Canada and the New US
It was back in my Nov. 10th MP report that I last raised the subject of then President Elect Donald Trump where I speculated among other things that the Keystone XL pipeline approval was a strong possibility while the likelihood of seeing a national carbon tax in the United States was not.
Given the recent inauguration of now President Trump there is certainly a new level of concern for what this will mean to Canada, in particular to the many small business owners who depend upon either directly or indirectly free trade with the United States.
At this point there is only speculation to answer this question however there is in my view a pattern emerging to what direction the Trump administration is heading in trade renegotiations. What is that pattern? Thus far it appears that those countries that most enjoy a trade surplus at the expense of the United States are potentially being targeted. Mexico, as one example, currently enjoys a $60 Billion dollar trade surplus and already manufacturers such as Ford have announced they will abandon planned investment in Mexico and instead bring some of those dollars back into the United States. While many around the world see this as protectionism across the border it is viewed as nationalism in an effort to increase well-paying US manufacturing jobs in the auto sector. We should not overlook that here in Canada our Federal Liberal Government also just secured a major investment with Honda for upgrades to an automobile plant in Ontario. The primary difference in approach is in Canada over $80 Million was offered to Honda in joint Federal and Provincial corporate subsidies whereas in the United States the Trump administration threatened an import tax to achieve a similar outcome.
China is suggested to also be a potential target of the Trump administration considering it currently enjoys a trade surplus of close to $370 Billion with the United States. The primary concern expressed from the Trump administration is manufacturers taking advantage of lower labour costs to move jobs outside of the United States into countries such as China. Although seldom reported this is not a new concern for the United States. Under the former Obama administration the United States filed some 16 World Trade Organization complaints against China alleging unfair trade practices. The Trump administration has suggested further increasing tariffs potentially as high as 45% to encourage manufacturing investment to remain in the United States. The Trudeau Liberal Government by contrast has expressed interest in going in a very different direction by potentially establishing a free trade relationship with China, who currently enjoys a trade surplus over Canada of roughly $46 Billion annually.
So where does this leave Canada with the United States? From a trade perspective Canada and USA have a far more balanced relationship. In 2015 Canada enjoyed a trade goods surplus of $15 Billion however an offsetting trade deficit on services at $27 Billion meant that overall the United States had a total trade surplus of $12 Billion. When one considers the total value of trade in goods and services between Canada and United States is over $660 Billion it is clear this relationship is overall working well for both countries. Likewise in Canada there is typically no significant labour savings in manufacturing when compared to the United States. Generally lower corporate and small business taxes along with the preferable exchange rate have been Canada’s leading assets for attracting investment. The Trump administration is not unaware of these factors and has committed to lowering US corporate taxes to levels similar to here in Canada. What is of concern is that Canada is increasing payroll costs through expanded CPP and implementing a national carbon tax– both increase costs that a competitor in the United States would not have to swallow. At this point I am more concerned that Canada will make itself less competitive for investment and that can harm jobs that will benefit other countries. It should also not be overlooked that many countries who do enjoy a large trade surplus are not implementing carbon taxes or other cost increases onto employers. Here in Canada investment continues to decline while net new jobs are not increasing. Let us all hope this trend will start to be reversed in 2017.
As always I welcome your comments, questions and concerns and can be reached at Dan.Albas@parl.gc.ca or toll free at 1-800-665-8711.
If you follow my weekly reports often you will know at times I find it frustrating when much of the Ottawa bubble is consumed on somewhat isolated issues that often overshadow other important concerns. Currently the topic of the Prime Minister’s winter vacation to a private Bahamas Island and more specifically the possibly illegal use of a private helicopter remains the focus in Ottawa of many media reports. In my report from last week I explained why the vacation issue was a concern however as the Deputy Critic for Finance I have a duty to point out there is other, very serious financial information Canadians deserve to be made aware of.
