Freeland has Dropped the Ball!
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Summary
On today's show, we have an economic outlook that isn't looking too pretty. We re going to examine Chrystia Freeland's comments on inflation, the impact of the carbon tax, and much, much more.
Transcript
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Hello and welcome once again to The Blueprint. This is Canada's Conservative Podcast. I'm your
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host, Jamie Schmael, Member of Parliament for Halliburton Corps at the Lake Sprock. On today's
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show, we have an economic outlook that isn't looking too pretty. We're going to examine
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Chrystia Freeland's comments and that much, much more. Please like, comment, share, subscribe to
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this program because we have new content for you every single Tuesday, 1.30 p.m. Eastern Time.
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Don't forget to tell your friends. They can download it and listen to it on platforms like
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CastBox, iTunes, Google Play, Spotify, you name it. It is out there. So we're coming back on the show.
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A good friend who hasn't been on in a while, that's my fault, not his, is Marty Morantz,
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the Member of Parliament for Charleswood, St. James, Assiniboia, Headingley, or soon to be Winnipeg
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West. Thanks for coming back on the show. Also a member of the Finance Committee.
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All right. Well, that'll shorten things up a bit. All right. Fall economic statement came out
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a little while ago. Chrystia Freeland's doing her media rounds. And I think what we really need to
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look at when we look at this big picture and all these numbers, all these figures, all these charts
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that the Finance Minister has thrown out in front of us is cause and effect, right? We have got to the
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point where Canada is not looking so great balance sheet wise. We have some anchors in our economy
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that aren't doing so great. And all of this combined gives us the picture we're looking
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at now. So we got a few clips for you, too. But I just want to get your thoughts on kind
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of the vision as a whole. Where do you think we are now? Because you're on the Finance Committee.
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Sure. Well, I think it's important to understand, Jamie, how, and I thank you for the question,
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how we got here, how we got into this high cost inflationary environment. You know, the government
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would have us believe that, well, inflation just came to our shores. It's the war in Ukraine
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or supply chains. But we know now that's simply not true. It's very clear that government spending
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has fueled the inflationary fire. The bank started off with a program of quantitative easing that fueled
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over $600 billion in government deficit financing. I don't need to remind you that in 2015, the entire
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federal debt from 1867 was just over $600 billion. Today, the entire federal debt is over $1.2 trillion.
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That takes a lot of effort to double the national debt in only eight years, Jamie. And so what that
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did is it caused hundreds of billions of dollars in inflationary spending that fueled the fires of
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inflation. When inflation goes up, the Bank of Canada really only has one tool. And it's a very blunt
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instrument, Jamie. It's to raise interest rates on Canadians. And they have. They've raised them
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dramatically from just 0.25 of a percentage point before the pandemic to 5% today. And people are
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really, really struggling. So I lay the blame for inflation and high interest rates squarely at the
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feet of Mr. Trudeau. He is simply not worth the cost, Jamie.
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Well, to your first point, Parliamentary Budget Officer confirmed half of the money printed during
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the COVID pandemic had nothing to do with COVID. It was basically spent on liberal pet projects and
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slush fund funding. And had that been a smaller print, a smaller footprint in the monetary policy,
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if you will, the inflation crisis that we've been dealing with for quite some time would not have been
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as bad. The second is the carbon tax. Of course, through your committee work, we have found out
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that the carbon tax contributes greatly to inflation. And it's driving up the cost of everything.
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Yeah. Well, on those points, for example, before I get even to the carbon tax, the Bank of Nova Scotia
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just issued a report saying that two full percentage points, 200 basis points of interest rates in place
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today are because of government spending. In other words, if government spending had been more
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reasonable or less inflationary in nature, the bank rate would only be roughly 3%, not 5%. And on top of
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that, you correctly point out that the bank governor confirmed to us just a couple of weeks ago on
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committee that the carbon tax itself accounts for 0.6 of one percentage point of inflation. So for example,
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with inflation today at 3.1%, if the carbon tax didn't exist, inflation would only be 2.5%. And I'm
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sure that would allow the bank to seriously consider to stop dropping interest rates. So again, I lay the
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blame squarely at the feet of Mr. Trudeau, whose inflationary spending drove up and drove up inflation,
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which caused the bank to drive up interest rates and compounded that with the inflationary carbon tax.
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Well, let's get super producer Nick to cue up cut number two. I think we'll start there. This is you
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in committee. So this is a very... I just want to say my name is not Philip Lawrence on there.
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Well, yeah, that's right. You're better looking than Philip Lawrence. He was just on the show a couple
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of weeks ago. I'll have to mention that too. That is the whole problem, right? When the government does
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not have any restraint, any idea that their policies will cause this misery in the long term,
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you get to the point that we're at right now. This could be, this could have been a lot better than
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what it is right now. So let's get to the clip where you kind of cue it up. And we talked to Philip
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Cross, a very well-known economist, columnist in the Financial Times, Financial Post, who basically
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backs up what you just said. All right, play cut to. Sounds good.
