Juno News - Beware Carney's coming budget math trick

00:00:00.000 Welcome to the show, Not Sorry. My name is Chris Sims. I'm filling in for Alexander Brown today.

00:00:08.160 Thank you so much for making us a part of your day. If you have not yet done so,

00:00:12.600 please like this video and share it with your friends who need to know. So as you may know,

00:00:17.880 I am the Alberta Director for the Canadian Taxpayers Federation, where we are always fighting

00:00:22.440 for lower taxes, less waste, and more accountable government. You can catch more of our content here

00:00:27.900 on Juneau under the show, The Fighter, if you want to check that out. There's so much to talk about

00:00:33.600 here. And first off, I wanted to speak about this shutdown by Stellantis happening in Ontario.

00:00:42.300 This is such a bad situation. Around 3,000 people in Ontario are getting laid off because Stellantis

00:00:51.460 is moving south to the United States. Yep. They're picking up production and they're

00:00:57.560 spending, they say, around $13 billion in their production into Illinois. So this means that

00:01:05.340 around 3,000 families are now without a big breadwinning paycheck. So serious stuff going on

00:01:12.960 in Ontario. The problem here though, is that government does play a role. Okay. So first let's

00:01:21.280 pull up Prime Minister Mark Carney's response letter. He posted it on X today. So this is on social

00:01:27.200 media. And you can take a look at it here. Canada's new government will always be there for Canadian

00:01:33.680 auto workers. My statement on Stellantis' production plan. And he goes on to basically say, a lot of

00:01:40.860 words, but not a lot of action. And this is where the Taxpayers Federation, we wind up sitting there

00:01:47.600 scratching our heads asking, why are the adults not in the room? Why are they not taking the action that

00:01:54.440 needs to happen in order to prevent stuff like this from happening? Now it won't prevent all job losses,

00:02:00.440 and it won't prevent layoffs from happening all the time, but we can at least improve our odds on this

00:02:06.600 side of the border. And there's a few things that Carney needs to do. One, he needs to scrap his current

00:02:14.640 industrial carbon tax. And he must obliterate any and all plans to create a new, bigger, stronger industrial

00:02:24.080 carbon tax. And especially for places like Ontario, remember folks, we heard during the election campaign

00:02:31.960 directly from pipe workers and the steel industry saying that Carney's industrial carbon tax will decimate

00:02:41.360 their industry. Those were their words. They felt so strongly about it that we saw labor unions

00:02:48.860 endorsing the conservatives publicly. That was the first time I can remember seeing that in my political

00:02:56.140 experience. So this is a serious situation that's going on here. So why isn't Carney coming out right

00:03:02.620 away in scrapping that? Okay. Another element just to, if people remember the name Stellantis,

00:03:09.560 if you're not part of the auto sector, yet you still remember the name Stellantis, that might be

00:03:14.860 because the federal government gave around $15 billion with a B to Stellantis for a battery plant.

00:03:25.120 Now the battery plants in Windsor. And as far as we can see, this is not affecting the shutdown that's

00:03:30.140 happening happening in Brampton. The one that's happening in Brampton is apparently related to

00:03:35.700 Jeep. So we'll have to wait and see what happens there. The issue here though, is what concrete

00:03:40.940 actions is Carney going to take in order to prevent things like this from happening? So get rid of the

00:03:47.280 industrial carbon tax. And second, where is our trade deal with the United States? Hammering out a trade

00:03:55.580 deal, a cross-border trade deal, especially when it comes to auto manufacturing, should

00:04:00.140 be pretty straightforward because those are the ones who have the experts in the room.