If you followed the last Federal election closely you will know that the Prime Minister promised to run modest deficits of $10 billion annually and would return to a balanced budget in the year 2019. Shortly before Christmas the Finance Department released updated fiscal forecast reports that indicate in fact that without deliberate and direct action by Liberal Government, Finance Canada projects that we will not return to a balanced budget until at least the year 2050. If the current Liberal trend of running deficits that are much larger than the promised $10 Billion a year also occurs Canadians total debt will be at an alarming level of $1.55 trillion by that point in time.
What is more concerning is as much as the Liberals have promised all of this spending is going to building Infrastructure the Parliamentary Budget Officer also released a report on January 10th that states, and I quote directly “Government’s planned investments in infrastructure spending have not materialized in the first half of the year. Infrastructure transfers administered by Transport and Infrastructure Canada fell in comparison to the previous year”. In other words infrastructure spending is actually in decline. In reality it is Government operational spending that has increased. Where has this money gone? Statistics Canada shows that the Trudeau Liberal Government hired 14,000 more government bureaucrats to work in the National Capital Region alone in 2016 and a recent 5.5% pay raise plus a signing bonus for many federal government employees has also added many billions of new debt that in turn has resulted in increased operational spending.
As I have also past pointed out increased debt means increased payments on the interest of that debt that in turn results in less money available to fund other government programs, services and projects. Inevitably it will likely also lead to higher taxation that reduces net take home pay. As you may have heard the Liberal Government has also recently admitted they are giving serious consideration to tax changes that may impact many Canadians. As one example if you currently receive any healthcare benefits provided by your employer the Liberal Government has indicated these may become taxable benefits in the near future. This would be particularly punitive here in BC as we are Canada’s only Province that charges MSP premiums for healthcare.
I appreciate my report this week will not sit well with some citizens however I should also point out these are actual events that will at some point affect future Canadian taxpayers. Some in Ottawa have gone so far as to suggest given this recent fiscal news the Liberal Government prefers talking about private helicopter trips compared to increased taxes, higher debt and deficits as a result of increased operational spending with little infrastructure to show for it. As the Deputy Finance Critic and as your Member of Parliament I will continue to hold the Liberal Government to account on these concerns and welcome your comments and questions. I can be reached at Dan.Albas@parl.gc.ca or toll free 1-800-665-8711.
On Sunny Locales and Shuffles
The two major stories out of Ottawa this week revolve around Prime Minister Trudeau’s newly revealed vacation details followed by news of a small cabinet shuffle. I believe most Canadians support and understand that the Prime Minister would enjoy an exotic vacation to a warmer climate not unlike many Canadians often do so why is this current vacation a controversy? The answer is a tad more complex than one might expect.
In Canadian public office we have very strict rules that limit and restrict financial benefits that a Minister of the Crown can accept and directly benefit from. These restrictions also include gifts that cannot be legally accepted from any registered lobbyist. Obviously gifts have a momentary value and must be disclosed and this includes the value of accepting a stay at an exotic Bahamas private island as has been now revealed was the vacation destination of Prime Minister Trudeau.
On a related theme the private island where the Trudeau family vacationed happens to be owned by the Aga Khan who in turn is the head of an organization that is registered to lobby the Trudeau Liberal Government. This same organization headed by the Aga Khan also received $55 million in Canadian public funding from the most recent Liberal Government budget and as a result the Conflict commissioner is investigating this matter further. I am not for a moment suggesting any wrongdoing on the part of the Prime Minister but rather clarifying why this subject continues to be actively raised in Ottawa and more so as the Prime Minister’s office initially refused to provide details of the vacation in question.
Following the vacation controversy the Prime Minister also announced a cabinet shuffle that will see the departure of the following Ministers: John McCallum (Citizenship and Immigration) Stéphane Dion (Foreign Affairs) and MaryAnn Mihychuk (Employment, Workforce Development and Labour) The departure of these Ministers provided an opportunity for three new Minister to join the Federal cabinet: François-Philippe Champagne (International Trade) Karina Gould, (Democratic institutions) and Ahmed Hussen, (Immigration). The following existing Ministers were also shuffled into new portfolios: Chrystia Freeland (Foreign Affairs), Patty Hajdu (Employment, Workforce Development and Labour) and Maryam Monsef (Status of Women).
