Juno News - October 29, 2024


Did Trudeau trigger a recession in Canada？


Episode Stats

Length

22 minutes

Words per Minute

184.7393

Word Count

4,220

Sentence Count

1

Misogynist Sentences

1

Hate Speech Sentences

1


Summary


Transcript

00:00:00.000 well anytime anyone in the federal liberal government talks about Canada's economy they
00:00:08.400 seem to be very optimistic they always talk about how Canada's economy is growing and that's something
00:00:13.620 that we should all be excited about wages have been outpacing inflation for 18 months in a row
00:00:22.260 but it doesn't really feel that way does it not only does it not feel like Canada's economy is
00:00:27.900 doing well but the statistics also do not back up any of those claims young Canadians it appears
00:00:34.680 can barely find any entry-level work these days Canada's GDP per capita is decreasing and Canada's
00:00:42.420 housing starts are also decreasing so how exactly can anyone claim that Canada's economy is doing
00:00:48.720 well right now when quite clearly the opposite is true well joining us now on the show is Russell
00:00:55.320 Matthews a Canadian financial youtuber commentator and real estate agent Russell thank you so much
00:01:00.900 for joining the show thanks for having me here Harrison it's nice to meet you and I've been
00:01:04.500 looking forward to chatting appreciate that and likewise I want to first start off with the news
00:01:10.080 that came out of Ontario last week the province has once again raised the minimum wage at a time
00:01:15.960 when youth unemployment figures are down now what does this decision mean for workers in Ontario yeah
00:01:22.920 well I think for for most workers especially those that are uh in that sort of minimum wage range for
00:01:28.500 for their jobs it's definitely a welcome change for for them right going up to the 17 20 a doll
00:01:35.400 20 dollars or 17 20 an hour up from 1650 I think it was or roughly that um like a four percent increase
00:01:43.980 uh but I think you'd probably be hard-pressed to find anybody for which that's going to be a super
00:01:49.920 meaningful difference in their lives right um definitely welcome but the reality is it's a
00:01:54.840 marginal increase relative to the surge in the cost of living that we've seen over the past number of
00:02:00.120 years do you think that this will result in in more uh younger workers being able to get into the job
00:02:06.960 market because we know how tight it is for so many young young people in this country we've heard the
00:02:11.280 stories people saying they just can't find an entry-level job anymore for whatever reason they're just not
00:02:16.260 being you're not getting those looks for those under-level jobs so does this decision change
00:02:21.300 that or do you think that it might have a negative impact for access to jobs yeah it's tough to know
00:02:28.380 for certain right and we'll definitely watch how it plays out going forward but I'd argue that it's
00:02:33.600 likely not the minimum wage that's being paid to young workers that's resulted in the challenge with
00:02:39.000 them um ending up being able to get jobs especially in those sort of entry-level jobs that they need to
00:02:45.060 build their experience I wouldn't say that a lower or a slightly higher minimum wage would have too
00:02:51.060 heavy an impact uh on their job prospects I think far more some of the changes that have been made to
00:02:57.540 the temporary foreign worker program along with sort of what has happened there over the past number
00:03:01.940 of years in my eyes at least uh would be uh have a larger impact on young Canadians job prospects
00:03:09.540 so let's get into that a little bit how has immigration changed the economic landscape in
00:03:16.260 Canada for not just those entry-level jobs but also we're increasingly hearing about um high-skilled work
00:03:23.460 the high-skilled temporary foreign worker system or program rather um really impacting the job market
00:03:30.420 talk to us more about that because it's one thing for people like myself to talk about it but I don't
00:03:35.700 really have that background in in in economics as you do so what what what has this immigration program
00:03:43.380 the expansion of the temporary foreign worker program and all the other programs that come along
00:03:47.380 with that what has that done to the economic landscape in Canada yeah so let's start with just
00:03:52.900 talking about the temporary foreign worker program in in general maybe we'll get more into the high skill
00:03:58.740 aspect of it later something I'm not as familiar with but a quick sort of um recap of the past few years
00:04:04.340 perhaps about what what's happened here with the temporary foreign worker program uh well we saw
00:04:10.260 large-scale reports of labor shortages in around 2021 um you'll remember all kinds of signs we can't
00:04:17.300 find workers there's nobody here to fill in these business or to help these businesses do what they need
00:04:22.580 to do so there were some changes made by the government to allow for more temporary foreign workers to
