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Ginny Roth: Gen Z doesn’t care about your public health care hang-ups

Commentary

What do you do when big problems can’t be solved by writing big cheques? This is the problem facing Prime Minister Justin Trudeau, and it’s increasingly clear he can’t figure it out. It’s true that the country’s fiscal picture is getting bleaker, that the cost of public borrowing is getting higher, and that inflation and high interest rates call for greater fiscal restraint. It’s also true that the Liberals seem incapable of confronting these facts, kicking the can of tough spending decisions down the road and avoiding the problem as it gets worse.

But the bigger challenge—for both today’s government and whoever forms government soon—is that neither fiscal restraint nor increased spending can fully address some of the biggest problems plaguing the country. The supply challenge—our shortage of everything from energy to housing to child care to family doctors—won’t be fixed by writing cheques (in fact jacking up demand only makes things worse), but it won’t be fixed by mere fiscal restraint either. And young Canadians know it.

Last week I walked into a crowded Tim Hortons to grab a quick coffee before my first meeting of the day. I glumly shuffled to the end of the twenty-person queue only to have it dawn on me that I had recently downloaded the Tim Hortons app. I realized I could order my coffee on my phone, jump forward to the mobile order line, and be out of the door before the less savvy patrons in front of me had even moved forward in line. What was a late realization for me is a state of mind for younger Canadians. Members of Generation Z, born from the mid-1990s through to the early 2010s, can barely remember a time when you had to visit a restaurant to get takeout, go to a mall to buy clothes, or wait until a week after the cliff-hanger to see the season finale. 

Now that generation is growing up. Coming into their mid-to-late-twenties, Zoomers are thinking about buying houses and having kids, they’re consuming more energy, buying more groceries, and they’re managing their own lives, including trying to get health care. As they take on each of these adult responsibilities, almost none of them optional, they’re running smack into government-regulated marketplaces where supply is always artificially low and customer convenience doesn’t even factor in.

For years, Canadians have abided by long wait times, bad service, and high prices. But a combination of accumulated personal wealth and government-issued cheques cushioned the blow. Now, a new generation of kids without the wealth that comes from coming of age in a time of abundance has grown up.

First, it was housing. For years, economists and analysts quietly argued that as bad zoning and regulation were restricting housing supply, prices were climbing at an alarming rate, and young people were getting priced out of the market. Politicians put their hands over their ears. After all, NIMBY Canadians who got into the market when prices were low were doing fine (heck, they were doing great—their wealth had sky-rocketed!) and renters don’t vote anyway.

Then things got worse. As immigration shot up, supply stagnated, entire cohorts of Canadians gave up on the dream of ever being able to own a home, and someone started to listen to them. As Conservative leader Pierre Poilievre started talking to young Canadians about housing, they started to flex their political power. Now that their preference for housing solutions is showing up in the polls, the Liberals are scrambling to catch up. It wasn’t so long ago that political advisors told aspiring politicians they could offer up cash to voters aspiring to home ownership, but real supply-side solutions were untouchable. Then Millennials and Zoomers flipped the script on the NIMBYs practically overnight.

If politicians will stand up to NIMBYs, what could be next? A recent Crestview Strategy survey might provide a hint. Public health care is Canada’s ultimate political sacred cow. For Canadians of a certain age, the idea that all you have to do when you walk into a doctor’s office or hospital is show your health care card is sacrosanct. Grinning and bearing it while waiting hours to see the doctor could feel almost patriotic, a kind of honourable duty in defence of the-best-health-care-system-in-the-world™. Some years, we would get bad flu season and people would get worried. But it was never something a bigger cash transfer from the federal government couldn’t claim to solve. And anyway, haven’t you heard of Tommy Douglas?

Just as on housing though, young people don’t share their parents’ stiff upper lips when it comes health care. Crestview’s October survey of 2,000 Canadians found that as much as 70 percent of Gen Z decided voters are open to “pay for service” health care, a shockingly high number for anyone who grew up learning the gospel of the Canada Health Act. 