My take on this shuffle is mixed. Government experience is critically important in a cabinet and the loss of veteran Ministers such as McCallum and Dion will no doubt be felt. At the same time adding fresh blood is not necessarily a bad thing and given the failure to date for the Liberal fiscal plan to reap the promised benefits some new ideas at the cabinet table may be welcome. A Cabinet shuffle is never an easy task for any leader and time will tell if these changes will help reverse the current direction. It is important to remember that citizens run for public office in order to help build stronger communities and federally a stronger Canada. I know that MPs from all parties are concerned at the current economic direction Canada is heading in and I believe we will continue to work diligently in 2107 towards constructive solutions. I would also like to take a moment and public thank Stéphane Dion and John McCallum who have spent many years in public office and have both recently announced they will be resigning as MPs to serve in other areas.
I would also like to extend an invitation to come and meet with me. I will be holding town hall meetings and constituents are welcome Saturday, January 14th in West Kelowna at the Lions Community Hall 2466 Main Street; West Kelowna from 3:00pm–4:30 PM or on Sunday, January 15th in Kelowna at A. S. Matheson Elementary at 2090 Gordon Drive, Kelowna from 3:00–4:30 PM to share their views. I look forward to hearing from you! Contact me at Dan.Albas@parl.gc.ca or call toll free at 1-800-665-8711.
One of the challenges of being in Government is that sometimes the core message a Government is attempting to promote may become overshadowed or even buried by other unintended events sometimes of the Governments own making. Such was the case back in November when the Liberals announced plans to “speed up” the end of coal power in Canada by the year 2030. Unfortunately for the Liberals breaking news of the Prime Minister and his cabinet’s cash for access fundraising events quickly buried the coal announcement and as a result it received little public scrutiny.
I believe many Canadians support the idea of reducing the use of coal power in Canada and on the surface would embrace the Liberal Government announcement to accelerate the end of coal power in Canada. As much as the Federal Liberal Government would like to be viewed as taking action against coal power, in reality many of Canada’s coal power producing Provinces have already either eliminated the use of coal power, such as Ontario, or are well on the way to doing so as is the case in Alberta. Meanwhile Provinces such as BC, Quebec and Manitoba do not currently generate any significant amounts of coal power. So what Provinces currently are Canada’s largest generators of coal power? The answer is Saskatchewan and Nova Scotia.
Interestingly enough the Liberal Government has quietly made side deals with both Saskatchewan and Nova Scotia that will allow these Provinces to continue to generate and use coal power beyond the 2030 deadline. In other words, the announcement to accelerate the end of coal power by 2030 was really more for show than substance. Fortunately both of these Provinces are taking other measures that will help reduce the GHG emissions from their respective coal power sectors.
Another somewhat overlooked Government announcement was a new national agreement on carbon. What is interesting about this particular national agreement is that it is not truly national. Both Manitoba and Saskatchewan have refused to join this agreement and British Columbia has secured what could be interpreted as a future veto. Also of interest is the fact that the agreement is not a centralized national strategy and instead allows Provinces to independently follow their own strategies. As an example in British Columbia a revenue neutral carbon tax is used while Ontario prefers a cap and trade system.
Why is this fact of interest? As an example in Ontario under their Cap and Trade system already it has been quietly announced that some of Ontario’s largest polluters such as steel and smelter plants are being exempted from the regulations. Likewise here in British Columbia greenhouse growers have also been largely exempted from carbon tax while industries such as cement production also receive taxpayer provided relief to offset carbon tax expenses. Ironically one of Saskatchewan’s arguments against a carbon tax is that it is pointless to tax industries only to return that same money in the form of subsidies or other relief related exemptions.
