Ottawa’s plan is not working; budget ignores major economic challenges

VANCOUVER—Despite the rhetoric coming from Ottawa, the federal government’s plan of deficit spending and higher taxes is not working and today’s budget ignores the serious economic challenges facing Canada, according to Charles Lammam, director of fiscal studies at the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “Instead of responding swiftly and decisively to the headwinds facing the Canadian economy, the federal government has ignored them,” Lammam said.

Crucially, the government today praised Canada’s economic performance last year, but it overlooked falling levels of business investment, which have declined by 19 per cent since 2014. And this budget also does nothing to counter recent tax reforms in the United States that have erased Canada’s nearly two-decade business tax advantage over the U.S. and also made Canada’s personal tax system even less competitive for skilled workers and entrepreneurs. The future of NAFTA also remains uncertain, raising serious doubts about future access to the U.S. market from Canada. “While investors, businesses and entrepreneurs turn their backs on Canada and seek out more attractive jurisdictions, Ottawa’s response with this budget is essentially a shrug,” Lammam said. The government touts last year’s economic growth of 3.0 per cent as proof its plan is working to strengthen the economy, but today’s budget document itself acknowledges growth is expected to slow markedly to 2.2 per cent in 2018 and 1.6 per cent in 2019. “Prospects for future economic growth are weak, and the government—with this budget—has failed to improve the economic fundamentals, leaving Canada less competitive and less attractive for investment,” Lammam said. “This was an opportunity to shift gears and begin repairing Canada’s competitiveness, but Ottawa chose not to.” MEDIA CONTACT: Bryn Weese, Media Relations Specialist, Fraser Institute, bryn.weese@fraserinstitute.org