Thursday, April 25, 2024

To Decline or Develop: That Is the Question

Abstract: By 2000, Canada's per capita GDP began to fall behind the United States and was on par with other developed economies. However, this situation has continued to deteriorate. This is due to problems on some of the major macro-economic policies. The interest rate is a tool with broad effects and cannot be used solely and over and over again. The prices are subject to supply and demand. While the government needs to take care of the living cost of the general public, convening the grocery conglomerates to reduce the price is not a wise choice, and competition is needed both at home and abroad. The carbon tax is not financially, economically and technically feasible. Nor is it consistent, income neutral and effective. During the period from 2015 to 2023, there were more immigrants and visitors than necessary, and the structure is astonishingly unhealthy and unsustainable. As Canada relies heavily on imports, it is important to maintain a long-term friendly relationship with some of the major trading partners like China, India, Britain and Saudi Arabia though there may be differences in culture and ideology. Changes must be made to address the macro-economic problems. We may not know what works for some areas, but we know what does not work. We can learn from the past of our history, and we can also learn from our peers active on the international stage. Actions must be taken to make a brighter future as we have our next generation behind as well as the gaze of foreign onlookers upon us.


Key Words: Macro-economic Policies, Carbon Tax, Immigrants, Trade, Prices


I. Introduction

In a debate on the new federal budget, Conservative Party Leader Pierre Poilievre raised the question that who would pay for this latest $50 billion orgy of spending and added that he and his colleagues knew who wouldn't pay[1]. Even 1% tax is levied on the extra wealthy people, will they just sit and wait to be chopped up? Will that not be passed along to the general public?


After nine years of rule by the Federal left-winged Liberal Party and three years of the epidemic, Canada's economy has shown signs of recession. In the 1980s, Canada's per capita GDP was almost the same as that of the United States, and to a certain extent ahead of other developed economies. By 2000, Canada's per capita GDP began to fall behind the United States and was on par with other developed economies. Entering 2022, the gap between Canada and the United States will further widen, with the gap exceeding US$10,000, and starting to lag behind the average level of other developed economies...

Productivity, which is typically defined as economic output per hour of work, is a crucial determinant of overall economic growth and living standards in a country. Over the most recent 10-year period of available data (2013 to 2022), productivity growth has been meagre at best. Annual productivity growth equaled 0.9 per cent for the G7 on average over this period, which means the average rate of growth during the two previous decades (1.6 per cent) has essentially been chopped in half. For Canada, productivity has grown even slower than the paltry G7 average.

A skeptic might suggest this is merely a global phenomenon. But other countries have fared much better. Two European countries, Ireland and Estonia, have seen a far more significant improvement than G7 countries in both productivity and per-person GDP.

From 2013 to 2022, Estonia’s annual productivity has grown more than twice as fast (1.9 per cent) as the G7 countries (0.9 per cent). Productivity in Ireland has grown at a rapid annual pace of 5.9 per cent, more than six times faster than the G7 (Please refer to the article "Economic progress stalling for Canada and other G7 countries" written by the Fraser Institute published on May 10, 2024, on the web page

II. Policy Problems

1. Monetary and Price Policies

Monetary policy and price policy will affect not only big or small businesses but also individuals and non-profit organizations. Wise and consistent sustainable policies are needed, and they should not rely on the impulses of some of the officials in Ottawa.


1) Monetary Policy

The writer does not agree to change the interest rate whenever there is a need to tackle the inflation. This is because that there are the other two tools, bank deposit reserve rate and the open market operations, and that the interest rate has overall impacts on the whole economy.


(1) Inflation versus Financial Burden

The inflation can be curbed to some extent when the interest rate is raised. However, the mortgage rate will be increased, and the rate for real estate development, business loans and even student loans will also be increased. This will also have a negative impact on government deficit payment.


(2) Interest Rate versus Exchange Rate

It was reported that Canadian exports of goods and services reached 33.85 % of GDP in 2022, according to the World Bank collection of development indicators, compiled from officially recognized sources[2]. Canadian imports of goods and services reached 33.71 % of GDP in 2022, according to the World Bank collection of development indicators, compiled from officially recognized sources[3]. However, past data shows that Canada is more reliant on imports, making a low Canadian dollar more attractive. Nevertheless, a high interest rate will make the Canadian dollar stronger, which will be harmful to Canadian imports.


2) Price Policy

(1) Demand Side

To stabilize the price level, two hands are needed. One hand is to curtail the aggregate demand, and that is affected by the fiscal and monetary policy, which has been covered partly above. Aggregate demand can be spurred by increased government expenditures or lower tax rates or both, though there may be a financial price for the government to pay later.


