Dean speaks with Conservative Pierre Poilievre, on the current financial situation facing Canada as a result of the pandemic and the mis-handling of the country's finances by the Trudeau government.
There has been a lot of talk lately about inflation, the real estate market and the economy and just how expensive everything is getting. So, what’s happening on those fronts?
Let’s take on inflation first.
In short, one of the reason’s inflation is happening to a level higher than usual, is because of the unprecedented government spending not just in the last year, but over the last number of years. We are close to over 350-billion-dollar deficit just from last year alone.
Canada’s year-over-year inflation rate was recently reported to be 3.4 per cent. Governments usually don’t want to see this number any higher than 2%. What does that mean? It means that your money is now worth less.
Canada’s year-over-year inflation rate was recently reported to be 3.4 per cent. Governments usually don’t want to see this number any higher than 2%. What does that mean? It means that your money is now worth less.
Things you buy will be more expensive.
Inflation is basically a tax, which is why experts call what’s happening now an inflation tax. Because goods and services are now more expensive, there may be a permanent reduction in purchasing power. So, unless you get a 3.4% raise in salary, you’ll be falling behind because everything you purchase will be at least that much more to buy.
That’s what printing money to the extent that the federal government has done year, over year, over year has arguably caused. Granted, Canadians did need help, and the government did roll out programs like CERB, wage and rent subsidies and others to assist those that have been hardest hit.
To provide this money, which the government does not have, the money needed to be printed, and so here we are. In time we’ll see whether the inflation rate stabilizes at the desired 2% or if there has been a long-term damage and a permanent change in the cost of everything to the economy.
In the meantime, the Central Bank is buying 3 billion dollars a week worth of government bonds with no timeline as to when these purchases will slow down or stop.
Critics of this approach say the Bank of Canada is in effect helping the federal government to pay for overspending, punishing lower income Canadians. As I mentioned, funding the government with printed money drives up the prices of everything, boosting the cost of housing, food, and general necessities throughout the country.
This leads very well into my second issue — real estate.
I’m sure many of you have heard or seen firsthand how the real estate market during the pandemic has gone wild. Bidding wars have become the standard in many parts of our country. Putting down conditions on a purchase of a property may mean that the sellers won’t take you seriously and choose an offer without conditions.
All this fast-paced activity in the real estate market has generated quite a bit of attention.
A recent article from the CBC says that “Vancouver, Toronto and Hamilton are the least affordable cities in North America.”
According to the study the CBC cites, Hamilton is less affordable than Los Angeles and New York City. That’s something that many find extremely surprising, but it seems to be the case.
The report, from Oxford Economics, said that homes in Canada are 34 per cent more expensive than the median-income household could afford. The report goes on to say that “Canadian housing affordability has worsened considerably over the past decade, not only in Toronto and Vancouver, but also in several smaller metros.”
According to the Canadian Real Estate Association, national home sales set a record in March, with activity up 76.2 per cent year-over-year.
Bloomberg news has even noticed Canada’s housing market and says that “it’s running hotter than just about anywhere else in the world.”
So, life is getting more expensive all around.
Can Canadians afford it? Is the current way of stimulating the economy sustainable? Is Canada’s central bank acting as an “ATM” for Prime Minister and his emergency pandemic programs? What are other countries around the world doing? Is this a problem just here in Canada or is this a concern around the world?
What ultimately will happen if governments choose to ignore and continue to overspend?
These are questions I’ll ask my guest today, Mr. Pierre Poilievre, current Member of Parliament for Carleton, elected first time in 2004 and now the shadow minister for Jobs and Industry.
Former shadow minister for finance, he was also a former cabinet minister for democratic reform and employment and social development. Pierre is one of Canada’s most prominent politicians and someone who has been sounding the alarm bells for years when it comes to government overspending
Recently, Angus Reid on behalf of United Way conducted a poll on the mental health of Canadians. The data showed that 76% of respondents said that the pandemic had caused stress, anxiety or depression.