Welcome to Need to Know, The Hub’s roundup of experts and insiders providing insights into the developments Canadians need to be keeping an eye on.
Today’s weekend edition dives into thought-provoking research from think tanks, academics, and leading policy thinkers in Canada and around the world. Here’s what’s got us thinking this week.
With all the focus on the tariff threats from President Donald Trump, Canadians would be remiss to forget that Canada has a lot of issues of its own making. These include declining average living standards over the past few years, a housing affordability crisis, and record food bank usage. And this is just the tip of the problematic iceberg.
Take the fiscal realities facing the federal government per the 2024 fall economic statement. In 2023-24, the federal government was projected to run a deficit of over $60 billion. Deficit-financed program spending has been adding to the debt for years, to the point where projected debt interest charges of $53.7 billion next year will be more than $51.9 billion the federal government is expected to raise from the goods and services tax (GST).
It’s clear Canadian governments have some work to do when it comes to reigning in finances, unleashing economic growth, and ensuring that all Canadians have the opportunity to climb the social ladder. Let’s take a look at a few new ideas that could help them get there.
How can the federal government save $10 billion this year?
A new study from the economists Jake Fuss and Grady Munro of the Fraser Institute provides a roadmap for cutting more than $10 billion dollars in federal spending by eliminating eight programs. The study assesses government programs, services, or initiatives that they evaluate to be “wasteful, inefficient, or ineffective.”
What this means is that the programs are either not accomplishing their stated goals or operating in areas where the need for government support is questionable. Some of the areas that the authors argue should be cut from the federal balance sheet include growing government support for journalism, several corporate welfare programs like the regional development agencies and the Global Innovation Clusters, and the Canada Infrastructure Bank, which a 2022 House of Commons Transportation Committee report recommended be abolished.
The areas of spending that Fuss and Munro suggest cutting and the projected savings are as follows:
While $10 billion in cuts would be a drop in the bucket when program spending is projected to be $486 billion in 2024-25, Fuss and Munro conclude that “if the federal government reduced annual program spending by $11.0 billion (2.3 percent) over two years, from 2024–25 to 2026–27, it could balance the budget while delivering significant tax reforms that would leave the majority of Canadians facing lower personal income tax rates.”
How provinces can crush growth-killing interprovincial trade barriers
Interprovincial trade barriers are back in the news, as Canadian policymakers look for ways to boost the economy amid Trump’s trade provocations. A new report from University of Calgary economist and Hub contributor Trevor Tombe argues that Canada’s provinces have the power to unlock significant economic growth by eliminating internal trade barriers and easing labour mobility—without waiting for national consensus.
