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Sean Speer: Six charts that set the stage for Parliament’s return

Commentary

As the federal Parliament returns from its summer recess, there are a number of big economic and fiscal questions that will loom over the upcoming parliamentary session. They speak to some of the growing anxieties that Canadians are feeling, the key political fault lines between the major parties, and issues that will ultimately animate the next federal election. 

Here are six charts that bring expression to these economic and fiscal questions that may shape the parliamentary sitting. 

1. Ottawa doesn’t have a revenue problem…
Graphic credit: Janice Nelson

One of the most underreported stories of the Trudeau government’s fiscal policy has been the gradual increase of federal revenues as a share of GDP from the record lows of the Harper government to levels that now match where they stood more than 20 years ago.

There are different explanations but the two biggest are (1) higher energy prices have pushed up corporate profitability and in turn corporate income tax revenues, and (2) the federal carbon tax, which is responsible for about 0.6 percentage points of the increase in the chart. 

The key point here though is that the Trudeau government cannot balance the budget on a revenue base that is two-and-a-half-percentage points higher than the previous Conservative government. 

2…it has a spending problem
Graphic credit: Janice Nelson

The problem of course is the government’s sustained spending growth. Program spending grew on average by 6.4 percent in the Trudeau government’s first five years in office prior to the pandemic. One has to go back to the 1970s to find a five-year span with similar rates of spending growth. (In comparison, the last five years under the Harper government saw program spending grow by an average of just 0.5 percent per year.)

As we look ahead, the government’s fiscal projections are doubtful. After growing spending by more than 6 percent it in its first five years (excluding the pandemic), it now proposes that program spending will grow by roughly half that amount over the next five years. There are few reasons to believe that it will actually stick to these projections—especially in light of pharmacare and other outstanding progressive priorities. 

It’s also a reminder that even an incoming Conservative government will face a constrained fiscal context. All things being equal, even limiting program spending growth to 3 percent per year (which will be challenging in light of pre-existing spending commitments and outstanding spending pressures) won’t produce a balanced budget in this decade. 

3. Canadians are getting poorer
Graphic credit: Janice Nelson

There’s been a lot of discussion in recent weeks about Canada’s poor performance with respect to GDP per capita. Although we may not be in a technical recession, we’ve experienced long and deep recessionary conditions for Canadian living standards. This presumably explains a lot of the economic pessimism that we’re seeing in public polling.

Canada’s GDP per capita actually declined last year and remains roughly $1,000 per person and $2,500 per household below pre-pandemic levels. This puts us among a small number of OECD countries that haven’t yet recovered from pandemic losses. It’s now not expected to recover until 2027.  

There is some debate about the relative role of different factors, including the inherent trade-offs between capital and labour, for explaining this alarming trend. But few voices contest its consequences. It’s not hyperbole to say that Canada has experienced something of a lost decade of stagnant or declining living standards that will have permanent consequences for Canadians’ wealth and well-being. 

4. We’re falling further behind the U.S.
Graphic credit: Janice Nelson

One way to understand those consequences is to compare Canada to the United States, as University of Calgary economist Trevor Tombe did in a Hub article in June 2023. His key finding has generated a lot of attention: most Canadian provinces lag far behind almost all U.S. states. 

Ontario, for instance, has a per-person level of economic output that’s similar to Alabama. The Maritimes are below Mississippi and Quebec and Manitoba lag West Virginia. Only Alberta exceeds the U.S. average of $76,000, but even our strongest province ranks only 14th overall. 

The growing lag between our two countries could have various medium-term consequences including, as University of Waterloo economist Mikael Skuterud recently warned in a conversation with The Hub, the risk of so-called “brain drain” by prospective immigrants and Canadian citizens.  

5. We have a less dynamic economy
Graphic credit: Janice Nelson

Tombe recently highlighted another example of Canada’s economic stagnation in the form of the growing gap between business start-ups and bankruptcies.

The latter are now at levels not seen since the 1990s. That might be okay if not for the fact that the former is also at all-time lows. Firm entries into the market are half the rate of the mid-1980s and far below the rate of firm exits.

These trends require some reflection on how we ought to think about what’s happening in Canada’s economy. As Lakehead University Livio Di Matteo recently set out in The Hub, there are two types of economic growth: extensive growth and intensive growth. The former reflects an increase in the total size of the economy. The latter is concerned with an increase in GDP per person which ultimately depends on whether inflation-adjusted GDP grows faster than the population.

The Trudeau government has mostly pursued a policy of extensive growth. It has increased the population, run a loose fiscal policy, and increased cash transfers. This mix of policies will by definition boost the country’s gross domestic product—it has probably in the past year even caused us to avoid a technical recession—but it doesn’t drive intensive growth. In fact, to the extent that the rise in low-skilled labour has distorted business investment decisions, it may be detrimental to intensive growth. I’ve previously described it as an economic agenda of “empty calories.” 