00:04:29.140 um be able to fill those positions right there's this idea that that makes sense because it it helps
00:04:35.780 Canadian businesses thrive and and if there's nobody to work then how can these businesses grow
00:04:40.820 that's sort of a questionable conversation that we can sort of get into more um but I believe that
00:04:46.180 uh these changes were made by the political and financial elite um because they sort of are scared of
00:04:52.020 this concept of a wage price spiral you have to also look back to the economic climate that we're
00:04:56.980 in in 2021 um especially into 2022 with uh record high inflation um one of the worries of the central
00:05:06.260 bank and the federal government is that if they allow wages to keep on growing without uh equal
00:05:13.140 productivity growth that they could see something called a wage price spiral where that drives inflation
00:05:19.060 up even more which is the main goal that the bank of canada was trying to fight against um the idea
00:05:24.420 being that if you have to pay people more to work in at your business then those costs are going to be
00:05:31.300 added into the product and expanded um and sort of passed on to the consumer so the idea is if we can
00:05:36.980 reduce inflation um by preventing a wage price spiral um so i think that that is the sort of framing of a
00:05:44.100 well-meaning government or a well-meaning um central bank to try to serve the interests of canadians
00:05:50.420 what ended up happening though i think was something that drove down wages in general because now all of a sudden
00:05:56.580 there's a huge amount of labor supply in the market that people can have access to
00:06:01.860 uh and that obviously leads to some issues when it comes to younger canadians getting these entry-level jobs
00:06:07.860 because all of a sudden they're not the only ones competing for those jobs and there are additional incentives
00:06:13.380 for people to take those jobs um because maybe they're not here just for the pay but additional
00:06:18.740 points to help with a permanent resident status um you know part of the this the a new phenomenon
00:06:26.660 really you can say that we we've seen with this mass expansion of the available labor supply in canada
00:06:32.820 has been the prevalence of uh black market and under the table work i want to ask you um you know what
00:06:39.300 role does the uh this sort of the black market under under the table economy play when wage hikes are
00:06:45.060 imposed um and how might this lead to an increase in in uh off the books employment um and job and
00:06:52.420 security yeah yeah i think that we we've seen a large amount of fraud in the system by by all reports
00:07:00.900 um talking specifically about uh labor labor market impact analysis jobs this program that was essentially
00:07:07.860 designed to make sure that no other canadian could fill a job before temporary workers were able to
00:07:13.220 take on those roles now i think that that's a well-meaning program one that makes a lot of sense
00:07:18.340 if you can prove that there's no canadians to fill a position then then it makes sense um to bring bring
00:07:24.020 someone in to help out that business uh but there were it has been a lot of uh questionable practices
00:07:29.780 in this space right um people putting uh up job postings and putting them on uh job pages that
00:07:36.420 aren't actually um seen by applicants or aren't used by uh applicants for jobs allowing them to
00:07:43.060 say hey nobody applied so we can bring people in this is one of the areas of fraud that we've seen
00:07:48.020 uh additionally um we've heard of immigration consultants uh selling labor market impact analysis
00:07:54.660 jobs lmia jobs to people to help them boost their uh their standing when it comes to the permanent
00:08:01.540 residence application if you have a job secured then that's going to boost your ability to get
00:08:07.060 uh resident status in canada and it turns out there's a a cost to that or a black market uh price
00:08:13.140 that people were willing to pay in order to make sure that they get that job instead of somebody else
00:08:17.860 now it goes goes a lot deeper than that but ultimately we've seen the the liberals backpedaling on
00:08:23.460 this immigration policy saying we're going to slow down this temporary foreign worker program
00:08:27.540 we recognize that canadians are saying hey maybe this isn't sustainable but ultimately i don't
00:08:32.500 know how much of an impact these changes are going to have given the fraud in the system and um the
00:08:38.500 fact that a lot of the the businesses that were making use of this program weren't doing so above
00:08:44.340 board and the government also didn't have the resources to check to make sure that they were doing
00:08:48.420 it above board now are these changes going to actually slow things down or is it going to make
00:08:53.460 people and sort of turn to doing more things off the books i think we're going to have to wait and see
