This week Hub readers discussed Canada’s neglected resource sector, the country’s brewing constitutional crisis, how unsustainable population increases won’t solve Canada’s underlying issues, and the completely overlooked tax increase the government just started.
The goal of Hub Forum is to bring the impressive knowledge and experience of The Hub community to the fore and to foster open dialogue and the competition of differing ideas in a respectful and productive manner. Here are some of the most interesting comments from this past week.
“The need for Canadian energy in Europe and Africa is clear. Establishing a national corridor wouldn’t be a short-term project, but we need to start thinking in generational timescales. Negotiating a corridor and addressing environmental impacts would require time and no doubt cost money, but not incredible amounts.”
“A bigger factor on the likelihood of some possible constitutional crisis sparked by intransigent senators is the increasingly nasty partisan nature of the political battlefield; elected officials and citizens alike. Perhaps this is just the natural ebb and flow of politics and nothing new.”
— Paul Attics
“We are faced with two major problems: an unelected Senate, and an activist Supreme Court. Both of them are capable and ready to overturn anything coming out of the House of Commons, regardless of the will of the people. Not a good look for Canada.”
“A shame that our immigration policy, once the envy of Western nations for its targeted approach and ts point system that addressed the actual needs of provinces and employers, has been set aside or watered down. Alarming too that it will drive down the standard of living of both Canadians and the very people Ottawa has decided to take in en masse. Providing an abundant, cheap pool of labour may be a desired outcome of businesses, but it produces consequences that run counter to the narrative of the Liberal/NDP coalition and their desire for ‘growing the middle class.'”
— RJKWells
“It doesn’t matter whether it’s more people or more electric cars, if you don’t have the infrastructure then you can’t support it.”
— Peter Byrne
Prime Minister Justin Trudeau, left, and Deputy Prime Minister and Minister of Finance Chrystia Freeland hold copies of the federal budget in Ottawa, on Tuesday, April 16, 2024. Justin Tang/The Canadian Press.
“Only capitalism provides a sustainable economy that can support the government’s need for money, while also returning a profit on the investment and providing employment and a good standard of living for the citizens. In Canada, our economy has become inverted. The government is employing more and more people who create no monetary input to the economy. This is unsustainable.”
— Greg Jackson
“Narrow taxation changes for short-term political purposes is a huge ongoing multi-partisan roadblock to prosperous, stable, and fair tax regimes (federal, provincial, municipal). Alas, a tale as old as taxation.”
“No one wants to live in a city without zoning laws, or even very loose ones. Restrictions meant to preserve light and green space make cities livable, they don’t just block housing. Heavy restrictions on even modest density do probably unfairly privilege the interests of existing residents over potential residents, and it’s a harm to restrict the kinds of neighbourhoods and lifestyles people want even if it doesn’t result in aggregate unaffordability.”
— Valerie
“You’d think that with the high current prices housing construction would be booming in Canada, but there are too many financial risks and bureaucratic hurdles for developers to accept.”
The Hub’s mission is to create and curate news, analysis, and insights about a dynamic and better future for Canada in a single online information source.
The Hub’s mission is to create and curate news, analysis, and insights about a dynamic and better future for Canada in a single online information source.
“It is because every individual knows little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.” – Friedrich Hayek
Canadians are watching as their skylines rise ever higher, while the low-rise, single-family neighbourhoods that once symbolized middle-class life become unattainable for the next generation. Amidst superficial signs of economic prosperity, life for the average citizen has deteriorated as our economy, having not grown on a per-capita basis for 10 years over Canada’s “lost decade”, becomes increasingly zero-sum. This has hit our young the hardest, with Canadians under 30 reporting they are far less happy than their parents.
Frustration is boiling over as the public demands action rather than talk from governments. Meanwhile, politicians make shallow promises to alleviate the cost-of-living crisis. This anger has been channeled in the growing protest against Loblaws, the largest business in Canada’s “Big Three” grocery oligopoly over perceived price-gouging. Pretending that they’re taking food inflation seriously, the Trudeau government loudly announced plans to attract an international grocery chain to enter the Canadian market, suggesting that one new entrant to the market could create enough competition to solve a much deeper problem.