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We're two years into inflation. We're two years into a government that is willing to spend endlessly.
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Double the national debts has added another $60 billion in spending over the next five years,
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just over and above what they announced in November. And because of that, the governor of the Bank of
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Canada has, despite saying interest rates will stay low for a long time, people shouldn't worry about
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that, has now raised the bank rate to 4.5%. I know it seems self-evident, but I just want to get
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confirmation from you on the record. Is there a direct correlation between inflation and the bank
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increasing interest rates? Unquestionably. I mean, even the bank would say, of course,
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that's why we're raising interest rates. So as John Manley said, the former Liberal Finance
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Minister, foot on the gas, foot on the brake. Absolutely. This is what we're doing. Government
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can't stop spending, can't get its balance sheet in check. So Bank of Canada has to throw on some
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water and that's causing a lot of hurt right now. Absolutely. And government spending is now working
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against everyday ordinary Canadians. It's causing prices to go up. It's causing interest rates to go
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up. Every major economist who looks at this says that at this point, government spending and
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fiscal policy, I should say, which is what government takes care of, and monetary policy
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are working at cross purposes to each other, including the governor of the Bank of Canada,
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who said just in our meeting a couple of weeks ago that government spending has been unhelpful.
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And so now when I made that recording, the bank rate, I note, was only four and a half percent.
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It went up another half a point since that time. So I asked that question because I want,
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it's important for people watching to understand that there is a direct correlation between the
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decisions this government has made with respect to how it's handled spending with the public purse,
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by driving up inflation and interest rates. And that was really the point of my question to Mr. Cross.
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And I can't stress it enough. I lay the blame for the economic predicament that we find ourselves in
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solely at the feet of Mr. True. And I would add one other thing. That $600 billion I was talking about,
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where they doubled the national debt, they call those things investments. Now, in my mind, when you make an
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investment, you expect a return on that investment. But the reality is our economic growth has flatlined,
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barely one percent. And even worse, our per capita GDP output is predicted by the OECD to be the lowest
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in the OECD for the next 30 years. Not a pretty picture, or as the finance minister will say in a
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moment, not a great result on her report card. All right, let's queue up cut three. We'll get to the
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finance minister, and we have another clip for you. But same thing, it's cause and effect. I think
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that's what you need to remember, cause and effect. We just didn't get here by magic. It wasn't some,
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you know, far away event happening. It was directly attributed to this prime minister,
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this finance minister, because there are countries that didn't fire up the printing presses like Canada
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did, and they're doing fairly well. That's right. There are others that did fire up the printing
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presses and borrowed and printed in tax that are doing worse. But at the same time, we're responsible
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for the people within our borders, and our people are hurting right now. Citizens are hurting. Yeah.
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So let's queue up cut three. This is, this is going to, oh, we're going to, we'll go to cut one now.
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Okay, let's, super producer Nick has cut one. Let's go to cut one. We'll talk about that,
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then get to finance minister. One last question in the 20 seconds I have left. Last week we had Robert
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Aslan here, and he said something very interesting. He said that economic growth is so weak at sub one percent,
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and that low growth in a high interest rate environment will make social programs unsustainable.
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Well, low, lower growth and higher interest rates will certainly impact on the government's budget. I,
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you know, I, I don't think fiscal policy in Canada is in a situation where it's unsustainable,
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but I do think protecting our very good fiscal position is important. It's important for social
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programs. It's important for the prosperity. All right. That was Tiff Macklin, the governor
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of the Bank of Canada. Basically saying what we have said for a while now, if you also want to lower
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prices, you can add more supply, right? If we want to add and, and, and release the price hikes that
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people are facing at the grocery store, we can add more food, but also at the same time, we can't also
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punish our farmers with massive carbon tax, which increase the cost of production, which get passed
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on to the consumers. If we want to add more energy, that will lower the price. But we have stifled
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those industries and many, many more in this Canada, this country, where we aren't able to grow
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those economies to add to the, the supply chain, to add to the economy, which would give some relief.