(2) Supply Side

Supply can be increased by lower costs, more competition or more fairly priced imports.


a. Oligopoly

The writer contests the idea of getting together some of the grocery conglomerates like Loblaw and Walmart for two reasons. One reason is that the government should not intervene as long as it does not involve a government product or service. The other reason is that getting together to discuss the price is the exact behavior that anti-monopoly actions should be ushered in. The prices can be lowered temporarily, but they can be raised too soon for you to realize, as they have every right and possibility to do that.


b. Imports

When competition is hard to encourage in Canada among different industries and areas, imports should be promoted. This is why the writer emphasizes the importance of maintaining a good relationship with China and India.


2. Carbon Tax Policy

1) Measurement of a Good Policy

A good policy should be financially, economically and technically feasible, consistent, income neutral and effective. However, the carbon tax policy is untenable in all the respects.


2) Analysis

(1) Feasibility

a. Financial

As early as 2022, a paper Assessing Energy Transition Costs: Sub-national Challenges In Canada established an investment model to calculate how much it would cost for provinces to fully adapt to new energy sources. Based on provincial governments' 2019 GDP, the total annual net cost of meeting the federal government's 2030 carbon targets between 2016 and 2030 is estimated to be $2.015 billion (C $) for Alberta and $442 million for Saskatchewan, according to the chart[4].


The Government of Saskatchewan has submitted its response to the federal government's public consultation on the proposed Clean Electricity Regulations (CER), urging the federal government not to proceed with the regulations as currently proposed. The proposed regulations impose a net-zero electricity grid across Canada by 2035. "The federal government's approach, in an attempt to regulate Saskatchewan's electricity system, is unaffordable, unconstitutional, and technologically and logistically unattainable," Crown Investments Corporation Minister Dustin Duncan said. "The proposed Clean Electricity Regulations will jeopardize the reliability of Saskatchewan's power grid, and increase power rates to an unaffordable level." SaskPower estimates that families, communities, businesses and industries will see electricity rates more than double by 2035 to cover the costs associated with the CER and federal coal regulations. The federal net-zero power system plan is expected to cost Saskatchewan about $40 billion from now until 2035[5].


b. Economic

In a new study published by the Fraser Institute, it is found that the government’s claims are likely untrue. A $170 charge per ton will cause the economy (i.e. GDP) to shrink by about 1.8 per cent, cause a permanent loss of nearly 185,000 jobs, and reduce real income in every province. Even with the rebates, the overall income loss will average about $1,540 per employed person annually.


What about the plan to rebate carbon tax revenue to households? The contractionary effects are large enough that if the federal government either spends or refunds all household carbon tax revenues, the combined federal and provincial budgets will move about $22 billion into deficit[6].


What’s more, even with the rebate, by 2030, 80 per cent of households in Ontario and Alberta will be worse off and 60 per cent will be worse off in Manitoba and Saskatchewan[7].


c. Technical

In December 2023, federal Environment Minister Steven Guilbeault finalized regulations to phase out the sale of gas-powered vehicles – and mandate sales of battery-powered vehicles – by 2035. However, Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, tells BNN Bloomberg that we need some realism as right now buyers are buying internal combustion vehicles, for that is where the volume is. The automotive industry needs to decarbonize, but it is a “stressful time” for companies in the sector that are retooling facilities to keep up with the changes[8].


Prof. Mark Winfield of York University said the fact there is no public policy on the disposal of EV batteries is concerning because a number of the chemicals and components used to make EV batteries, such as cadmium, arsenic and nickel are listed as toxic under the Canadian Environmental Protection Act (CEPA) and simply can't be thrown into a landfill.


The environmental costs of a greener future in transportation don't stop at dead batteries. If the country carries through on its plan to build a home-grown supply chain for the critical minerals needed to make EV batteries, it could mean the development of a vast tract of unspoiled nature in Ontario's north.


In the Hudson's Bay Lowlands, there are an estimated 35 billion tonnes of carbon, acts as a major stopover for billions of migratory birds and is home to wolverines, caribou and lake sturgeon - all considered endangered, or species at risk by the federal government. destroying one of the world's largest carbon sinks by developing it would only undo all those emission reductions from EV batteries[9].


Governments need to get the consent of all of the communities that are going to be impacted by this major irreversible change to their way of life, as they are entitled to a right of free, prior and informed consent according to international law.


(2) Consistency

As you’ve probably heard, the government will suspend the tax on heating fuel used primarily in Atlantic Canada and provide additional subsidies to Atlantic Canadians by doubling their rural carbon tax rebate. Also, oil heating will not be subject to carbon tax. The present Federal Government has made the federal carbon tax non-uniform, ended technological neutrality and—by exempting a swath of emissions—made it less efficient and effective. Even the University of Calgary’s Trevor Tombe, a diehard fan of the carbon tax, now suggests it might be the beginning of the end for the entire idea of carbon taxes. The carbon tax is dead, he writes. Or at least, its days may be numbered[10].