00:04:05.360 We basically have an integrated automotive sector in Canada, cross-border trading. I think the last I

00:04:11.580 read was a car part can actually cross the Detroit-Windsor border or the Canada-US border like six to eight

00:04:19.560 times before it's finally installed in one vehicle. So you think that we would have these highly paid

00:04:25.740 experts within our trade departments who would be able to at least hammer out a good trade deal

00:04:31.560 with the United States when it comes to auto manufacturing. But we're still seeing all of

00:04:36.260 this uncertainty. And that's where we are urging the politicians and the bureaucrats who are very well

00:04:42.720 paid to be the adults in the room. They're going to have to do concrete things like getting rid of the

00:04:49.080 industrial carbon tax, like getting rid of Bill C-69, which is not just a no more pipelines law. It's basically

00:04:56.160 a don't build anything anywhere law. And it's also affecting Ontario and its ring of fire where they're not able to

00:05:02.360 get mining started. So the situation is this. Canada still has a big red stoplight over it when it comes to

00:05:09.940 investment. And when international investors don't want to park their money here, that means we as taxpayers wind up having to

00:05:17.740 spend more on the stuff we need. It's always better to get private investment happening in your country

00:05:23.980 because that alleviates the financial burden. So we need to see some serious action happening both from

00:05:31.640 Prime Minister Mark Carney and from Ontario Premier Doug Ford. Now, Doug Ford does have a brand new ad

00:05:39.200 that I wanted to show you in a moment. But first, let's take a moment to hear from our sponsor.

00:05:44.060 I want to give a quick word from our sponsor, Albertans Against No Fault Insurance. So did you

00:05:49.620 know that the Alberta government is overhauling its auto insurance system under a new model called

00:05:53.940 Care First coming to effect in 2027? Most Albertans injured in car accidents will no longer be able to

00:05:58.840 sue the at-fault driver. Instead, decisions about your care and compensation will be made by the

00:06:03.300 insurance company, not your doctor, not the courts. Critics say this system puts insurance companies first

00:06:08.460 and removes key rights from victims and their families. Okay, so like I said, this is interesting.

00:06:15.700 As the Canadian Taxpayers Federation, I'm seriously questioning the $75 million bill for this thing.

00:06:23.560 Apparently, Ontario taxpayers are going to spend around $75 million, with an M, airing an ad

00:06:32.560 in the United States. And it's going after tariffs. Now again, tariffs are a bad thing. They're just a

00:06:40.260 trade tax. Okay, it's a fancy word for a trade tax. It winds up costing normal working people more for

00:06:46.960 regular stuff on both sides of the border in the United States and in Canada. But I wanted to know

00:06:53.560 what you thought of this ad. So leave your responses in the comments under this video. Let's watch.

00:06:59.940 This is the ad that Ontario Premier Doug Ford's government is going to be airing in the United

00:07:06.420 States at a cost of $75 million. Let's watch.

00:07:11.640 When someone says, let's impose tariffs on foreign imports, it looks like they're doing the patriotic 1.00

00:07:17.260 thing by protecting American products and jobs. And sometimes for a short while it works,

00:07:24.640 but only for a short time. But over the long run, such trade barriers hurt every American worker

00:07:31.300 and consumer. High tariffs inevitably lead to retaliation by foreign countries and the triggering

00:07:39.540 of fierce trade wars. Then the worst happens. Markets shrink and collapse, businesses and industries

00:07:46.520 shut down, and millions of people lose their jobs. Throughout the world, there's a growing realization

00:07:53.800 that the way to prosperity for all nations is rejecting protectionist legislation and promoting

00:08:00.340 fair and free competition. America's jobs and growth are at stake.

00:08:05.840 Okay, so I'm super biased because I'm a Gen X kid. And that's a good ad because that, of course,

00:08:17.280 for kids who didn't know who that was, that was the former late president of the United States,

00:08:23.580 Ronald Reagan. And he's often referred to as the great communicator. And that's why, because he could

00:08:30.080 really deliver a message. His background, interestingly, he first started in sports radio.

00:08:35.720 The guy actually was able to describe entire baseball games that he could not see based on a

00:08:41.640 bunch of numbers coming out of a ticker tape. And he was able to make radio magic out of that. And he,

00:08:47.140 of course, eventually became governor of California and eventually president of the United States.