00:08:59.380 well because of one of the one of the obvious re um consequences of that has been that a lot of
00:09:04.420 young people are out of work and whenever that is the case we usually start to hear more about
00:09:10.180 universal basic income it starts to be talked about more often and two weeks ago an ndp member of
00:09:16.100 parliament proposed a universal basic income uh piece of legislation i want to ask you do you see a
00:09:22.660 situation in canada's future in which a ubi a universal basic income could become a reality
00:09:29.860 do i see a future yeah i see a future where that could certainly happen um then we have to have the
00:09:35.300 conversation is is that a good thing or is that a bad thing right i i think i think in in a lot of
00:09:42.340 cases if you if you look at this in okay everybody's a well-intentioned actor in the system
00:09:48.420 um it kind of makes sense right i can see the argument for it um people should be able to to
00:09:54.260 live um and have uh ability to sort of pay for food and to be able to pursue uh work but also their
00:10:02.260 passions and maybe take risks in order to build businesses that you wouldn't have taken if there
00:10:06.180 wasn't that social safety net i think that these ideas are are good ideas in principle um but when i see
00:10:13.700 what happens when good ideas are put into practice um in ineffective ways that that's what makes me a
00:10:19.780 little bit more cautious right um we've seen all kinds of funding programs be it uh um the sort of
00:10:26.180 green slush fund that's been in the news or or some of the uh rent-a-feather uh indigenous programs and
00:10:32.340 funding that we've seen there as reported by uh global news um we've seen that sometimes the funds that
00:10:38.740 are put towards a given goal don't actually achieve that goal and are subject to possible
00:10:43.460 corruption or just uh ineffective application of those ideas so in a perfect world i think it could
00:10:49.380 be a good thing but i just don't i haven't seen the evidence to convince me that it would be free of
00:10:54.900 corruption and free of any issues on that front but do i see a future where it could happen i i definitely
00:11:00.420 do you know when whenever members of the justin trudeau government talk about the economy and i'm
00:11:06.260 thinking specifically about christian freeland here they always sound so optimistic somehow
00:11:11.140 and whenever we talk to canadians about this they never share that optimism it's always everybody
00:11:16.740 feels pretty down about the economy um at least the people that i speak to and the question i have for
00:11:21.860 you now is is canada in a recession because i think for a lot of people it does feel that way
00:11:27.380 yeah and i think a lot of people might feel a little bit confused about why it feels that way
00:11:31.860 right and we see uh leaders around the world doing this right but pointing to uh look our economy is
00:11:39.460 growing if you look at the top level gdp numbers um by all accounts canada's economy is growing but i
00:11:47.220 don't believe that that top level economic number is an accurate reflection of the the day-to-day
00:11:53.460 realities of actual people i don't think it's a reflection of how an economy is actually serving the
00:11:58.980 people within it uh rather it's more of a vanity metric in my eyes um what i like to look at
00:12:04.980 personally is gdp per capita or a country's productivity um to sort of uh be a better analog
00:12:11.700 between how people are actually experiencing an economy versus just the the headline numbers and
00:12:17.060 it's a vastly different story when we talk about gdp per person as opposed to gdp while we've seen gdp
00:12:23.780 grow um largely i believe as a result of the uh the uh immigration changes in the temporary foreign
00:12:30.900 worker program we saw the gdp grow the economy is growing but on a per person basis it's shrinking
00:12:36.900 right we're adding more people to marginally increase the the entire country's uh gdp but on
00:12:44.660 a per person basis that uh that reflects uh how a person experiences their quality of life that's
00:12:52.100 actually been shrinking over the past number of years so in reality it feels like a recession for
00:12:56.980 sure even though the definition of a recession a declining gdp over a number of different quarters
00:13:03.060 maybe we haven't seen that but it certainly feels like it and for canada's experiencing it it's it's
00:13:08.740 more real than the top line gdp numbers i've heard economists talk about canada's declining
00:13:16.340 productivity and pointing to the fact that our declining productivity is a serious problem but i
00:13:22.660 find it hard to conceptualize what exactly that means and what the and and why canada's productivity
00:13:29.220 is declining can you explain in a bit more detail what that means on a day-to-day basis and exactly why
00:13:35.300 canada's productivity has dropped so into such a dangerous territory yeah i think that that's a
00:13:41.140 challenging question the the later question that you that you posed there uh why exactly are we
