Conservative Party Leader Erin O’Toole wants to blast Prime Minister Justin Trudeau over inflation. And the prime minister is certainly vulnerable as rising prices at the gas pump and grocery store illustrate the risks of runaway government spending. But using O’Toole’s policies to fight inflation would be like using gas to put out a fire.
Statistics Canada’s latest inflation report shows consumer prices rising by 4.7 per cent. That’s the highest annual increase in nearly two decades.
“Today’s numbers show the damage Justin Trudeau has inflicted on our economy by spending a staggering $400 billion above normal levels over the past two years, with a deficit among the highest in the G-20 last year,” said O’Toole.
Fair enough. The Trudeau government’s unprecedented spending is a factor causing inflation.
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The Bank of Canada has printed more than $370 billion by purchasing financial assets such as government debt during the pandemic. That 300 per cent growth in the central bank’s assets is significantly higher than what occurred during the recessions of the 1970s, 1980s, 1990s and 2008-09.
What is the Bank of Canada purchasing with these new dollars? Government debt.
In 2020, the feds ran a $335-billion deficit while the bank printed up new dollars to purchase about $275 billion worth of government of Canada bonds.
Just two days after Finance Minister Chrystia Freeland announced her plan to run a $3 billion per week deficit in 2021, the Bank of Canada announced its plan to purchase $3 billion worth of government debt per week. That makes it seem like Trudeau is using the printing press to finance a good chunk of his deficits. And the more dollars the government prints, the less your dollars buy.
O’Toole is right to criticize Trudeau for borrowing too much money. But he has a credibility problem. O’Toole just spent the entire election telling voters that he would spend about $50 billion more than the last Liberal government budget.
O’Toole is also off track on energy prices.
“Energy prices were up 25.5 per cent year over year in October, primarily driven by an increase in gasoline prices,” according to Statistics Canada.
With taxes making up 31 to 42 per cent of the pump price, according to Canadian Taxpayers Federation analysis, one way to make life more affordable is to provide tax relief.
O’Toole knows carbon taxes drive up prices.
“Why do I have concerns about a carbon tax?” asked O’Toole in 2018. “First, affordability. Families, people on fixed incomes like our seniors, they don’t have more coming in, yet they see costs going up. The carbon tax adds to that and raises the cost of everything.”
O’Toole even signed a CTF pledge promising to “immediately repeal the Trudeau carbon tax; and, reject any future national carbon tax or cap-and-trade scheme.”
But O’Toole now wants to increase the current nine cents per litre carbon tax to 11 cents per litre of gas.
O’Toole also wants a second carbon tax based on British Columbia’s fuel regulations that helped Vancouver break North America’s all-time gas price record. That second carbon tax could add another 16 cents to each litre of gas. Taken together, O’Toole’s carbon taxes would cost a family $20 every time they fuel up their minivan.
O’Toole’s carbon tax flipflop is keeping his Official Opposition from holding Trudeau accountable on sky-high gas prices. It’d be tough to hold a press conference standing up for taxpayers when your party leader wants to soak drivers for an extra 27 cents per litre.
Taxpayers expect O’Toole and the Conservatives to hold the government accountable on inflation. But O’Toole won’t have a leg to stand on in this inflation fight until he ditches his plans to raise the carbon tax and borrow more money.
Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation.
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