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So we're being hit everywhere we look. And this is again, as you said, directly a result of bad
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government policy by this prime minister. You're 100% correct, Jamie. And, and you saw what the bank
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governor was talking about there, responding to my comments about Robert Asselin. For those watching,
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Robert Asselin is a senior economist with the Business Council of Canada, who has come out and panned
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the fall economic statement 100%, basically saying that it does nothing to help generate new economic
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growth. And that's exactly the problem we have. The country is growing. We have more people than we've
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had ever before. And so demand has increased. But at the same time, economic growth is so low that we
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can't meet that demand. And so that's why you see prices going up the way they have. We have
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among the most overheated housing markets in the world, by the way, the most more land than almost
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every other country in the world, a population of just 40 million people. And yet we have housing prices
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that are more expensive than places like New York or Singapore. That's, that's an island. So clearly,
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there's pent up demand in our economy, but limited supply. And this, again, I lay the blame squarely
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at the feet of this prime minister who got nothing for the $600 billion he spent to double our national
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debt. Let's queue up cut three. This is the finance minister, Chris here, Freeland. We're, you know,
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appearing at the, the weekend media tables. Now, this is, this is very interesting comments that she's
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about to make. We have a few clips on this. She will never be affected by the misery being in
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inflicted on regular ordinary Canadians. These hardworking Canadians. She will never feel that,
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right? All she has to do is cancel her Netflix subscription apparently. No, Disney Plus or whatever
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it was. And maybe take the subway, which she doesn't do because she likes to drive fast in Alberta. But
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this will, I think this is one of three, but this will give you a good painting of, of where this
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government's head at. Backs up with you, you're saying play cut three. So you have the capacity, let's say,
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to sustain the programs that you have right now. My question is whether you will have the capacity
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going forward now, having outlined these fiscal anchors. And I'm asking you because what I have
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noticed in public opinion polling is that a lot of Canadians are saying, what's this government's
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vision for the future? And so if you're going to present big transformational projects that do come
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with a high price tag, I am wondering if this fall economic statement actually limits you from doing so,
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or maybe you're not so wedded to those two promises. Actually, I really believe our fall economic
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statement is about ensuring that we can continue to invest in Canadians. Because what I really believe
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makes things like early learning and childcare possible is that they are built on a sustainable
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fiscal foundation, because that means we can keep on doing it year after year after year.
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In four short years or less, we will be spending the exact same amount on interest on the debt. So
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just servicing the debt, not paying it off, as we do in transfers to the provinces for healthcare.
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Well, you're absolutely right. We're in a situation now where the interest on the debt
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is going to exceed what we spend, not only on healthcare, but on child care, on EI, on our armed
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forces. All of these things could benefit, you could double healthcare spending if we did not have
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to spend all this interest on our debt. And it didn't need to be this way. You know, as you pointed
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out earlier, much of the spending during the pandemic had nothing to do with the pandemic.
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Our debt could have been lower. That would have eased pressure on the bank to keep interest rates
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lower. There's no free ride. You know, when the government spends all this money and says,
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well, we're investing in Canadians, there's a bill to pay on the other end of that. And the bill that's
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coming home to roost is in high inflation and high interest rates. And that's the legacy of Mr.
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Trudeau and his finance minister. What's the old saying, when the government gives you something
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with an open hand, there's a clenched fist behind its back. This is what we're getting now. Let's
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let's queue up cut number four, I believe we're at now. Cut number four, the finance minister goes on.
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We're still, you know, to Vashe's credit, she is pressing the finance minister, right? The finance
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minister is saying, we have all, you know, things are great. We're doing well. But she's clearly pointing
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out because she's looking at the chart saying things aren't so well. So how are you going to fund all
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this stuff? All right, play cut five. And so am I to take from that, that you would characterize,
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for example, this year's deficit at $40 billion or the next two years, which are about 10 to $12
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billion higher than anticipated at budget as modest? And can you understand how Canadians might greet
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that with some skepticism, given your government's track record hasn't always been restrained? And I'll
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provide you with a few examples and offer you the opportunity to respond. $50 million on an app,
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arrive can that never worked. The federal public services employment growth rate is three times
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greater than the population growth rates. Spending on contracting has increased by more than a third
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since just 2017. Yeah. Truly thank you for the question. Because I believe from all the conversations
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I have across the country, that Canadians understand now is a time we need to invest. I find people are
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particularly focused on investments in housing. I find certainly parents and grandparents very focused
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on childcare. But that's different than the examples I laid out with respect. I'm going to get to those,
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I promise. People are really aware that we need to invest in the industrial transformation of our
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country. And I think people really want to know that we're doing it in a fiscally responsible way. I think
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that's kind of the base setting of Canadians. And I agree with that. Okay. Fiscally responsible way?
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Not even close. Now look, Jamie, you know, when this government came to power in 2015, they said they were going to
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run a couple of small deficits around the $10 million range and that by 2019, the budget would be balanced.
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That never happened. And the reality is that they were $100 billion in deficit before the pandemic
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ever came. And so the finance minister to now claim that somehow they're being fiscally responsible is,
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well, a nice word would be disingenuous. But the reality is, you know, that the fiscal responsibility
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from a government perspective demands that the government adopt a serious fiscal anchor.