00:13:46.100 struggling with this i have some ideas some hypotheses that we can get into but first a sort of explanation
00:13:51.540 of of productivity and how we get to that um the idea of productivity is that if you can make
00:13:57.620 every individual worker in a country produce more valuable outputs um then that's going to result in
00:14:04.020 a higher standard standard of living um uh and more gdp growth in a country which by all accounts is a
00:14:10.340 good thing uh and how do you do that well you can invest in workers and getting them more skilled
00:14:15.220 so that they can perhaps do something more quick quickly that they were doing slowly before you can
00:14:19.700 invest in in tools uh invest in automation meaning that one person can do the job of five because now
00:14:25.540 we have access to these more advanced tools it's investment in these sort of research and development
00:14:31.140 um ideas that i think can help with productivity um interestingly the conversation we were just having
00:14:37.940 about um the sort of suppression of wages and uh tampering in the labor market i think personally
00:14:44.580 this is my hypothesis that that could have a negative impact on productivity in canada because if you have
00:14:50.820 artificially low wages um in some even fraudulent below minimum wage payments um with the ml mia issues
00:14:58.820 that we talked about in the past um and i'm sure you've talked about with your viewers as well uh
00:15:04.100 uh yeah that that it's it gets to be it gets to be a challenge right because when you have uh these
00:15:12.100 issues where the government is coming in and uh and editing the labor market um then then there are
00:15:20.260 some serious problems um yeah maybe do you want to direct me in in another direction here i can keep
00:15:26.980 going yeah yeah no i mean that that that i think helps to conceptualize what that means because for
00:15:32.740 in my perspective you know when i hear about productivity it's hard to understand exactly
00:15:37.780 what what what is being discussed in that instance now i think i want to i want to switch gears now to
00:15:42.340 housing because this is something i know you speak quite a lot about um and it's obviously something
00:15:46.980 that is top of mind for many canadians sure and housing starts have managed to decline they keep
00:15:54.100 declining it appears at a time when demand for housing at least in my eyes has never been higher
00:15:59.700 how is it possible that housing starts are declining in this country yeah yeah and this is
00:16:06.500 something that a lot of people are pointing to and saying hey this is this is a little bit odd
00:16:10.180 right we haven't we haven't seen this uh recently um this is something that the the current
00:16:15.300 government is saying hey we need to do something to make sure that more housing starts happen
00:16:20.500 um the government has one strategy um i'm not sure if that's the best strategy but
00:16:25.460 we'll we'll get into that in a moment um for housing starts i believe that the the main reason that
00:16:31.620 we're not seeing them is because chiefly it's not as profitable for developers um right now given
00:16:38.980 the higher interest rates that we're experiencing these people need to take on construction loans
00:16:43.220 different kinds of loans to actually develop this housing uh alongside all kinds of different
00:16:47.780 development charges by or levied by municipalities and provinces um where those apply it makes it
00:16:54.660 more challenging to produce a home that there's actual uh buyers in the market for right uh i think
00:17:01.060 that there's record demand in the market but i just don't think that there's demand in terms of the
00:17:06.500 people who have dollars to pay for housing at a price where it is profitable for those developers
00:17:12.180 um this is the challenge right we've we've let housing prices grow and grow and grow and now all
00:17:17.860 of a sudden people can't those wages that people are earning can't support the loans that they're
00:17:23.540 trying to to get to buy this housing um so interestingly the government says okay well what
00:17:28.820 we're going to do then is we're going to make it easier for canadians to take on more debt um specifically
00:17:34.820 high leverage debt um they've expanded the maximum amount of mortgage you can take on when you have an
00:17:41.060 insured mortgage these are people that have anywhere from five ten fifteen percent as a down payment
00:17:46.420 versus the twenty percent plus these are people that don't have as much equity in their home right
00:17:50.980 off the top what they're saying is hey we're going to let those people take on more debt more easily
00:17:57.060 so that they can buy these homes that people are that developers are trying to sell off they can pay
00:18:02.660 those higher prices that will then make it profitable for the developers and if they know that they can
00:18:07.700 sell to this new um new uh surplus of demand then perhaps housing starts will will take up again