00:08:51.640 To the point here on what Reagan was saying back in 1987, when we were in the middle of trying to get

00:08:58.820 things going with trade between Canada and the United States in a more serious way, was that he's

00:09:04.660 right. Tariffs just make stuff cost more. Tariffs are just a form of trade taxation. The question here

00:09:12.840 is, A, is 75 million a good amount to be spending on this in the United States on TV airwaves? And two,

00:09:22.180 I'm curious about the timing. So I'm not dialed right in to the American election cycle. But are they

00:09:28.220 close enough to another election for this to really kind of swing the whole Reagan Democrat vote? And

00:09:35.560 that typically is a trades person, somebody who's working in things like the auto industry,

00:09:40.760 who's close to the border, who's in one of those northern states. So again, really good ad. I'm

00:09:46.960 curious about the price tag, because that's a lot of money for taxpayers to spend. And on the timing,

00:09:52.900 is the timing correct to be able to play on the hearts and minds of Americans?

00:09:56.660 I'm glad they're trying something. And I really want the adults to come back into the room with

00:10:02.100 this financial situation that we're in right now. Because all of the buzz around Ottawa is that we

00:10:08.840 could be facing down a deficit of $100 billion. I really hope that that is just a nightmare and

00:10:18.300 that that doesn't actually come true. Because at the end of the day, no matter how they try to play

00:10:23.900 a magic trick, and split the budget between capital and operating, it still is just spending.

00:10:32.700 So how do we dispel this magic trick that's happening in Ottawa? How do we make people understand

00:10:38.860 that at the end of the day, it is the bottom line spending that really matters when it comes to the

00:10:44.460 budget? Let's find out. Joining me now is Kim Moody, the founder of Moody's Tax. Now,

00:10:51.180 Mr. Moody wrote an outstanding article for the Financial Post on the issue of this whole sleight

00:10:56.940 of hand that's happening with our federal budget. But first, sir, I wanted to get your response.

00:11:02.220 It's one of those bad days in southern Ontario, where families are hearing about a terrible layoff

00:11:07.580 notice that's happening at Stellantis. And we're seeing the responses from the politicians. And

00:11:13.340 you had a pretty strong response to Prime Minister Mark Carney's answer, calling it tepid. Can't help

00:11:20.380 but say that I agree with you there. It was a lot of words, but not a lot of action. What was your

00:11:25.420 response to the politicians reactions here? Well, it's vacuous is basically the word that I used.

00:11:35.580 quite, you know, I repeated it because when you read those press releases

00:11:39.900 that come out of the Prime Minister's office, both in this tenure with Mr. Carney and then also

00:11:44.460 Mr. Trudeau, it's so vacuous. All of it is vacuous. It's designed to, you know, have some nice,

00:11:54.220 fluffy language that really means nothing. So, you know, there's a tax angle to this too,

00:11:59.340 which I wrote about. And just real quick, you know, the battery EV battery subsidies that were

00:12:05.900 given, which Stellantis was a recipient. There is a nice little order in council that was slipped in.

00:12:13.420 I think it was late 23, early 24 to make those subsidies non-taxable, which is very unusual.

00:12:22.300 And so, you know, when you consider the fact that Stellantis received subsidies,

00:12:29.900 non-taxable, and then of course responded to the US terrorists by moving jobs out of Canada,

00:12:36.140 it's just horrible, absolutely horrible.

00:12:38.300 I have to ask you, I've covered Parliament Hill for a long time, decades, and I was a little bit

00:12:45.900 hopeful that we would see, how do we put this, the adults coming back into the room. When we have

00:12:52.460 Mark Carney, he's got his PhD in economics from Oxford, he's been the head of a central bank for

00:12:57.900 both Canada and the UK, a different person, I would say, than former Prime Minister Justin Trudeau.

00:13:04.780 Were you hopeful that we would get a little bit more seriousness and a bit less vacuousness?

