With the Throne Speech, Trudeau goes all-in on bigger government

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If there was ever any prospect that Prime Minister Justin Trudeau’s government might temper plans to spend its way out of this crisis, it appeared to vanish with Wednesday’s Speech from the Throne.

Not only did the speech all but ignore calls to rein in the massive growth in federal debt since the onset of the coronavirus pandemic; it confirmed the government’s intention to spend untold billions more on a national daycare strategy, universal pharmacare, seniors' pensions and an industrial strategy aimed at making Canada into a global champion in building zero-emissions cars.

The Throne Speech was so laden with lingo dear to progressives that it made you wonder whether Mr. Trudeau might just be keeping his options open for a fall election, after all. He would have to call it himself, mind you, since New Democrats could hardly justify voting against this speech, considering its leftist tilt.

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“This is not the time for austerity,” the Throne Speech said. “Canadians should not have to choose between health and their job, just like Canadians should not have to take on debt that their government can better shoulder.”

Income support programs for workers and businesses facing hardship during the pandemic will continue, in some form, for months to come. And the government will launch a “feminist, intersectional response” to the pandemic specifically aimed at helping women, racialized and Indigenous Canadians overcome the effects of a crisis that has hit them particularly hard. In this, it will be guided by a “task force of experts whose diverse voices will power a whole of government approach.”

Woke-speak aside, there are strong arguments for tackling the barriers to employment faced by women and minorities. Investing in affordable child care and training programs makes economic sense in that it helps to increase work force participation rates. Such measures pay for themselves over time by boosting employment and productivity.

Where the government is on shakier ground is in promising to go all-in on zero-emissions vehicles. Contrary to the Throne Speech’s contention that Canada has a “competitive edge” in this sector, this country has been largely bypassed by electric vehicle and battery producers along with the supply chains that feed them. The news that Ford could retool its Oakville, Ont., plant to produce electric cars is encouraging, but it is far from a done deal. Big Three automakers can be fickle friends of this country.

Canada is years behind other countries in developing an electric-vehicle manufacturing ecosystem. It means little that the country is home to some of the resources used in electric-battery construction – including lithium and cobalt. China and South Korea dominate the electric-battery business, while the United States has been playing catch-up. Canada is not even on the radar.

This could end up being a blessing in disguise if the long-promised EV revolution never happens. Of the nearly 90 million cars produced in the world in 2019, only 0.5 per cent were EVs. U.S.-based Tesla this week appeared to backtrack on claims it could bring down battery prices in the near future, suggesting EVs will not be going mainstream for at least several more years.

The Throne Speech’s vow to “ensure Canada is the most competitive jurisdiction in the world for clean technology companies” should be taken with skepticism. Canada cannot out-subsidize China in this sector, and no Canadian should want to try.

A bigger concern remains the government’s failure to signal an understanding of its responsibility for fiscal stewardship. There was a passing reference to preserving “Canada’s fiscal advantage and [continuing] to be guided by the values of sustainability and prudence.” Besides a vague promise to go after the wealthy and foreign internet behemoths, however, the speech was silent on how Ottawa plans to finance all its activism. Finding additional “ways to tax extreme wealth inequality” or “addressing corporate tax avoidance by digital giants” will not cut it, for the simple reason that neither is likely to generate very much money.

Indeed, the Throne Speech flies in the face of the economic advice provided by a chorus line of experts to Mr. Trudeau’s government in recent days, including that of the C.D. Howe Institute’s fiscal and tax working group, co-chaired by former Liberal finance minister John Manley. The group insisted that, with the government already facing a weaker fiscal position, “any significant levels of new spending would need to be accompanied by broad-based tax increases that will affect the average taxpayer.”

All of which means the shelf-life of this Throne Speech may be shorter than most.

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