(3) Effectiveness

In Canada, the carbon price hike has been a significant policy initiative aimed at curbing greenhouse gas emissions and transitioning towards a low-carbon economy, and a national carbon pricing system was introduced in Canada in 2019.  


According to recent data from Toronto Sun, the Federal Government won’t achieve the carbon reduction target (439 millions) by 2030, yet we are still paying a price higher and higher (note that the carbon tax is expected to continue to rise annually by $15 until it reaches $170 a ton by 2030[11]). Here is why:



Net Increase
of Emissions

(Million Tons)

Rate of

Carbon Price
per Ton

Rate of

























Source: Lorrie Goldstein: The carbon tax went up and

so did Canada's emissions[12], Toronto Sun, 20 April 2024


(4) Revenue Neutrality

When B.C. first introduced a carbon tax in 2008, it was revenue neutral, but revenue neutrality was eventually abandoned. Barry Penner, chair of the Energy Futures Institute, said he thinks there might be more support for carbon taxes if people saw other taxes—such as income taxes—go down by levels commensurate with carbon tax increases. Mark Jaccard, a sustainable energy economist at Simon Fraser University, said that it was a strategic error to diverge from revenue neutrality.

According to Ken Peacock, chief economist at the Business Council of British Columbia (BCBC), part of the problem is that the government has abandoned revenue neutrality. If they are truly interested in reducing emissions, while continuing to foster investment and make business viable, they would provide some offsetting tax relief[13].


(5) Other Alternatives

By 2030, the large-emitter trading system would account for 23 per cent to 39 per cent of avoided emissions from all federal policies implemented to date, the CCI report estimates. That compares to just eight per cent to nine per cent for the “fuel charge” paid by consumers purchasing gasoline and diesel. The second-largest emissions reduction would come from an emissions cap on oil and gas production, which can be done by Carbon emission quota trading. Methane reduction regulations would account for the third-largest reduction[14].


Other alternatives not mentioned above include:

*Development and utilization of solar energy, wind energy, water power, etc. to reduce dependence on fossil fuels. Through policy support and investment, Denmark has become a leading country in renewable energy. They encourage the development of wind and solar energy, attract investment through preferential policies, and strengthen cooperation with industry to promote innovation and development of renewable energy technologies. Denmark's energy supply has become almost 100% renewable, and carbon emissions have been reduced accordingly.

*Carbon capture and storage to capture and store carbon dioxide from the atmosphere and reduce carbon emissions

*Forest and farm conservation and restoration to protect and restore forests as carbon sinks to absorb carbon dioxide and reduce carbon emissions and to promote sustainable agricultural practices that reduce the use of fertilizers and pesticides, improve soil health, and reduce agricultural carbon emissions

*Energy efficiency improvements with a short payback period and significant cost benefits. By reducing energy consumption and reducing energy costs, economic benefits can be realized in a relatively short period of time.


3. Immigration Policy

1) Total Volume of Immigrants

Andrew Grantham, an executive director at CIBC Economics, estimates that since 2019, Canada’s population growth has risen by around 1.1 million, or 35 per cent, more than housing availability could accommodate. He added that the increase “has eclipsed labor force needs” by between 200,000-700,000, or between five and 20 per cent. However, for persons born within Canada, the participation rate has declined by almost three per cent since 2015[15]. According to Statista, the number of immigrants into Canada was respectively 468,817, 493,236, and 226,314 in 2023, 2022 and 2021[16]. Currently, annual immigration in Canada amounts to almost 500,000 new immigrants – one of the highest rates per population of any country in the world. As of 2023, there were more than eight million immigrants with permanent residence living in Canada - roughly 20 percent of the total Canadian population[17].


2) Structure

(1) Refugees

According to a report, half of the increase in number of immigrants from 2015 to 2023 is accounted to India, and almost 20% is accounted to refugees. The unemployment rate for refugees aged 25 to 54 is 9%, lower than that of Canadian-born citizens (6%)[18].


(2) Indians

The distribution of immigrants should be fair, even, sustainable and easy for people to integrate into the Canadian culture. Yet the present trend is not so. The writer is not discriminating against Indians, but he urges the government to ponder over the scenario and arrive at a fairer and soberer decision.