00:13:09.900 I must agree that that letter was pretty vacuous.

00:13:14.700 Yeah, I mean, of course I was hopeful. Anybody that replaces the unintelligent Trudeau,

00:13:21.500 and clearly you have, you know, a much more intelligent person, you know, I was hopeful. And,

00:13:26.700 you know, the tone was better. Some of the things that were happening, you know,

00:13:30.220 the rip-offs of the Conservative Party policy platforms were hopeful, you know. But when you

00:13:37.500 look at Mr Carney's background, which I've been aware of him for years and years, like many Canadians,

00:13:44.140 you know, there is a anxiousness there, because he's very much a socialist, and it's, you know, very

00:13:52.060 much a subscriber of the modern monetary theory of economics, MMT, which I clearly am not,

00:13:58.140 and most reasonable Canadians are not. And so, unfortunately, the playbook is certainly,

00:14:07.180 you know, what I was anxious about is coming, and it's disappointing, because the tone is

00:14:12.860 certainly better. But, you know, the whole elbows up crap, and then, you know, it's just unbelievable

00:14:21.740 that Canadians fell for that. Anyway, I could go on and on, but I was hopeful, but not anymore. 0.86

00:14:29.900 Let's get to your article, because you were bang on. I'll try to summarize it, but I strongly encourage

00:14:37.420 everybody to go read it. It's in the Financial Post, and you start very bravely with a reference to

00:14:44.300 literature with the golden bow on magic tricks and sleight of hand, and then you tie it very well

00:14:51.020 into financials, which I must say, as a writer, that's tough to do. So, good job on that.

00:14:55.900 No, thank you.

00:14:56.460 No, thank you.

00:14:57.420 But your point was so well made. Could you please try to make it again for our audience? Basically,

00:15:04.460 what Prime Minister Mark Carney is doing is taking his spending, and he's relabeling it as investments

00:15:11.980 and capital in order to hide the big ugly numbers. Is that where we're headed with this budget?

00:15:17.900 No question. Absolutely no question. And, you know, to explain the article, I used a simple

00:15:25.180 analogy of a magician, right? And I compared it to my son, who I watched as an amateur magician,

00:15:33.180 and actually, he got to be pretty good. And so, I would watch him perform in the Calgary farmers

00:15:41.180 market. They always have street performers. And so, he would perform these magic tricks,

00:15:45.660 and it's amazing to see. And I knew how the trick worked because I'd watched them.

00:15:50.620 But to see these people that were just amazed at, wow, how did you do that? That's amazing.

00:15:57.020 And then, you know, walk away and who knows if they believed it or not. But that example,

00:16:05.340 you know, accelerated to Las Vegas, for example, and some of the amazing magician shows there.

00:16:10.940 How to figure out some of those are unbelievable. So, if you compare those, that basic example,

00:16:18.540 to this financial example of separating the budget into capital and operating,

00:16:23.900 it's a magic show. You know, most Canadians don't understand magic. Most Canadians are not 0.96

00:16:28.860 financially literate. That's just a fact. I'm not being pompous or arrogant. It's just 95% of Canadians,

00:16:35.660 roughly, don't understand basic financial material. And so, can you do a sleight of hand magic trick

00:16:43.180 to think that you're going to balance the operating budget within three years? And the first time he

00:16:48.700 presented this in March during his liberal leadership coronation campaign, it was that he was,

00:16:55.260 you know, that he was going to use those savings in order to fund tax reductions for Canadians. Like,

00:17:05.180 how silly that is, because spending is spending, no matter if you separate capital

00:17:10.380 or operating. And this accounting trick goes back literally hundreds of years. This is not the first

00:17:16.860 time it's been done. And it certainly won't be the last. And the most recent was my home province of

00:17:21.980 Alberta, where, you know, disastrous premier Alison Redford, you know, the spending was completely out of

00:17:29.420 control in Alberta, and they proposed something very, very similar, and rightfully got roasted and

00:17:34.460 rightfully she, you know, basically got turfed as well. UK did it for a lot of years under Gordon Brown.