The point of my report today is not to debate the merits of a carbon tax or coal power production in Canada but rather to illustrate the Government efforts to tackle these GHG emissions related industries may be more for appearance of taking action than actual substance. Considering that the United States is currently moving in a different direction under the incoming new administration it will be critically important to keep a close eye on both Canada's competitiveness and the effectiveness of the Liberal Government policy in this area. I welcome your comments, questions and concerns on this or any topic before the House of Commons and can be reached at Dan.Albas@parl.gc.ca or toll free at 1-800-665-8711.
Looking Back At The Last Year
Over the next few weeks most media organizations will feature year in review related articles and columns. On the same theme I believe it is also important to review the past year in the House of Commons from a legislative perspective. To be candid the last 12 months under the Trudeau Liberal government has resulted in one of the most unproductive Parliaments in recent history with only 14 bills to date receiving Royal Assent. Of these 14 Bills, 6 were Appropriation related granting Government access to spending money meaning there has been just 8 Bills implemented by the Liberals thus far. A closer inspection of these 8 Bills reveals that 2 are directly related to the Budget and one was technically related to trade provisions and was left over from the previous Conservative Government. Thus in essence there have been 5 unique Bills passed by the Liberals as part of their broad agenda of real change.
Normally a Canadian Parliament under a majority Government at this point in the mandate would have passed between 40 to 45 Bills thus illustrating why this particular Liberal Government is being labelled by many in Ottawa as extremely unproductive. Should this be a concern to Canadians? Obviously the answer to this question is a matter of opinion and not fact however if one was expecting significant regulatory changes to date this has largely not occurred. To be fair the Liberal Government has continued to promise that it will introduce more legislation in the upcoming year pending the outcome of a large amount of different consultations currently underway, as one example is the current ongoing consultation on democratic reform that I discussed in last week’s report.
I should also add that not all changes made by a sitting Government have to be implemented through legislation. For example when the Trudeau Liberal Government decided to effectively abolish the First Nations Fiscal Transparency Act rather than use a Bill to repeal the legislation the Liberal Government instead announced it would not implement or enforce any penalties against a First Nation Band Council that does not comply with publicly disclosing expenditures.
From my perspective what is more concerning is that the Liberals continue to hint that they would like to eliminate Friday sittings in the House of Commons – meaning there would be one fewer day each week that the House sits available to debate legislation through the House. A lack of a Friday sitting would also mean one less day for Question period which is alarming considering that Prime Minister Trudeau has missed more than half of all Question Periods to date. For the record I have spoken out in the House of Commons against shutting the House down on Fridays and will continue to oppose this measure.
Despite the lack of Liberal Legislation in the House of Commons one item that has not changed are the House of Commons operations including the costs of 338 MPs that came in just over $60 million for the first half of the current fiscal year. Once the full fiscal year has concluded I will once again release my annual fiscal accountability report and provide in detail what my expenses were for the period. Some may welcome the lack of legislation as it supports the status quo and means that laws passed by previous Parliaments remains largely unchanged. As this is a subjective are of concern I welcome your views on this topic – is the significant lack of legislation under the current Government a concern or is this largely a non-issue?
As always I welcome your views on this or any subject before the House of Commons. I can be reached at email@example.com or toll free at 1-800-665-8711. Alternatively, I will be holding town hall meetings and constituents are welcome Saturday, January 14th in West Kelowna at the Lions Community Hall 2466 Main Street; West Kelowna from 3:00pm – 4:30 PM or on Sunday, January 15th in Kelowna at A. S. Matheson Elementary - 2090 Gordon Drive, Kelowna from 3:00pm – 4:30 PM to share their views- I look forward to hearing from you!
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Dan Albas is the Member of Parliament for the riding of Central Okanagan-Similkameen-Nicola.
Central Okanagan – Similkameen – Nicola