Most of the noise in Ottawa this week has been focused on varying degrees of outrage related to a statement from Prime Minister Trudeau on the passing of Cuban dictator Fidel Castro. The Prime Minister’s statement and comments on his death has been widely criticized internationally for not referencing the numerous human rights violations that have occurred in Cuba under the Castro regime. From my perspective while I believe the statement could have been worded in a manner more reflective of these human rights violations it is also important to not allow issues such as this one to overshadow other important concerns, one of these is the Liberals pending new “Infrastructure Bank”.
In my November 3rd MP report I shared several concerns about the Liberals promised new $35 Billion Federal Infrastructure Bank. In that report I questioned the need to develop yet another federal agency as well an expensive new federally run bank. I also pointed out one of the advantages of Government borrowing money is that Government can do so at rates much lower than the private sector can. In order for the Infrastructure Bank to gain any private sector investors, the bank will need to pay competitive rates of return– these interest rates will of course be higher than the rates that the Government can borrow at so in effect this new Infrastructure Bank could ultimately end up subsidizing private investors who would enjoy lucrative and guaranteed rates of return – this in my view is not the role of Government.
This is in stark contrast to what the Liberals proposed in their election platform. Originally they said it would be set up to help all Canadian municipalities to access lower cost borrowing rates and would be largely used to finance social housing.
Since writing that report the Liberals have now announced further details on the Infrastructure Bank that in my view should be of very serious concern to citizens in our region. The most troubling aspect of the mandate for the Infrastructure Bank is that it will only fund projects with a price tag of $100 Million or more. While major cities such as the Liberal strongholds of Toronto and Vancouver have projects within this price range, for smaller and rural municipalities these types of projects are completely un-affordable. As the Canadian Press recently reported the Finance Minister has admitted that global investors will only invest in "large transformational projects" that produce enough revenue from which they can earn a high rate of return on their investment. In other words the Liberal Government is borrowing money it does not have at reduced rates so that Canadian taxpayers can finance and subsidize high rates of return for private international investors.
What is more disappointing about this scheme is that taxpayers in rural, smaller and even mid-size municipalities will be taking on this debt, will help pay for the high interest paid to private investors and will not even be eligible or able to afford the projects in question because of the pricey $100 Million minimum price tag. Worse is that the roughly $32 Billion the Liberals are borrowing to use as seed money for the creation of the Investment Bank is money that could but will not be spent on building infrastructure in the very same municipalities that will not be able to participate in this expensive program. This Infrastructure Bank in my view will be detrimental to not just our region but many regions across Canada.
As it is my practice to not just oppose but also propose I have a different idea. Instead of paying lucrative returns to private global investment firms the Liberal Government could instead increase the rate of return on Canada Savings Bonds so that everyday Canadians could benefit and at the same time lower the $100 Million project minimum so that the majority of Canadian municipalities can participate. As always I welcome your views on this or any subject before the House of Commons. I can be reached at Dan.Albas@parl.gc.ca or call toll free 1-800-665-8711.
Generally speaking Canadians tend not to hear much in the media about our Canadian Senate unless it involves a Senator spending scandal. I mention this because this week a group of Conservative Senators on the Senate Finance committee made the rare and unusual decision to amend a Government spending bill in a way that may be of some interest to citizens.
As many will recall during the last election one of the Liberal promises was a plan to reduce income taxes on the middle class that ultimately would be revenue neutral as a result of income taxes being increased on citizens who earn over $200,000 per year. Credit to the Liberal Government as they have been in the process of enacting some of their electoral promises however it has been done in a manner that some take disagreement with that ultimately has resulted in the Senator amendment in question.
One challenge in enacting tax cuts for the middle class is defining who exactly is the “middle class” from the perspective of the Liberal Government. In this case many were surprised that the proposed tax cuts for the middle class did not apply to most in need Canadians earning below $45,000 per year. More surprising was that the same middle class tax cuts also applied to citizens earning between $100,000 up to $199,000 per year. I have yet to hear any citizens supporting a tax cut for citizens earning close to $200,000 annually. As it turns out, when citizens in the $100,000 to $199,000 income level are included in the ‘middle class’ tax cut it turns out the plan is not in fact revenue neutral as was promised. Overall the cost of the Liberal middle class tax results in an annual deficit ranging between $1.2 Billion and possibly as high as $1.7 Billion each year. As the annual budget is currently forecasting deficits for the duration of the Liberal Government term these tax cuts are in fact unsustainable– this is where the Conservative Senator`s amendment comes in.