Canada’s lost economic values
All this reflects a consistent pattern: governments fail to understand the systems driving market outcomes, attempt to pick new corporate winners with subsidies that align with their political agenda, and are then baffled when the consumer benefits don’t materialize. Rarely do governments allow themselves—or the public—to ask the deeper questions underlying Canada’s economic stagnation.
Why are there not more small and medium-sized grocers? Why haven’t international grocers invested here without coercion? Why have so many sectors of Canada’s economy become dominated by oligopolies established a half-century ago or more? Why have basic necessities like food, housing, healthcare, and transportation become so much more expensive? How has it become so hard and costly to build anything physical in this country? Why do Canadians, who once had an abundance of choices, increasingly have fewer real options in their economic lives?
Canada’s economy is experiencing the culmination of a long-term decline in real economic freedoms, which is increasingly evident in everyday life. You are not free if soaring rents prevent you from moving to a better job in a different place, or if owning property is only possible through inheritance. Freedom is stifled when moving incurs exorbitant taxes and fees, or when you’re told you must wait on endless lists to address health issues with no alternatives. It’s compromised when the costs of having children or starting a simple business are an unrealistic dream. It’s curtailed when changing careers demands costly re-education, or taking time off work risks basic sustenance. Ultimately, you are not free if your future is chained to debt, paying endlessly for shelter inferior to what previous generations enjoyed. True economic freedom demands real, attainable choices in every aspect of life.
Economic freedom is built on fundamental principles essential to a thriving and just society. These principles include open and competitive markets, regulatory efficiency, the rule of law, ease of starting and scaling businesses, labour freedom, freedom from corruption, and, importantly, secure property rights. Market openness fosters competition and innovation, while regulatory efficiency ensures rules facilitate rather than hinder economic activities. The rule of law guarantees fairness and predictability, and labour freedom ensures individuals can work in environments that respect their rights and potential. In too many examples to count, contemporary public policy has discarded grounding in these important values. The outcome has been a decline in all of them.
From telecom to banking to airlines, governments have erected formidable barriers to entering the Canadian market through onerous regulatory regimes and restrictive foreign ownership policies. In Ontario and Quebec, the inability to crack down on auto-theft rings has sent our cars abroad and insurance rates skyrocketing. Interprovincial trade barriers act as an invisible tax representing up to 7 percent of the cost of goods. Credential inflation, coupled with rigid credentialing authorities, has extended the time it takes to enter the workforce, made career transitions difficult, and stymied the potential of highly educated immigrants. High housing costs, exploding rents, and high taxes on moving have trapped Canadians in place and hindered productive labour mobility in our biggest cities. Infrastructure costs, like those for the Ontario Line subway, have ballooned to be multiple times higher than in comparable developed countries, revealing the unspoken soft corruption ingrained in public procurement we pay for via higher taxes. The ArriveCan scandal is already fading from public memory; we’ve become desensitized to what we should find alarming.
Canadians have given up their property rights
The most critical pillar of economic freedom—property rights—has suffered the greatest erosion, largely at the behest of provincial and municipal governments. Once a cornerstone of individual autonomy, economic prosperity, and the fight against feudalism, property rights have been systematically undermined by intrusive government policies. As property rights deteriorate, the ability of individuals to invest, innovate, and plan for the future diminishes, leading to a stifled economy and diminished personal freedoms.
The slow usurpation of property rights in Canada can be traced back to the introduction of modern planning and zoning regulations, particularly in cities like Toronto and Vancouver. These measures, originally intended to organize urban growth and ensure livable communities, have become tools of restriction rather than empowerment. Toronto’s stringent zoning laws, initially designed to separate residential, commercial, and industrial activities, have evolved into a complex web of regulations that severely limit property use and development. The recent rejection of a modest three-story, 10-unit building on a dilapidated property in Toronto’s wealthy Seaton Village, located near two subway stations and requiring no new infrastructure, underscores the challenge. This rejection, made by an unelected Committee of Adjustment after the project endured multiple public hearings and extensive letter campaigns, ultimately demonstrates how little property rights matter to Canadians and their local governments.