00:18:15.140 as as interest rates come down i think that would happen naturally anyways and there might even be
00:18:19.380 an argument that um the the pendulum is swinging that way already and we have a tendency to overshoot
00:18:24.740 with our policies because it takes so long for government to recognize what's really happening
00:18:29.380 um but i guess we'll see if if this is too much uh sort of stimulus or or not enough
00:18:34.900 and is that is that kind of in relation to your your most recent video where you're discussing this
00:18:42.820 this uh bailout that is taking place this kind of secret bailout that is taking place uh for
00:18:49.860 canada's top banks i want to give you a chance to explain that because um and explain that concept
00:18:54.580 in more detail because when i was watching the video it was hard to believe so can you explain more
00:18:59.220 about what this secret bailout is yeah i think it's a bailout on on multiple fronts for multiple
00:19:05.540 different parties not just the big banks in canada but i think that there's a lot of convenient
00:19:09.860 solutions that are happening all at the same time to either make people look good or to make um make
00:19:16.660 banks more more stable right uh in the video i talk about how okay the government has sort of slowed
00:19:23.460 down temporary foreign worker program um they need another way to uh to prop up gdp numbers and i
00:19:29.780 think that's why there's been a lot of the mortgage changes that that we've seen um canada is an
00:19:34.580 economy of housing and as housing grows uh or as there's more activity in housing the canada's gdp
00:19:41.380 grows i think that that's a bailout that the government is sort of giving itself through through
00:19:45.460 policy right we're going to pop up our gdp numbers so we can continue to say our economy is is
00:19:50.740 looking good now when it comes to the the big banks there are you may know that there are some
00:19:57.460 there's something called a capital reserve requirements that that banks have to adhere
00:20:01.700 to essentially for the for the amount of sort of debt and the things that they've loaned out
00:20:07.380 they need to have a certain amount of what they call risk-weighted relative to their risk-weighted
00:20:11.860 assets they have to have a certain amount of cash on hand at all times um to to make sure that
00:20:16.980 there's a buffer there for for stability right we have the deposits for canadians that that want to
00:20:22.740 take out their money uh it seems to me that there has been a little bit of a challenge here um because
00:20:29.380 these big banks uh at the end of each day need to meet these capital reserve requirements and it seems
00:20:34.740 like they're having a harder and harder time doing so uh traditionally what they've done is uh lent and
00:20:40.420 borrowed between each other um to hit these capital reserve requirements on a night to night
00:20:46.580 basis this is called the overnight uh repo market um where banks will lend to and from each other
00:20:53.540 we're also we're seeing the central bank now the bank of canada uh open up more and more programs
00:20:58.740 that also allow the banks to borrow from the bank of canada um specifically to help them in my eyes
00:21:05.380 meet those capital reserve requirements now i think that this is a a complex thing that not a lot of
00:21:11.140 people are thinking about and cynically some people may say that perhaps that complexity is by design
00:21:18.260 so that you don't have more and more canadians questioning how does our system actually work
00:21:23.300 and perhaps i'm misinformed on it but i would certainly love policy makers and central banks to
00:21:29.140 come out and more readily explain themselves on these types of things because certainly over the past
00:21:34.420 few years we're we're all feeling the impacts of the decisions made by these centralized organizations
00:21:40.020 be it the government or the central banks absolutely and uh well we've been able to cover quite a lot of
00:21:45.860 ground there russell and we appreciate you explaining to us some of what's been going on and giving us
00:21:52.260 your insight into the situation with housing the general state of the economy minimum wage and all of that
00:21:58.500 we really appreciate it where can canadians find your work russell yeah the best place is right here
00:22:03.540 on youtube if you're watching it here or head over there if you're not um yeah you can just look up
00:22:08.580 russell matthews r-u-s-s-e-l-l-m-a-t-t-h-e-w-s you'll find my videos there i'm making canadian focused
00:22:15.700 content um and uh do my best to make sense of of things that don't make a lot of sense um so i'm
00:22:23.860 doing my best to do that so follow along absolutely and i think we need we need more of that so we
00:22:29.140 really appreciate it to everyone watching you can find a link to russell's youtube channel in the
00:22:33.460 description of this video as well with that russell thanks again beautiful thanks so much harrison