The Hub’s editor-at-large Sean Speer joins Up to Speed to discuss news reports that the Canadian government is planning “COVID-level” public spending including cash transfers to individuals and corporations in response to American tariffs.
What will the effect of these new, large cash outlays be on the Canadian economy, debt, interest rates, and inflation? The Hub breaks it all down along with including some political analysis on how the new spending could see the NDP reverse its position on not supporting a future Liberal leader’s government when parliament returns in March.
The following is an automated transcript. If you are quoting from or referencing this episode, please refer to the audio to verify.
RUDYARD GRIFFITHS: Rudyard Griffiths here, the publisher of The Hub, for our latest edition of up to speed. These are our short video segments that we dive into an issue in the news that we’re covering here at the hub. You can always get all of our great journalism anytime at triple w the hub.ca. To unpack what we think is one of the big stories you should be watching today is Sean Speer, co founder and editor at large. Sean, great to be in conversation with you.
SEAN SPEER: Yeah, it’s always great to connect Rudyard. Well,
RUDYARD GRIFFITHS: I wanted to get you on the program today for a quick 10 minute Hit on what we’re hearing out of the show government in Ottawa. I think it surprised a lot of people. Reports that the government is considering a quote, COVID level of spending to provide stimulus to individuals and businesses in the face of Trump tariffs. What’s your reaction to this?
SEAN SPEER: Yeah, yeah, it’s big news, but Rudyard has economic implications, and of course, it has political implications. As we started recording this afternoon, we now have reports that NDP leader Jagmeet Singh has expressed an openness to working with the government to pass an emergency relief package, which would ostensibly mean that he would support the government through some early votes of confidence, which tells us that even before we get into the economic and fiscal implications of today’s reports, it could have major ramifications for our politics.
RUDYARD GRIFFITHS: Absolutely. Let’s get to the political in a moment. But I want to talk about the economic. To talk about the economics Sean, because, you know, there’s consequences for decisions we ran, you know, not simply sky high record blowout debts and deficits during COVID Maybe that was justified. Seems like some of that spending probably wasn’t, in second hindsight. But now we have years of sky high deficit spending following COVID both at the federal and provincial level. So I don’t know Sean. I’m curious as to what planet some of our political class is living on that they think that it would be consequence free to once again go and borrow 10s of billions of dollars to transfer checks to individuals and corporations in the face of tariffs, surely this will have impacts on the currency, impacts on our borrowing costs, maybe larger impacts On the economy if we’re going to subsidize businesses and individuals consumers, as we did during COVID Twice in less than five years. Boy, doesn’t that send a message about the kind of economy we have in Canada. And I guess, as all things in economics, this is going to affect people’s behaviour.
SEAN SPEER: totally. And in fact, it already, it already is, isn’t it? One of the concerns around the extraordinary government intervention, particularly on the fiscal side during the pandemic, was it would, it would come to normalize the expectation that whenever there is a downturn in the economy, the government isn’t going to just do conventional Keynesian stimulus spending in the form of public infrastructure or whatever it was going to essentially commit to keeping Canadian businesses and households whole, which is an extraordinary promise, something that has not historically been the way we’ve thought about the role of government in these types of economic downturns. And as you say, if these reports are accurate, we’re not talking about some targeted support for sectors that are adversely affected by by the Trump administration’s tariffs. We’re talking about large scale, broad based emergency relief to Canadians to protect against, you know, virtually any economic loss from what we’re about to experience coming out of DC.
And I would just say, Rudyard, before I turn it back to you, one of the things that you and I have warned about, really, since early November, when President elect Trump first started talking about tariffs, is that we may not be in the short term here. You know that is to say, these tariffs may not be merely about inducing some sort of concessions out of Canada may be part of a new economic policy framework in the United States, and if so is it, should we expect that the Canadian government is going to provide emergency relief to Canadian business households in perpetuity? This strikes me as a kind of short sighted way to respond to what is a legitimate challenge for the country. But instead of working focusing on plan B, as you and I have discussed in the past, which is about doubling down on competitiveness, what we seem to have out of out of the Trudeau Government is doubling down on welfarism for individuals and businesses. And it seems to me that is precisely. Precisely the kind of defensive posture that is going to do long run damage to the country.
RUDYARD GRIFFITHS: Yeah, if you thought inflation was fun last time, get ready for you know the repeat the sequel. I mean, what’s going to happen? You can the story writes itself. The Canadian Dollar declines in the face of record borrowing. That’s generally what happens to the dollar, and it’s being pressured already by the threat of tariffs. Capital is leaving the country. People need less Canadian dollars. Canadian dollar less powerful. Costs more to purchase things. Maybe cost more to purchase your groceries the next time you go to the store and oh, there’s always that cherry on top. Your debt servicing costs go up, because if you got a lot more debt, if you’re borrowing 10s of billions of dollars, and remember, Doug Ford is now promising to go to the Ontario voters to do exactly the same thing, get a mandate to spend, in his words, tens of billions of dollars.
All that money has got to be sold to investors here in Canada, around the world, I think they’re going to be demanding higher yields as a result. So I see this as stagflationary Sean as precisely what we should be trying to avoid when it comes to Canadian economy. Let’s end on politics, though, because I think you and I both share a concern that there’s a lot of politics at play here. Specifically, as you mentioned off the top of our interview, jag Naylor Singh now seems to be reopening the door, proverbially, to supporting the Liberals should legislation in the form of a large scale stimulus package come forward. This all seems Sean like the liberals, in a sense, trying to extend the time after their leadership ends in early March, to give their preferred candidate, their Victor, an opportunity to, I guess, win the hearts and minds of Canadians. It certainly could be an expensive measure, couldn’t it?
SEAN SPEER: Yeah, no kidding, but I think that’s precisely right the prevailing wisdom and a lot of political commentary since Justin Trudeau announcement that he would resign after his party elected a successor was that soon thereafter, the Liberal leader and interned Prime Minister would be thrusted into an election. And we’ve been a bit skeptical of that set of assumptions at The Hub. We think there’s a whole host of reasons why the new prime minister would be keen to try to stretch this parliament out as long as as he or she can. And I think what we’re seeing today is the first step in what feels increasingly like that inevitable outcome. Yeah, Jagmeet Singh has talked tough in the past, but at the end of the day, he’s always he’s always laid down, and I think today, he basically set out his price. If the government is prepared to deficit finance large scale spending to support different sectors and and Canadian households, he’s going to find a way to essentially walk back his past, his past assertions about bringing the government down. And we could be in a world Ruger where this parliament runs through right to the fixed election date in october 2025, or and maybe I can come back to talk about this at a later date, even even beyond that, which is something that we’ve contemplated here at The Hub right.
RUDYARD GRIFFITHS: As always, Sean, great analysis, great insights, you’ll be writing, and others will in the hub on these latest developments, this, I would say, explosive news that we are once again considering COVID levels. That was the news report of spending in response to Trump tariffs against the backdrop of a severely deteriorated public and private balance sheet. Well, ladies and gentlemen, we’ll keep following this story for you. Tune in to more editions of up to speed on our YouTube channel, tons of videos that you can check out. We’ll be doing these daily. We hope you’re enjoying them.