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That's what Prime Minister Harper did. His fiscal anchor was very simple. It was,
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we're going to get the budget balance. And he did. This government will claim a fiscal anchor.
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And then as soon as it doesn't work out for them, they'll just abandon it like it didn't matter. For
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example, just two years ago, the finance minister said, well, the debt to GDP ratio will be our fiscal
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anchor. And, you know, it won't go up. It'll continue to go down. She said that is a line
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we shall not cross. And yet it's going up again. It's gone up the last two years. It's going up in
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the fall economic statement again. It's a line that they did cross. And it seems like they were
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they were fine with crossing it. So you look at the projections in the fall economic statement,
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they're completely unreliable. I'll just give you another example. One year ago today, they released
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this month, I mean, they released the fall economic statement, which said that in 2028,
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there would be a $4.5 billion surplus. One year later, in this fall economic statement,
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it's a $28 billion deficit, $32 billion swing in one year. I don't know how we could ever trust
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what this government says. But they can't control themselves. She also pointed out that now is the
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time that Canadians expect us to invest. The Canadian government has never been more flush with cash
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right now. But at the same time, things are getting worse. Delivery of service is getting worse.
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The federal bureaucracy has never been as big. For the longest time, you couldn't get a passport,
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despite all these these investments, so-called investments. So we have actually tried that,
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and it's not going so well. This government is failing over again. She also said about the
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industrial transformation. This isn't a market transformation she's talking about. It's a
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government-led transformation with winners and losers in the marketplace based on what
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money is given to companies that believe what the government believes. It's not driven by the
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marketplace. You wouldn't need these investments. It was driven by the market.
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No. Well, look, I keep getting back to, you know, she says it's time for government to invest in
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transformation. You're absolutely right. It is government-led. And really, the best thing to do,
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you know, I'm reminded of when you were speaking of my favorite Ronald Reagan joke, where he would say,
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the nine most frightening words in the English language are, I'm from the government and I'm here
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to help. That's what that reminds me of. I mean, I think what government needs to do is get out of the
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way and let Canadian entrepreneurs do what they do best. But having said all that, I keep coming
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back to the $600 billion. What a wasted opportunity to invest in economic growth. And so we got
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absolutely nothing for it. And now the finance minister is talking about investing even more. I don't
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think that she's a reliable partner, nor is this government, in promoting economic growth for Canada.
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And that's why we need common sense conservatives to be in government so that we can get this
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country's economy humming again. All right, we have one more clip of the finance minister, but we are
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also running way late on time. I would hate to not go without, maybe what I'll do, we'll get the clip
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and then we'll get your closing thoughts. How's that? Sure. Okay, play cut five. I get that you don't
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want me to grade my own homework. And I get that hearing me say government is fiscally responsible,
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you want some proof points. So I'll give you two quick proof points. The first one is Canada's debt
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and Canada's deficit right now, today are the lowest in the G7. That is significant. Second thing,
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and this speaks to, I don't believe we should grade our own homework. I don't expect you to want us to
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grade our own homework. There is someone out there whose job it is to give us a grade. And that is
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quite literally the ratings agencies. And the grade that the ratings agencies are giving Canada right
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now, today is the highest grade possible, a triple A credit rating. And that is because I have a good
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credit rating from my bank. Does that mean that I should increase the size of, you know, the staff
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that I have at my workplace or, you know, at a pace faster than is needed, for example, in the public
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service? I mean, you've admitted to that pace perhaps being too fast and that the cuts that you're
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now looking to make over the next five years are all focused on that. The rating that the agencies
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give us is based on where we are today. And it's based on what they think is sustainable going forward.
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Most of them, I have no idea what she's talking about. It's a word salad, finance minister.
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Do you want to address that in your closing comments? Sure. Well, I'll just say, look,
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Canadians know that doubling your household debt is not being fiscally responsible.
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That's what this government has done. They've doubled the debt of all Canadians. When she talks
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about the report card from the rating agencies, there's other entities out there that report on
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her performance as well. The Business Council of Canada has panned the fall economic statement.
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C.D. Howe, William Robson has panned it. The BMO, Douglas Porter's economist, has panned it.
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Jack Mintz, of course, has written extensively about it. So the report card is not all that good,
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frankly. And what this government really needs to do is get their spending under control,
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get inflation under control, so interest rates can come down. And if they can't do it,
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common sense conservatives under Pierre Polyev as Prime Minister of Canada will get the job done.
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This Prime Minister is just not worth the cost, Marty Morantz. All right, appreciate your time.
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Marty Morantz, Member of Parliament for Charles Lewood, St. James, Assiniboia,
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Headingley. We thank him for his time. We thank you for yours. Please remember new content for
00:23:39.120
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