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Greater Niagara Chamber of Commerce

The Federal Government: One Year Review

GNCC Government Relations Keeping an Eye on Trudeau. Literally.

A year ago, Canadians went to the polls and elected Justin Trudeau’s Liberals to a majority government, ending almost a decade of government by Stephen Harper’s Conservative Party. The election represented more than just a change of faces, but a change in favour of a government openly endorsing deficit spending and substantial public-sector investment.

One year later, how is it going?

Trudeau’s approval ratings are positively gravity-defying, with multiple public opinion surveys showing support for the government in the mid-40s to low-50s, and support for Trudeau personally hitting the 60s. A year after the election, that level of popularity is pretty unusual. For comparison, a year after Stephen Harper was first elected Prime Minister, his numbers were in the 30s.

The site trudeaumetre.ca is keeping track of the slate of 219 Liberal campaign promises and whether they are being kept. 219 campaign promises are too many to go into here, but we’ll look at some of the more important ones to business.

Keeping governments to election promises is important. The Prussian Field Marshal Helmuth von Moltke remarked that no battle plan survives contact with the enemy; well, no election platform survives contact with actual government, but politicians should strive to keep their promises, or democracy suffers.

They promised to run short-term deficits of less than $10 billion in fiscal 2016 and 2017. That promise was broken, as the government admitted in March of this year with a forecast $29.4 billion deficit – almost three times the projected amount (this projection was based on a deliberately pessimistic view of the economy, however, and one notably worse than the projections of major economists). The promise is unlikely to be kept, but it’s also unlikely to be broken as badly as the government believes.

They also promised to keep the debt-to-GDP ratio to 31 per cent for 2015-2016. The debt-to-GDP is supposed to be reduced by one percentage point per year until 2020, reflecting the idea that deficit spending will stimulate the economy and create growth. They didn’t meet this goal, but they got very, very close, holding debt-to-GDP at 31.1 per cent. Given that Canada’s economic performance was not as good as expected, it seems mean-spirited to deny them that one.

Another promise was to invest $200 million each year in a new innovation agenda. Sure enough, Budget 2016 allocated $800 million over four years, or $200 million per year.

They said they would invest $6 billion more on green infrastructure over the next four years. Budget 2016 gave $5 billion over five years. Better than nothing, but a broken promise nonetheless.

$100 million per year was supposed to be invested in the Industrial Research Assistance Program. However, only $50 million was actually allocated in Budget 2016, so this promise was also broken.

The government promised to quadruple investment in public transit infrastructure, and public transit is a huge issue for Niagara (the single biggest issue facing business identified in our 2015 Niagara Economic Summit). Budget 2016 allocated $3.4 billion over three years, so this promise is on track so far.

An additional $300 million investment in the Youth Employment Strategy to create 40,000 jobs was promised each year for the next three years. The money was delivered, but the number of created jobs fell short at only 35,000.

The government also vowed to spend $40 million every year to help employers create more co-op placements for STEM and business students. Only $73 million over four years was actually delivered in the budget, which is a lot less.

A promise was made to work with the provinces and develop a plan to fund a gradual enhancement of the Canada Pension Plan. That was done, with an agreement-in-principle reached earlier this year, although how much credit should go to Ottawa and how much to Premier Wynne forcing the issue through her ORPP gambit is debatable.

On tax reform, the Liberals promised to end family income splitting, cut the middle income bracket from 22 per cent to 20.5, and introduce a new 33 per cent tax bracket for individuals making more than $200,000. Those were all delivered.

An important promise to employers and to young people was to offer a year-long break on Employment Insurance (EI) premiums for permanent hires aged 18-24 between 2016 and 2018, to try and encourage employers to hire younger workers and put a dent in youth unemployment. Sadly, it disappeared without trace at budget time.

The EI premium rate itself was supposed to be reduced from $1.88 per $100 of insurable earnings to $1.65. Budget 2016 projects that going down to $1.61 in 2017, so we’ll check in on that one next year.

The small business tax rate was supposed to be reduced from 11 per cent to 9 per cent over a number of years, but Budget 2016 announced that the reduction would be halted after only one year at 10.5 per cent. This was very disappointing to us, as we communicated strongly to the federal government after Budget 2016 was announced, and we continue to advocate for continuing these cuts through our federal MPs and through programs such as Small Business: Too Big To Ignore in partnership with the Ontario Chamber of Commerce.

A popular campaign promise among many was the decision to legalize or decriminalize recreational marijuana in Canada. At the GNCC we recognize that this will be a multi-billion-dollar industry and, with our traditional strengths in agriculture, Niagara could grab a huge slice of it. We have advocated for a free market in recreational marijuana, regulated only for consumer and public safety, and we got policy resolutions passed at the Ontario and Canadian Chambers of Commerce on the issue, meaning that those higher-tier chambers have joined our advocacy efforts.

The government convened an expert panel to consider the question of how this should be done. This appears to be progressing well, and should meet the government’s self-imposed deadline of spring 2017 for legislation to be tabled, with a vote to follow by the end of the year.

Another issue of importance to Great Lakes communities such as ours is that of standards and protection for our freshwater resources, and the protection of waterborne trade. The GNCC has previously done advocacy work on this, for instance, in encouraging regulatory harmonization on these issues between Canada and the United States. An electoral promise from the Liberal Party was to protect freshwater resources and coastlines.

They did deliver more funding for ocean and freshwater research, as promised, and for the conservation of marine areas. However, the Canadian Parks and Wilderness Society and other environmental groups have warned that there is still a lot to be covered in this file, and to truly deliver on the electoral promise, the government still has a lot of work to do.

It’s easy to be critical of a government for failing to live up to every election promise made. Cynics will say that politicians will say anything to get elected regardless of whether or not they can deliver (a beautiful wall, anyone?); it’s more charitable to say that politicians make promises that they believe they can deliver and then, when actually in power, the problems of harsher-than-expected economic conditions, conflicts and compromise with groups strongly opposed to said promises, and so forth rear their heads. However, the government’s policies seem to be consistent with the spirit of their election promises, with few outright abandonments. And there are another three years to go.