prevented a critical mass of citizens from being left behind. Feeble businesses and excessive debt are present dangers, and therefore warrant immediate attention. And yet Canada\u2019s finance ministers over the past couple of months mostly emphasized the social issues associated with inequality alone.<\/p>\n
It\u2019s wise to think about heading off the sort of social upheaval that grips Donald Trump\u2019s America, but it\u2019s a puzzle to me how the federal government, Ontario and Quebec could present financial plans that would do little, if anything, to offset what Trump is doing to business sentiment.<\/p>\n
The gamble seems to be that the North American Free Trade Agreement will get sorted and that economic and political stability and an openness to immigrants will ensure that Canada wins its share of international investment. \u201cIt\u2019s our value proposition,\u201d Innovation Minister Navdeep Bains said this week of the country\u2019s relatively liberal visa rules for skilled labour.<\/p>\n
There\u2019s something to that. Tech companies everywhere face shortages of engineers, so they will be attracted to places where they can assemble a staff.<\/p>\n
Still, the Bank of Canada has said repeatedly this year that uncertainty over what tariff Trump might apply, or what trade agreement he might end, was causing international investors to bypass Canada and go straight to the United States. Trump\u2019s business tax cuts are an extra incentive to choose the U.S. over Canada or Mexico as a base in North America, the central bank said.<\/p>\n
\u201cI love Canada, I\u2019m committed to Canada, but if we don\u2019t start getting people that understand that business needs to be competitive and stop putting the burden on business, they\u2019re going to go. I\u2019m worried,\u201d Don Walker, chief executive of Magna International Inc., told an audience in Toronto in February.<\/p>\n
Some will dismiss comments like that as self-serving hyperbole. But there is no denying that the various carbon taxes, Finance Minister Bill Morneau\u2019s fight with the small-business lobby over tax loopholes and Ontario\u2019s decision to increase the minimum wage have created a bad vibe among entrepreneurs and executives. That matters, especially when the U.S. president is prepared to use every means available to corral new investment.<\/p>\n
\u201cWe are creating a bigger wedge in a lot of areas,\u201d said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets. \u201cThings like car output don\u2019t necessarily drop off in a year or two, but Canada\u2019s loses the beauty contest for a new vehicle line, and eventually the plant closes.\u201d<\/p>\n
Chandler also is concerned that so many governments made so little effort to constrain spending, especially since all of them benefited from windfalls thanks to stronger-than-expected economic growth.<\/p>\n
British Columbia, perhaps the country\u2019s fittest economy, recorded another balanced budget. So did Quebec, which also pulled money from a special reserve fund to make a big debt payment. Quebec Premier Phillippe Couillard and Finance Minister Carlos Leitao have orchestrated an impressive economic renaissance. The Liberal government ended decades of profligacy, and Quebec can now borrow at about the same rate as Ontario. The province\u2019s unemployment rate is the lowest since the 1970s.<\/p>\n
![\"\"](\"http:\/\/wpmedia.business.financialpost.com\/2018\/03\/carlos-leitao.png?w=640&h=480\")
<\/p>\nQuebec Finance Minister Carlos Leitao tables his budget on Tuesday, March 27, 2018.<\/p>\n<\/div>\n
Couillard, who trails in polls ahead of an election later this year, plans to increase spending, but not by an amount that caused alarm. That\u2019s the opposite of his counterpart in Ontario, Kathleen Wynne. She also trails in polls ahead of an election, yet she signed off on a plan that will return Ontario to deficit one year after it finally recorded a surplus. Quebec\u2019s example makes it harder for the Ontario Liberals to argue they had little choice. \u201cIf you can\u2019t balance the budget at the top of the business cycle when can you?\u201d Leitao told reporters after he released his budget last week.<\/p>\n
That\u2019s a great line. But Leitao, the former chief economist at Montreal-based Laurentian Bank, would know that creditors would react negatively if he didn\u2019t talk tough about deficits, given the province\u2019s history. Debt still is about 50 per cent of gross domestic product, manageable, but barely. Ontario, given its overall track record, gets more leeway. Finance Minister Charles Sousa said he would keep deficits small; about 1 per cent of GDP.<\/p>\n
Sousa also insisted there is more to running an economy than a budget surplus. He\u2019s right about that. Research by the International Monetary Fund suggests that deficits can leave societies better off as long as the borrowing is used to finance things that expand the economy\u2019s ability to generate wealth. And this is where Sousa and some of his counterparts will have difficulty explaining themselves. Ontario\u2019s plan to offer free, pre-kindergarten daycare will allow previously housebound parents to join the workforce. It will be harder to argue that free drugs for seniors is anything other than a pre-election sop.<\/p>\n
But perhaps Canada wants to be a country that uses a portion of its wealth to give away medicine? New Democratic Party Leader Jagmeet Singh would implement a national pharmacare program, and Morneau said in his budget that the Trudeau government is going to study the idea.<\/p>\n
It would ease anxiety and leave consumers with more money to spend. But is that really where the emphasis of the country\u2019s finance ministers should be right now? It doesn\u2019t seem like they have given that question much thought. They should.<\/p>\n
\u2022 Email: kcarmichael@nationalpost.com<\/a> | Twitter: CarmichaelKevin<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Kevin Carmichael: It’s a puzzle how the federal government, Ontario and Quebec could present financial plans that would do little, if anything, to offset what Trump is doing to business sentiment<\/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\/2926"}],"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=2926"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2926\/revisions"}],"predecessor-version":[{"id":2928,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2926\/revisions\/2928"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=2926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=2926"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=2926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}