00:17:43.260 Greece did it in 2008. I could go on and on and on about historical examples. But this is simply a trick

00:17:51.980 to fool the financially illiterate that think he's smart, or think this federal government is smart,

00:17:58.540 when in fact, it's just a guise to increase spending. Great examples. It is great examples.

00:18:07.260 Most people who've been paying attention to news can remember those times. And those are bad financial

00:18:13.500 times. You point out that this can trick people who are financially illiterate. But I'm going to go out on

00:18:19.820 a limb here and say that international credit rating agencies are not financially illiterate.

00:18:27.500 Aren't they just going to see through this smoke and say, Hey, okay, well, what's going to happen

00:18:33.820 then we're just going to some of the numbers here are, I'll be to use a common term, they're freaking

00:18:39.260 me out. The numbers being warned about here of a deficit of $100 billion with a B in one fiscal year

00:18:48.220 is astonishing. I really hope that that is the worst case scenario and it doesn't happen.

00:18:54.300 But at the end of the day, Kim, won't it just be that these international money lenders and credit

00:18:59.740 rating agencies, the ones who are fiscally literate will look at the bottom line on how much they're

00:19:05.020 spending and how much they're adding on to the debt versus how much money they're bringing in in

00:19:10.060 revenue. Isn't that what's going to happen here?

00:19:11.900 Absolutely. Absolutely. That'll happen. So some might take comfort in saying that,

00:19:17.420 well, the smart ones at the table can see right through this. And it's been interesting that some

00:19:23.500 of the so-called mainstream media are also asking, you know, the right questions saying, well, hey,

00:19:29.020 isn't this just, you know, spending, you know, so they're not totally buying the spin, which is good.

00:19:34.700 Yep. But the problem is, you could end up in a crisis like the parliamentary budget officer

00:19:43.580 warned about, which I'll come back to that in two seconds here recently. But in the meantime,

00:19:49.340 you have this big voter base that is so enamored by the magic show and they'll continue voting for

00:19:55.980 the smart one, you know, the smart people that are handling our finances. And so they'll continue to

00:20:01.180 vote them in. Who knows when we get an election, you know, maybe three and a half years from now,

00:20:06.940 maybe sooner. And if we do, it'll be that group of enamored people that think that this magic show is

00:20:13.340 real and then may end up being sideswiped because the smart ones, the bond agencies or the lenders

00:20:21.900 are certainly not going to buy this garbage. Coming back to the parliamentary budget officer

00:20:25.660 for two seconds. You know, that strong language that they recently used in, I can't remember what

00:20:32.620 day that was, October, end of September, and then followed it up with on October the 7th.

00:20:40.300 But the first warning, I think it was end of September, said that, you know, $100 billion,

00:20:45.740 I actually didn't use $100 billion because they didn't include military spending in the deficit

00:20:50.060 numbers. So it was a lower number. But the, but, you know, they warned of going over a fiscal cliff.

00:20:56.940 Yes. And it was interesting to see some commentators say, well, this guy should be fired.

00:21:04.620 He's an independent parliamentary budget officer. You should be fired for making that kind of blunt

00:21:08.700 assessment. That's ridiculous. And then some liberals saying, you know, how offensive. And it's that kind

00:21:16.380 of reaction to warnings that really scares me, right? Because the magic show over here taints partisan

00:21:24.140 people into thinking that the magic show is going to overcome the reality. And that's the part that

00:21:31.340 scares me. I would go a step further and say the magic show then feeds into the emotionalism and the

00:21:40.380 response using emotionalism often in mainstream media. And unfortunately often coming under the

00:21:46.860 mouths of members of parliament. I'm trying to remember clearly because I was on parliament hill

00:21:53.580 covering the government back in the Kretchen years when then finance minister Paul Martin had to do some

00:21:59.580 serious cuts to balance the budget and fiscal restraint actually was a thing. I don't remember