Canadians have overlooked the risks of ceding their rights to overzealous central planners. For instance, moral panic regarding single women in the early 20th century led to the banning of apartment buildings in neighbourhoods restricting housing options, encouraging expensive suburban sprawl, and perpetuating exclusionary zoning. Coupled with onerous modern approval processes and exorbitant taxes on new development that have exploded in recent years, these restrictions make it increasingly difficult to build housing within the constraints of infrastructure and demand. Canada ranks second to last in the OECD for building approval times as of 2020, a testament to the bureaucratic hurdles that exacerbate the housing crisis.
People walk by bilingual signs for a commercial space for lease in the city of Westmount on the island of Montreal on August 5, 2022. Graham Hughes/The Canadian Press.
Even when starting small is legal, it’s infeasible
Let’s return to some of our initial set of questions: why don’t small and medium-sized grocers capture a larger share of the Canadian market? Let’s consider the challenge of starting a small neighbourhood store, like a bodega. Modern zoning laws have severely restricted housing development in neighbourhoods to densities too low to viably support most local retail businesses. Even where they do, other rules prevent entrepreneurs from renovating the first floor of their home into a small shop, forcing them to instead turn to commercial landlords in strip malls or plazas. These landlords then demand long-term leases on properties that incur costly renovations, resulting in higher startup costs for the entrepreneur. This significant financial burden deters many from pursuing their dreams and represents a loss of economic freedom to the entrepreneur and their customers.
Without opportunities for small businesses to start and thrive, there are fewer chances for them to grow into medium and large enterprises. Our theoretical bodega can’t learn and prove itself by starting small, expanding into a supermarket, and eventually becoming a chain.
More importantly, if incumbents in a sector don’t fear new competition from these theoretical upstarts, they have little incentive to invest in their own competitiveness. It’s also worth highlighting that the lack of local businesses also means fewer “third places“—essential social spaces outside of home and work—in neighbourhoods, reducing opportunities for community interaction and healthier lifestyles. Restrictive policies not only stifle economic dynamism but also diminish the vibrancy and health of our communities.
Governments need to quiet down and get building
While this may sound like a libertarian argument, economic freedoms are not a challenge of the size of government per se. Instead, calling for an increased focus on our lack of economic freedoms confronts the government’s increasing intrusiveness and its coercive impact on our lives. The issue at hand is not how large the government grows, but how loudly it operates in the private economic lives of its citizens through public policy. That governments have become too big is certainly debatable, but that they’ve become too noisy is undeniable.
Public agencies can and should compete with the private sector, but the government should not impose excessive limitations on private businesses and then blame them for the resulting market failures they create. Instead, governments should build public institutions that deliver services and goods (such as housing) while adhering to similar rules as the private sector, enabling fair competition. This approach broadens options for individuals and businesses alike, ultimately enhancing economic freedom. Take our heated debate on the future of healthcare, one can support funding a robust public health sector that guarantees universality without the need to restrict options for private care. Ultimately, by cultivating strong public institutions that add to rather than obstruct opportunities, the government can empower citizens to pursue their goals in an environment where both public and private entities contribute to a vibrant economy that respects individual choice.
The erosion of economic freedom in Canada has been led by special interests manipulating their relationships with politicians and government to secure policy victories at the expense of our collective autonomy. Economic freedoms must be the foundation of public policy because these interests inflict countless small, often invisible cuts that cumulatively erode our economic liberties. Public policy tends to evaluate individual ideas in isolation, failing to consider whether these fragmented decisions collectively improve the lives of citizens. To safeguard our economic future, we must ground policy in core values and consistently question whether our actions align with those principles. Only by doing so can we ensure a vibrant, dynamic economy where opportunities for growth and prosperity are accessible to all.
Eric Lombardi stands at the forefront of urban development and advocacy as the founder and president of More Neighbours Toronto, a volunteer organization committed to ending the housing crisis. Professionally, he specializes in strategy management consulting in the finance and technology sectors.
Eric Lombardi stands at the forefront of urban development and advocacy as the founder and president of More Neighbours Toronto, a volunteer organization committed to ending the housing crisis. Professionally, he specializes in strategy management consulting in the finance and technology sectors.