Just as young Canadians understand no amount of government spending will make housing abundant and affordable, they understand that without some free market dynamics, public health-care delivery can’t adequately respond to consumer demand. But unlike with housing, politicians aren’t really responding, at least not yet. Some provinces experiment with private service delivery on the margins, but their public policy tweaks have the cloak-and-dagger feel of a measure you quietly take after getting elected, instead of a campaign promise you make to get elected. And it’s no wonder when the mainstream media portrays any foray into new service delivery models as sacrilege.

But for those of us impatient for better outcomes, the openness of young people to alternatives (and their frustration with the status quo) is encouraging. Hopefully—unlike with housing where a new generation is going without owning homes—it doesn’t take family doctors becoming completely inaccessible to young Canadians for politicians to wake up and for the political switch to finally flip.

Theo Argitis: Where’s the prudence? Freeland bets big on soft-landing fiscal plan

Commentary

Heading into the final month of a tough year politically, Prime Minister Justin Trudeau can be thankful for at least one thing: The economic picture could have been a lot worse.

The nation is feeling the strain from higher interest rates and growth is stalling, but we’ve yet to see a deeper economic storm many feared earlier this year.

The labour market continued to churn out jobs this year—more than 400,000—putting 2023 on track to be one of the strongest years ever for employment gains.

For all of 2023, growth is now projected at about one percent—which is not too bad given the circumstances. The federal government had forecast growth of just 0.3 percent in its March budget.

Meanwhile, price pressures have eased with underlying inflation showing some signs it may finally be breaking toward three percent—within striking distance of the Bank of Canada’s target range.

Hope for coveted soft landing

There’s just enough impulse in the data to keep Trudeau and his finance minister, Chrystia Freeland, hopeful that a deep downturn will never come, and that growth will meaningfully resume by the middle of next year with inflation in check and interest rates normalizing. The much-coveted soft landing.

It’s hard to overstate how much Trudeau and Freeland are invested in that soft-landing scenario. Their political futures hinge on it.

Trailing badly in the polls, Trudeau is trying to buy as much time as possible before the next election (which could take place as late as October 2025) hoping tough economic conditions for Canadians reverse course.

Falling inflation and interest rates will not only buoy confidence and keep consumers spending, but they will also give the governing Liberals scope to finance a semblance of an agenda. For a government that has sought to build a political coalition around spending, they’ll be happy to take whatever fiscal room they get.

So, it’s no surprise that Freeland has been more than happy to embrace the soft-landing assumptions as the basis for her budget planning, as evidenced again by her fiscal update last week. After all, it remains the base case scenario of private-sector forecasters and financial markets.

But what is a reasonable basis for fiscal planning is not necessarily judicious or prudent.

The government doesn’t need to be a passive taker of economic assumptions. It’s not forced to accept the prevailing wisdom of economists—who have never been good at predicting major turning points anyway.

Economic assumptions made in budget documents are as much political decisions as they are forecasts.

Nothing new

This is not a very new idea. This is how budgets had been done for much of the past three decades in Canada.

From the mid-1990s right up until the pandemic, both Liberal and Conservative governments applied prudence into their fiscal planning. Building and sustaining credibility was a policy priority of its own.

It began with Liberals in the mid-1990s when then-Finance Minister Paul Martin introduced multiple layers of cautiousness into his budget-making to signal little tolerance for missing budget targets and to establish credibility.

Even as the nation’s underlying finances improved considerably, the practice of adding risk accounting into the budget continued through Stephen Harper and even Trudeau’s first finance minister, Bill Morneau, right up until the pandemic.

During the pandemic, continuing the practice seemed outright pointless. But we are no longer there.

Today, we are paying tens of billions of dollars in interest on the massive debt that we’ve accumulated over the past three years. And in a world of deglobalization and global power conflict, risks to the economic outlook remain elevated.

Is this really the environment where fiscal planning should be based on benign economic scenarios? Is there a case to reintroduce credibility as an explicit government priority?

These are political decisions. No government is beholden to totally accept private-sector forecasts.

The widespread skepticism that has greeted Freeland’s new fiscal anchors (including a pledge to cap deficits at one percent of GDP starting in 2026) should be taken as a warning sign. Almost no one believes the Liberals will keep to these guardrails should the fiscal envelope become stressed.

The thing with credibility is that it’s hard to earn and easy to lose, and you don’t know how much of it you have until you need it.