00:22:07.100 these strange magic tricks and emotional responses to numbers happening. There wasn't any. There wasn't

00:22:13.740 any. Well, what on earth is going on then? And how do we bring the adults back into the room? Because at

00:22:19.740 the end of the day, to your point, Kim, it's going to be everyday working people that are going to be

00:22:26.380 wounded by this. Once the smoke clears and the mirrors are folded up and put back in the case,

00:22:30.940 we're what if we get a credit downgrade? What if our interest rates go up? What if again,

00:22:37.020 even fewer people want to invest in Canada? Like I can't even imagine that happening. So

00:22:43.580 is it basically when does this music stop? When do average people wake up and realize that they aren't

00:22:49.900 getting an earnest assessment from their political leaders here and that it's normal people that are

00:22:55.260 going to pay the price for this? Yeah, those are great questions that I don't have great answers

00:23:00.300 for because you rightly point out that if we go over a fiscal cliff and if the credit rating goes down

00:23:10.620 and if spending continues to be out of control, well, what's the inevitable result? Inflation.

00:23:15.980 And if we have inflation, what is that? Well, that's a tax on the poor. The wealthy can certainly put up

00:23:22.540 with inflation and to a certain extent they benefit from it. But not the poor. When you're paying,

00:23:30.220 you know, used to be $2 for a loaf of bread and now you're paying $10 for a loaf of bread. Well,

00:23:35.260 the wealthy can certainly afford that. But that $8 difference is a tax on the poor.

00:23:41.340 And that's who I worry about. You know, I get attacked for my writings quite often thinking that,

00:23:47.100 you know, people think that I, you know, act for the wealthy, which I do

00:23:51.020 in my private practice. But I do care about the, you know, my bigger concern is about the average

00:23:56.380 Canadian. And it's, it'll be them that'll be sideswiped by this. What's the solution? The only

00:24:01.740 thing I can think of is just education and calling out BS, which is what I do in my writings and my

00:24:08.220 speakings. You know, I'm not afraid to, and until one day they come and arrest me, I'm not afraid to call,

00:24:16.780 call out BS because I don't think they've passed that censorship legislation yet, but I think it

00:24:21.980 is in front of the House of Commons. So we'll keep an eye on that. I wanted to actually pull up a quote

00:24:26.780 from the article if we can here. And you say, it's a clever performance, but at its core,

00:24:32.220 it's a deceptive trick. One that trades transparency for theatrics and leaves Canadians poorer for having

00:24:39.100 believed it. Government spending, capital or operating, increases government debt in the same way.

00:24:47.100 Period. Like Albertans, in 2013, Canadians should speak loudly against this tired illusion.

00:24:55.500 Outstanding. So how do we then get Canadians to speak up against this tired illusion?

00:25:01.980 At the Taxpayers Federation, we try all sorts of things to educate people, including things like

00:25:07.020 our debt clock, showing it going up in real time and giving like concrete examples. Like for example,

00:25:14.620 we are now more than $1 trillion in debt. If you were to try to count that up in loonies,

00:25:22.060 1 trillion, one, two, three, it would take you 30,000 years to count that high.

00:25:29.180 Yeah, that's a big year. That's a big number.

00:25:31.260 It is. A billion dollars a week on interest payments on the debt. That's like burning down

00:25:37.740 a new hospital every weekend. Just people need to picture it that way. I guess what I'll ask you

00:25:45.340 lastly on this issue is, do you think this will resonate in the House of Commons? Do you think that

00:25:52.140 Pierre Polyev, for example, he's quite good at articulating things like debt and deficit,

00:25:56.620 but do you think that will play over into A, the Parliamentary Press Gallery,

00:26:00.780 enough for them to stop being so bamboozled, and two, to the average person, the average working 0.98

00:26:07.020 person realizing that this is going to hit their wallet, their bottom line, and it could wind up

00:26:11.500 costing them their jobs and their ability to afford things?