Ultimately the amendment from Senator Larry Smith proposes to eliminate the tax cut for citizens earning above $ 90,000 so in that respect those earning between $100,000 up to $199,000 would no longer see an income tax cut if the amendment was adopted. The amendment further proposes to increase the tax cut for those earning between $45,000 up to $53,000 and would keep the existing tax cut for those earning between $53,000 up to $90,000. It should also be noted that this amendment is also revenue neutral meaning that it would not add an additional $1.2 to $1.7 Billion in new debt annually.
At this point it remains unclear if the Senate will support this amendment however it will provide a test for those newly appointed non-partisan Senators to see if they blindly vote against this amendment in favour of the original Government Bill or not. In the event the Senate does pass this amendment it would return to the House of Commons for a vote from elected MPs. My question to citizens is what are your thoughts on this amendment? Does it make sense to increase the income tax cut for lower income citizens and eliminate the income tax cut for those earning between $90,000 up to $190,000 and eliminate the deficit created by this in the process? Or should un-elected Senators oppose the amendment and support the Liberals tax cut as is, given that it was a campaign promise that provided a mandate for these changes, despite not being revenue neutral as was promised.
As always I welcome your comments, questions and concerns on this subject or any other before the House of Commons. I can be reached at Dan.Albas@parl.gc.ca or toll free 1-800-665-8711.
This week in Ottawa I had a second opportunity to speak in opposition to the Liberal Government’s budget implementation bill. Aside from the fact that thus far the Liberal plan has resulted in economic downgrades and we've seen none of the 40,000 net new jobs that was promised in Budget 2016, I also raised the uncomfortable issue of debt. As it stands today looking at the 2013/2014 fiscal year the Federal Government spent just over $28 Billion a year servicing debt.
To put that number into perspective that is currently almost as much money as is spent on the Canadian Health Transfers to provinces that was just over $30 Billion in that same year. In other words the Federal Government is currently spending almost as much money on servicing debt as it is spending on healthcare and this Liberal budget increases debt by another $25 Billion this year alone and is on track to add $113 billion in new debt by the 2020-21 fiscal year.
There is also no longer any plan to return to a balanced budget. Given that debt is rising at the same time health care funding increases are being reduced the Federal Government will soon spend more on debt interest then healthcare, a fact I believe many will find troubling.
However as I have also pointed out in Ottawa, it is easy to be a critic. Part of my commitment to citizens in our region as an opposition MP is to not just oppose but also from time to time propose alternative ideas that can build a stronger and more prosperous Canada. What did I propose the Liberal budget should do instead?
First I made it clear that I do not believe that MP’s and other citizens earning up to $199,000 per year need an income tax cut as the Liberals are proposing in this budget. Recently as many potential home owners have discovered, the Liberals are making changes to the mortgage rules that are so severe by the departments own internal projections our Canadian housing market may lose 10% of all sales this year. This will adversely impact many families not just in our region but all across Canada. What is more frustrating is that these mortgage changes, largely intended to combat the rising house prices in the Liberal strongholds of Toronto and Vancouver, will adversely impact the rest of Canada. This is why I frequently speak out against one-size fits all Ottawa imposed “solutions”
So what is the answer? In my view the Federal Government should not be penalizing future homeowners as a means to try and lower housing prices. How about instead creating incentives to increase the supply of new housing?
Increasing the new housing supply would have several benefits for Canadians. Primarily increased housing supply will help to meet demand and in turn lower prices. Further, if more Canadians can move into home ownership and out of rentals that in turn will free up capacity for always in demand rental housing. An increased supply of rental housing can also help lower rental rates and hopefully increase affordability.
Another added benefit to increasing new home supply is that it will create jobs and help support many local economies across Canada given how many sectors are involved in the construction industry. As an added benefit much of Canada’s home building industry is supplied almost exclusively by Canadian value added wood products who would benefit from the increased activity at a time when the Federal Government has made no progress on the softwood lumber deal.
These are only a few of the many benefits of such a policy that could be enhanced if Ottawa considered raising the threshold for the GST rebate on new housing. In my view promoting instead of penalizing new home owners is an important economic alternative proposal that could be explored in this Liberal budget.
As always I welcome your views on this or any topic before the House of Commons and can be reached at firstname.lastname@example.org or toll-free at 1-800-665-8711.
This week Canadians woke up to the generally unexpected and surprising news that President elect Donald Trump will soon occupy the White House. On top of this, the Republican Party also remains in control of both the United States Senate & the House of Representatives suggesting at first glance President elect Trump may well have a clear path to implement much of his agenda. The single largest question and concern I am hearing this week is “What does this all mean for Canada”?
The answer to this question is of course unknown at this point, however some early speculation and concern does point to several possibilities. Possibly the most obvious is that President elect Trump, much like many of the elected Republican leaders in the US Government, have long stated support for approving the Keystone XL pipeline project. It should not be forgotten that Justin Trudeau has also been a strong supporter of this particular pipeline and in fact has past travelled to Washington, DC in support of this pipeline getting built. While some in Canada will see this is a positive economic development other Canadians will certainly be in opposition.