Canada’s economy instead needs a policy agenda focused on intensive growth—namely, boosting business investment. That ostensibly involves some combination of regulatory reform, competition reform, and maybe some mix of tax incentives. 

The key point here is that while there’s been a lot of exogenous forces in the economy, it would be wrong to think that government policy has no role in where we currently find ourselves. In fact, in some ways, the Trudeau government’s policy of extensive growth has delivered precisely what one would have predicted: a modest boost in overall economic activity but a decline in the economy’s competitiveness and dynamism. 

6. There’s a growing rural-urban divide
Graphic credit: Janice Nelson

One final issue that may be something of a sleeper topic is the extent to which Canada’s story of investment and job creation over the past decade or so is essentially about the country’s six major metros: Montreal, Toronto, Vancouver, Ottawa-Gatineau, Calgary, and Edmonton. 

They represent roughly 47 percent of Canada’s population, slightly more than half of its economic activity, and, between 2015 and 2023, they were responsible for more than two-thirds of all net new job creation in the country. 

If one adds the other 35 census metropolitan areas, the total percentage of the population rises to about 70 percent, the share of the economy goes to roughly 75 percent, and net new job creation since 2015 reaches more than 90 percent. 

The rest of the country—including smaller and rural communities—was home to less than 9 percent of net new jobs over this period. 

This degree of place-based economic concentration may represent a political economy problem for a few different reasons: (1) Canada’s model of hyper-urban agglomeration has contributed to its out-of-control housing costs as well as the ongoing concentration of immigration settlement in a small number of major cities, (2) rural and economically-distressed communities are facing various socio-economic challenges (including rising crime rates) rooted in a lack of opportunity, and (3) there’s a risk of growing socio-political issues between dynamic and stagnant parts of the country. 

Addressing these issues will require a mix of policy interventions. One idea that the government ought to explore is the adoption of the U.S. model of Opportunity Zones, which, according to recent research, is showing some promising signs. 

Donald Wright: Canada has no single national story—and that’s a good thing

Commentary

It was a weird December at The Hub. Reading it, I felt like I had fallen into a time hole and landed in 1998 when I was a PhD student at the University of Ottawa and everyone was talking about Who Killed Canadian History?, a slim volume by Jack Granatstein. To some, it was a much-needed counterpunch and a necessary corrective to the social history revolution. To others, it was a depressing diatribe by a scholar who hadn’t read the scholarship he so blithely dismissed. And to yet others, it was a bit of both.

To mark the 25th anniversary of Who Killed Canadian History?, The Hub published five—yes, five—op-eds and one podcast. As Hub editor-at-large Sean Speer explained, the series was intended “to grab Canadians and Canadian policymakers by the lapels, so to speak, and say this matters: a common sense of citizenship and a common national narrative.”

A been-there-done-that Rudyard Griffiths was nonplussed. In effect, The Hub’s executive director said, you can grab all the lapels you want, but you’re wasting your time. He should know, he added, because he had cut his teeth at the Dominion Institute where, in defence of national history, he “bled a couple of quarts of blood in the history wars of the late ‘90s and early 2000s.” 

The last 20 years have been more of the same, only worse, as “radical and I think dangerous ideas around decolonization” have taken root. “If you spend 20 years pushing your history into the proverbial dustbin, and then larding on top of it mounds of kind of racial and other cultural-induced guilt, and you assume that everything colonial, everything that happened, I don’t know, before 1867, is just an endless list of sins of omission and commission, I’m sorry Sean, there’s nothing to re-build. There’s no going back. Humpty Dumpty cannot be put back together again. The book isn’t Who Killed Canadian History? The book that is written today is Canadian History Is Dead.” 

Speer demurred, insisting that Canadian history isn’t dead, although it is on life support. And he held out hope for a national story. “It’s not an option at this point. It’s a necessity.” 

Listening to their conversation, I found myself wondering if I inhabited the same universe as Speer and Griffiths. Do they really think that a common national narrative or that a single national story is possible or even desirable? Trust me, no one wants to live in a country with a single national story.

Where does their anxiety come from? And what explains their pessimism? I don’t know. But I suspect that the taking down of, and in some instances, the toppling of statues—yet another front in the history wars—has confirmed their worst fears. And here I have some sympathy for them. I don’t like the idea of a city’s statuary being determined by vandals, even if I agree with their political motivations. But it’s an altogether different story if a statue is removed after a democratic, transparent, and deliberative process, as was the case with Halifax’s statue of Edward Cornwallis. After all, the past is reinterpreted all the time. That is the essence of history as a discipline.