00:26:16.540 Yeah, I'll answer the easy question first. Do I have any comfort that the Parliamentary Press

00:26:23.580 Gallery will pick up on this? Zero. I haven't hung around Parliament Hill like you have,

00:26:29.740 but I've certainly appeared before many parliamentary committees, and it's amazing how

00:26:34.860 partisan these committees are. They're kind of a waste of time in the whole scheme of things,

00:26:38.860 and what's picked up by the Parliamentary Press Gallery is just sound bites that feed their narrative,

00:26:45.340 feed their narrative, and it's ridiculous. So no, I don't have any faith that they'll pick up on that.

00:26:51.500 Do I have faith that the average Canadian will finally, you know, get away from the magic show?

00:26:57.900 Well, I'm an optimist by nature. I mean, my coffee cup is half full. It's not half empty.

00:27:02.940 And so, yes, I do think with continued efforts by the Canadian Taxpayers Federation, like you guys,

00:27:12.060 like me, you know, a bunch of other people, I think there's some momentum on calling out BS,

00:27:19.580 and I'm hopeful that the average Canadian will pick up on it. Do I have any hope for,

00:27:24.540 you know, just the partisan, loyal person? Absolutely not. Like, those people are just

00:27:28.860 drinking the Kool-Aid, don't really care about reality or facts. All they care about is their

00:27:36.060 trusty leader, and they hate Pierre Polyev. You know, they hate him. I have a family member,

00:27:42.140 I won't name them, but you know, this person is in a leadership position with a non-profit

00:27:47.740 organization, and he's out there handing out his business card telling people how much he hates

00:27:51.660 Pierre Polyev. And it's like, so I confronted him saying, what are you talking about? Like,

00:27:58.060 do you even know the guy? Like, I know him. He's a friend of mine. And he's as genuine as they get,

00:28:04.620 and as smart as they get. And so, what don't you like about him? Oh, you don't like the truth. I get it

00:28:09.980 no. Okay. And so, people like that, I have no hope for. But, you know, reasonable Canadians who

00:28:17.980 want to understand, or are open to understanding, I've got a lot of hope for. And I think that's the

00:28:24.460 only way that this thing's going to turn. I think we all have family members like that.

00:28:30.140 Lastly, I wanted to get, you get right into a really good example in your article,

00:28:35.340 and I wanted to leave on this note because sometimes focusing on one element does punch

00:28:41.420 through to the mainstream media, and it makes them kind of hang on to it. And they'll start

00:28:46.700 asking the tough questions. And so, for example, when you pointed out earlier that isn't that just

00:28:51.580 spending? That's good. That's good that they're asking that tough question because it's true.

00:28:55.420 It is just spending. But you zeroed in on something in your article. Again, folks, it's in the financial

00:29:00.780 post. Strongly recommend everybody who cares about this stuff, go read it. You zeroed in

00:29:05.660 on how the government is trying to tweak the term of asset and capital. Can you explain in normal

00:29:14.940 people talk what an asset typically is and how the government is trying to warp that term in order to

00:29:24.460 hide their spending? Because I think if we teach folks who are in the media to hear that

00:29:30.540 watchword, that buzzword, asset, asset, investment in capital, they might ask the tough question.

00:29:36.140 Can you explain it? Sure. So, the average definition, the common or what I called classic

00:29:42.220 definition, and you learn this when you go to accounting school or take accounting courses,

00:29:47.100 that's kind of ABCs, but is an is an expenditure that has lingering value. And the classic definition,

00:29:55.980 a classic example that's often used is, you know, if you've got a house and it's got

00:30:00.540 asphalt shingles, and they need replacing because they're worn out, and you decide to replace them

00:30:08.940 with clay shingles, that's an improvement and it has lingering benefits. So, that would be an example

00:30:17.180 of a capital asset. When I buy a computer, even though they're pretty disposable these days, it does have

00:30:23.980 lingering value. That's an asset, and that's a classic definition. There's also intangible capital

