Building back bigger: How Ottawa grew under cover of COVID – Financial Post Op-Ed
“Build back better!” We have heard that a lot since COVID hit — mainly from advocates for government spending, who saw pandemic-related fiscal stimulus, financed by central bank bond purchases, as suddenly making things that had seemed out of reach affordable.
The 2022 federal budget highlights their success. Ottawa’s last pre-COVID projections, in its 2019 fall update, showed federal spending at $421 billion in fiscal year 2024-25. The 2022 budget’s projections have it at $479 billion a year (adding back $2 billion in pension obligations the government stopped including meanwhile). That’s $58 billion more, long after COVID-related measures are gone. The slogan we should have been hearing is “Build back bigger!”
In 2019, a…
John Lester – Who Will Pay for the Pandemic-Induced Debt?
From: John Lester To: Canadians Hoping for a Fiscally Responsible Federal Government Date: April 21, 2022 Re: Who Will Pay for the Pandemic-Induced Debt? “We are absolutely determined that our debt-to-GDP ratio must continue to decline,” said Finance Minister Chrystia Freeland in her budget speech this month. “Our deficits must continue to be reduced. The […] The Bank of Canada’s rate hike: You can’t fight inflation on the QT – Financial Post Op-Ed
With inflation on the rise, the Bank of Canada kicked its tightening cycle into high gear Wednesday by announcing a 50-basis-point increase in its target for the overnight rate — the first non-25-basis-point hike in over 20 years. It also modified its stance concerning its over-sized holdings of Government of Canada bonds, which swelled its balance sheet during so-called Quantitative Easing (QE). Those days are over: it will now initiate Quantitative Tightening, or QT, by not replacing bonds on its balance sheet as they mature, thus reducing its bond holdings over time.
Some might be disappointed the bank didn’t go further on QT by announcing it would actually start selling its holdings of government bonds. Not to worry.…
William B.P. Robson – The Federal Gas Pedal Meets Bank of Canada Brakes
From: William B.P. Robson To: Canadians Worried About a Hard Landing Date: April 6, 2022 Re: The Federal Gas Pedal Meets Bank of Canada Brakes With inflation pushing 6 percent, and federal debt up about half-a-trillion dollars in two years, Canadian macroeconomic policy is a mess. It will get worse. The Bank of Canada is moving to get inflation […] Only tighter money can keep the dollar from shrinking – Financial Post Op-Ed
What explains surging inflation in Canada and many other advanced economies? Most commentators — correctly — blame loose monetary policy. That contrasts with the 1970s and 1980s, when many people argued inflation was not something central banks could control and that tight money was therefore a case of pain for no gain. With the Bank of Canada and other central banks beginning to tighten, those arguments may return. If they prevail, monetary policy will stay too loose and inflation will keep raging.
Inflation is another term for a persistent decline in the value of money, which like most values is determined by supply and demand. If the Bank of Canada promotes growth in the supply of Canadian dollars that exceeds growth in the…
Inflation Surprises, Interest Rates Should Not
In late February, an Intelligence Memo by Bill Robson warned that expectations of interest-rate hikes by the Bank of Canada might be lagging expectations about inflation. Using the Bank’s three favoured measures of core inflation as proxies for inflation expectations, Robson argued that the Bank’s overnight rate had become strongly negative in real terms. Reining […] Canada has blown through our fiscal guardrails. When will our federal budgets reflect that? – Globe and Mail Op-Ed
The budget that federal Finance Minister Chrystia Freeland will present shortly will reveal whether the government is serious about putting the national finances on to a sustainable track.
There is room for doubt. Since 2015, the government had been running deficits larger than it promised, and larger than a strong economy justified. Then it responded to the COVID-19 pandemic with debt-financed spending on an unprecedented scale.
To assuage concerns about soaring federal debt – concerns heightened by the government’s equally unprecedented failure to present a budget at all in 2020 – the Finance Minister introduced a new concept in the government’s fall economic statement that year: fiscal…
Kevin Comeau – Combatting Money Laundering to Help Ukraine
From: Kevin Comeau To: Canadians Concerned About Oligarchs Date: March 16, 2022 Re: Combatting Money Laundering to Help Ukraine For more than 20 years, our weak anti-money laws have enabled corrupt politicians, criminals, and tax cheats from around the world to launder billions of dollars in Canadian real estate without disclosing the true owner. Canada has the opportunity to […] S4 E5: Combatting Money Laundering to Help Ukraine with Kevin Comeau
C.D. Howe Institute · S4 E5: Combatting Money Laundering to Help Ukraine with Kevin Comeau Cutting-off Vladimir Putin and his enablers from global finance is the world’s primary weapon against the Ukraine-Russia War. But as Kevin Comeau writes in his latest Intelligence Memo, it’s a weapon weakened by bureaucracy in Canada. Robson, Wu – Grading Fiscal Accountability of Canada’s Cities
From: William B.P. Robson and Miles Wu To: Canada’s Municipal Councils Date: February 22, 2022 Re: Grading Fiscal Accountability of Canada’s Cities The budgets governments present around the start, and the financial statements they publish after the end, of their fiscal years are critical tools for legislators and voters. To be useful, these documents should let readers, who will […] Regina and Saskatoon produce user-unfriendly budgets. To improve, they can follow the province’s lead – Regina Leader-Post and Saskatoon StarPhoenix Op-Ed
The latest C.D. Howe Institute annual report card on municipal financial reporting in Canada featured a dismal coincidence.
Regina and Saskatoon had the worst grades among the 31 cities whose budgets and annual reports we look at — the only Fs in the group.
Is there something about Saskatchewan — something in the water or the air — that condemns Regina and Saskatoon to fail this test of transparency and accountability? Does the C.D. Howe Institute have it in for Saskatchewan?
No and no — and for proof, Regina and Saskatoon don’t need to look far to see how to improve their marks. Not to Vancouver, which topped the cities class with A+, nor to Surrey or Quebec City, with As, nor to Richmond or Markham or Vaughan,…
Making the Grade: Fiscal Accountability in Canada’s Cities
In the C.D. Howe Institute’s 2021 annual report card we grade the clarity, comprehensiveness, and timeliness of the financial presentations of 31 major Canadian municipalities, based on their most recent budgets and financial statements. Of those 31, Regina and Saskatoon earn Fs, failing to meet a minimal standard of transparency, usefulness and timeliness. Vancouver stood alone at […]