Related to the Keystone XL pipeline is environmental concerns, specifically that it is widely expected President elect Trump will not implement a mandatory Carbon Tax in the United States much less ratify the Paris Accord as the Liberal Government is currently doing in Canada. As a result this will make Canada less competitive as a manufacturing jurisdiction in some sectors and given President Trump’s often demonstrated projectionist views opposing trade this may be an area of concern.
Obviously given that the United States is Canada’s largest trading partner any changes that discourage or diminish trade relations may have serious economic consequences on our side of the border. As an example currently Canada has a critical need for a new softwood lumber deal with the United States and it remains unclear what, if any, progress our Liberal Government has made on this file.
Trade issues aside, President elect Trump has also indicated that the United States will have a greater expectation of increased contributions from NATO members such as Canada. While it is unclear what type of increase may be contemplated given Canada’s current fiscal state of significantly rising deficit budgets with no return to balance any increased financial pressure will not be welcome.
Having voiced several concerns I also believe that the United States cannot become completely isolationist meaning it is unlikely the strong trading relationship between Canada and the United States will not be fiscally severed.
Likewise if the United States is reluctant to enter into trade and investment agreements with other nations this may well open other opportunities for Canada to step into.
My final point is one of cautious optimism given that Prime Minister Trudeau repeatedly and wisely avoided entering into commenting on the US election and as such I would expect should receive an open welcome to sit down with President elect Trump. The United States, like all nations, will need allies and there is no question that the Canada-United States relationship has been one of the strongest and most successful in the world. I believe it is in the national interest of both of our nations to ensure this relationship continues.
As always I welcome your comments, questions and concerns on this or any issue before the House of Commons. I can be reached at email@example.com or call toll free 1-800-665-8711.
In last week’s MP report I outlined the concerns I had with expanding CPP at the present time that resulted in my opposing this measure in Ottawa. Since my report was written CBC has uncovered and released internal documents from the Finance Department that parallel my concerns. In fact internal finance projections reveal that expanded CPP will be a drag on our Canadian economy until the year 2030 and worse are also expected to adversely impact employment until the year 2035. In other words the Liberal Government is knowingly committing to a policy that will harm jobs and our economy for the next 15-20 years. This in my review remains a serious concern.
This week the Liberal Government also announced an economic update that is intended to reverse the current trend of declining economic growth projections and lack of any net new jobs being created in our Canadian economy. The key announcement was the Liberal Government intends to borrow more money and increase deficit spending by an additional $31.8 Billion over the next five years. This means the total amount of Liberal deficit spending will now exceed $114 Billion over the Liberals term meaning the promises to run “modest” $10 billion a year deficits and return to a balanced budget in the 2019/2020 fiscal year will not be met.
One curious announcement that is part of the Liberal’s fiscal update is plans to borrow $35 Billion to create a new Federal Infrastructure Bank that in turn will also see the creation of a new branch of Government or Government agency that will have a mandate to attract private investment into the Infrastructure Bank. The NDP has already expressed strong opposition to this plan suggesting it will result in the wholesale privatization of Canadian infrastructure. From my own perspective I question the need to develop yet another federal agency as well an expensive new federally run bank.
My concerns around this $35 Billion Infrastructure Bank are as follows: while I am not ideologically opposed to public-private partnerships in infrastructure in this case one of the advantages of Government borrowing money is that it can do so at rates much lower than the private sector can. In order for the Infrastructure Bank to gain any private sector investors, the bank will need to pay competitive rates of return– these interest rates will of course be higher than the rates that the Government can borrow at so in effect this new Infrastructure Bank could ultimately end up subsidizing private investors who would enjoy lucrative and guaranteed rates of return – this in my view is not the role of Government.
My other concern with the Federal Infrastructure bank is that like any bank it will carry administrative costs– wages, leases, leasehold improvements, legal, etc. – all of these costs will mean ultimately that less money is available to be spent on infrastructure as these overhead costs will come out of the bottom line. Currently federal Infrastructure funds are paid directly to Provinces and Municipalities and are not filtered through an expensive administrative process like this one being proposed by the Liberals. My final concern over an Infrastructure Bank is who is ultimately accountable for the projects that are approved and rejected. Currently elected officials are held to account however if this becomes unelected and appointed bankers potentially chosen from Bay Street in Toronto what input would there be for British Columbia and Western Canada?
I welcome your views on the idea of a Federal Infrastructure Bank and any other subject before the House of Commons. I can be reached at Dan.Albas@parl.gc.ca or call toll free 1-800-665-8711.
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Dan Albas is the Member of Parliament for the riding of Central Okanagan-Similkameen-Nicola.