I don’t want to revisit Who Killed Canadian History?. God knows enough ink has been spilled on it. Nor do I want to engage with each op-ed, although one in particular stuck in my craw. Instead, I want to invite Speer, Griffiths, et al. to conduct a simple thought experiment. I want them to start from a different place and ask themselves a different question, not who killed Canadian history, but who broadened Canadian history?

That’s not my question, by the way. It belongs to Ramsay Cook. In a recent conversation, Jack Granatstein described his former colleague as an essayist in the tradition of Frank Underhill and as an omnivorous reader: “He had a wide reading knowledge. Probably wider than anyone I knew.” In fact, it was one of his “great strengths” as a scholar. Despite their mutual respect, however, the two men didn’t see eye-to-eye on everything, including the state of Canadian history.

In 2009, Cook delivered the inaugural H. Sanford Riley Lecture in Canadian History at the University of Winnipeg, his alma mater when it was still United College. His title—“Who Broadened Canadian History?”—was an obvious riff on Who Killed Canadian History?, which in his words was “a polemical little tract.”

Canadian history, he began, is “alive and well,” not “subverted or sundered or murdered.” To make his point, Cook didn’t list book after book on this or that specialized topic (although he did some of that and, in the process, confirmed Granatstein’s observation about his reading habits). Instead, he looked at large-scale demographic, economic, and political changes across English and French Canada, as well as the rapid expansion of higher education and the growth of PhD programs. The old history—the history that he had been taught at United College and later studied at Queen’s and U of T with Arthur Lower and Donald Creighton—could neither contain nor explain these enormous, even tectonic, shifts. Something had to give, and it did in the form of history from the bottom-up written by a new generation of historians from diverse backgrounds.

History wasn’t killed. But it was broadened by, among other people, his PhD student Franca Iacovetta and her book on Italians in Toronto, Such Hardworking People (1992). “She nicely symbolizes my explanation for the emergence of a new, fuller understanding of Canadian history: a second-generation woman of Italian working-class origin, the first in her family to attend university and then graduate school, now a Professor of History at the University of Toronto. Work of this quality surely deserves better than Jack Granatstein’s slur: ‘multicultural mania.’”

To people like Griffiths who lament, in Cook’s words, that the “fragmented history of Canada, like Humpty Dumpty, can never be fitted together again,” Cook asked, “does it matter?” He didn’t think so, because history isn’t a civics lesson, much less a national consciousness raiser. It’s an intellectual discipline.

In a short essay published in 1967, Cook coined the phrase “limited identities.” There isn’t a single Canadian identity and there never has been, he argued. Instead of pining away for something that doesn’t exist, scholars should look at Canada’s limited identities, or its regional, ethnic, and class identities. The term stuck and soon took on a life of its own and came to include gender, religious, and Indigenous identities.

Participants run with a multinations pride flag during the Toronto Pride Parade, on Sunday June 25, 2023. Chris Young/The Canadian Press.

For his part, Granatstein never liked it. Writing in Who Killed Canadian History?, he argued that “Limited identities were almost openly anti-nationalist: it was not the nation that mattered, but ‘smaller, differentiated, provincial or regional societies’; not Canadians as a whole, but the components of the ethnic mosaic; not Canadians as a society, but Canadians in their social classes.”

Admittedly, Cook had an ambivalent relationship to “limited identities,” but not for the same reason as Granatstein. In his opinion, it wasn’t big enough to capture Canada’s complexity. Maybe “unlimited identities” would be better, he said in 1977. Or maybe, he said in 2000, it’s neither limited nor unlimited, but rather “multiple, relational, shifting, [and] contingent,” or intersectional, although he didn’t use that word. Still, that wasn’t quite right either.

In his 2009 Riley lecture, Cook took a final stab at identity, casting a wide and generous net that included an important nod to national identities. “Having been lucky once, let me try again: ‘multiple identities: national/limited/transnational.’ That conceptualization, I think, would help us better understand both the Canadian past and the world in which we live.”

If it lacks the pithiness of limited identities, it contains a lot of thinking, reading, and writing about Canada. It’s also optimistic and forward-looking and avoids the blame game inherent in trying to identify who, exactly, killed Canadian history when no one did.

On that note, and in my capacity as president of the Canadian Historical Association, I want to publicly invite Sean Speer and Rudyard Griffiths to our annual meeting in June in Montreal where they will see how Canadian history, and history in Canada, have been broadened, where they will meet scholars doing really cool things, from the social history of trans communities to the political biographies of prime ministers, where they will learn how the past is being communicated through tweeting, blogging, and podcasting, and where they can dip into any number of interesting monographs at the book display.

I’ll even pick up their conference fees.