00:30:29.740 assets, such as if I go out and buy a McDonald's franchise right that allows me to, you know, sell

00:30:37.020 hamburgers and fries. That is an intangible asset that has lingering value. Modify that for the

00:30:44.380 government context when they prepare their financial statements, and it's very similar,

00:30:48.780 but there's clear definitions of what they can capitalize, what they can consider to be a capital

00:30:55.020 asset. And a lot of it, to make it plain English, is tangible stuff like land and buildings. There's

00:31:02.780 the odd case where governments are able to treat software rights or licenses as intangible. But beyond

00:31:10.060 that the McDonald's franchise example is not relevant in a government context. And so, those are the two

00:31:18.620 baselines. What they're trying to do with budgeting purposes is expand that narrow definition into

00:31:25.660 something that's much broader. And they use the nice language of capital formation. Anything that forms

00:31:32.860 capital or may have a potential to form capital is going to be considered capital for purposes of the

00:31:39.020 budgeting exercise, this magic show. And so, you know, there's a lot of things that could be, you know,

00:31:47.580 eventually turned into a capital asset. And the one laughable one that I said in my article is the tax

00:31:54.220 expenditure, which is, so every time government introduces a new tax measure, that costs the

00:32:01.100 government lost revenues in taxation revenues. So every time they have a green credit that they've offered, which

00:32:08.700 there's been no shortage of that garbage over the years, you know, that costs money. Well, if it forms

00:32:16.460 now part of capital or capital formation, well, they're just going to take that tax expenditure and

00:32:23.180 put it into the capital column. I mean, that is so deceptive and so laughable and so offside,

00:32:30.220 basic accounting principles. But unfortunately, it's complex for the average Canadian. And so,

00:32:36.300 will they get away with it? Yes, they will. But it's laughable. I had a chat with, just to end on

00:32:44.540 this, I had a chat with a very senior economist about this. And he said, I just can't believe it.

00:32:52.300 I mean, that's ballsy. Because when I read it, I thought it was ballsy. But when you get a very senior

00:32:57.660 economist, that agrees with me, that's, that's, anyhow, I can go on and on. Hopefully that helps.

00:33:04.380 Well, it really does help. And I hope that there's a few because there are those who work hard in that

00:33:11.340 role. And if we can punch through to the mainstream media and make them stick a mic in the face and ask

00:33:16.860 those tough questions of aren't you just fudging the numbers and the definition of capital? Aren't you

00:33:22.300 just trying to hide your spending? Isn't at the end of the day, the number that matters the deficit

00:33:27.260 and how much you're adding on to the debt? I think we can be able to hold their feet to the fire.

00:33:32.460 Kim Moody, thank you so much for joining us today. Thank you very much for your article. Where can

00:33:37.180 people find more of your work? Are you are you most frequently on X or if people want to read more of

00:33:43.180 what you have to say? Where can they find you? Yeah, I'm on X at at Kim GC Moody. And then which

00:33:49.820 is K M GC Moody. And then on LinkedIn. And you can search me on LinkedIn. My contacts are always at

00:33:59.900 the bottom of my financial post articles, which I write weekly as well. So wonderful. Thank you so

00:34:06.540 much for your time today. And thank you for writing that piece. Oh, you're welcome. Thanks very much for

00:34:11.100 having me. You bet. Once again, folks, that is Kim Moody. He is the founder of Moody's Tax. Be sure to

00:34:18.380 go check out his writing. And again, he wrote that in-depth article in such a clear and understandable

00:34:25.100 manner that I think it's very helpful for both journalists, okay, both in mainstream and independent

00:34:31.340 media and for everyday working Canadians. Go read it and then ask those tough questions around budget time

00:34:39.580 of your member of parliament. Don't be fooled by this magic trick that's in the budget,

00:34:45.740 because at the end of the day, it's you and I who are going to pay. Thank you so much for watching.

Juno News - October 16, 2025

Beware Carney's coming budget math trick

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