In the 9 years from 2015 to 2023, the number of permanent residents approved by the Federal Government has increased by 73%. Within the 471,550 people approved, 139,715 were from India, accounting for 29.63% of the total, and almost equaling the total of all the top 10 countries except for India. Moreover, the rate of increase from 2015 to 2023 is 3.5 times, while the rate of increase for China remains relatively the same and the one for Philippines even drops about 46.2%. In addition, within the 1.04 million study permits approved (note that in the United States, which has a population and economy that is almost ten times that of Canada, the total number of international students is 1.36 million), 40% are for Indian students. All the study permits of the countries from the second to the tenth added together just account for 75% of the study permits for Indian students. The rate of increase for the period is even more astonishing: 9 times from 2015 to 2023. In 2023, Canada issued a total of 4.32 million visitor visas (which is going to drop to 2.7 million in 2024, yet still significantly higher than 1.4 million in 2022). Among them, India deserves to be ranked first again, reaching 1.28 million (also 9 times higher than in 2015), followed by Ukraine with 516,000 (683,000 in 2022), and China with 386,000. Each year India has added 140,000 new permanent residents, 270,000 international students, and 1.28 million temporary visa holders. With LMIA work permit and spouse work permit holders that we cannot count to be added, there will be nearly 2 million Indians every year coming to Canada[19].


The Federal government has also set up many small immigration categories and invites specific applicants individually. The total quota in EE has not increased at all. While the total number of invitations is still the same, a considerable part of it is given to applicants from special occupations and French speakers. For the rest, the quota in the large pool has plummeted. The writer doesn't agree with this type of targeted invitation mechanism. There are two reasons. The first and most important is that Canada has lost the principle of fairness in immigration. Those specific groups invited through targeted invitations have extremely low invitation scores. For example, French-speaking applicants can pass by 338. Even someone from a former French colonial country in Africa can easily score more than 300 points as long as they have attended university. A master's student who has received 6 years of university education in Canada has contributed hundreds of thousands of Canadian dollars to Canadian GDP[20]. After graduation, he has worked hard for 3 years and achieved perfect English scores. Yet he has no chance to stay. But a lucky person who has never been to Canada can immigrate easily with lower conditions and costs. Who among them has made greater contributions to Canada, and who has a stronger sense of belonging to this society?


There are some other problems. A senior teacher with more than 30 years of education experience and double master's degrees who received education in the United States cannot be a teacher in Canada. Because of her American qualifications, Canada does not recognize her. On the other hand, in the past year or so, there has been a special shortage of early childhood education in BC. Since 2023, 2,296 applicants from the early childhood education industry have been invited. But people in BC should also understand that everyone is rushing to immigrate to become a preschool educator. After obtaining immigration, how many can persist in the position of preschool education with the escalating cost of living? Nevertheless, Bill C-19 gives immigration authorities almost unlimited power. Policies that have been implemented for decades can be changed at any time. Today’s Canadian immigration policy can be said to be above the law[21]. Once upon a time, Canada's immigration system was a model for the world, but now it has become a political tool in the hands of politicians, and to a certain extent, a weight in the exchange of interests.


4. Trade Policy

1) Reliance on the US

Do the US and Canada enjoy a cozy partnership relationship? Let’s hear what David Cohen (last US ambassador to Canada) said in November 2023 when meeting with business leaders in Ottawa. He said, "as I began to travel around Canada, I was surprised to learn the pervasiveness of the loss of trust, on Canada's part, of the United States."[22] However, there is the inertia that Canada relies on Americans to do business though the first bill signed by President Biden was to veto the $9 billion Keystone XL oil pipeline (to be laid out from Alberta to Oklahoma) project in Alberta[23].


(1) Inflation Spread

As the two countries tend to resonate with each other on world stages, the side-effects may also be evident. For example, the same interest rate policy may bring forward an inflation spread from the US, let alone some other consequences.


(2) Fragility

United States Government debt accounted for 124.3 % of the country's Nominal GDP in Dec 2023, compared with the ratio of 122.9 % in the previous quarter[24]. Canada Government debt accounted for 67.8 % of the country's Nominal GDP in Mar 2023, compared with the ratio of 73.0 % in the previous year[25].


(3) Stability

Canada is a country heavily reliant on imports as well as foreign direct investment. Therefore, a good relationship with its trading and other business partners may be a wise decision. Also, a multilateral relationship can get Canada in a more advantageous position and more room for diplomatic negotiation.


2) Impacts of Ideology

(1) China

With the past imprisonment of Wanzhou Meng of Huawei and the foreign interference inquiry at the Parliament, dark clouds still hang over the unpredictable China-Canada relationship though Canada needs many imports as well as immigrants from China.


(2) India and Bangladesh

With Nur Chowdhury (who, though wanted since 1975 as a murderer of the past president of Bangladesh, has now quietly lived in Toronto for the past 27 years) still sheltered by the Federal Government of Canada, the relationship cannot go further. For India, after Prime Minister Justin Trudeau's unprecedented and explosive allegation that the Indian government had a hand in the June killing of Canadian Sikh activist Hardeep Singh Nijjar, Canada found itself at the centre of a geopolitical rift. India has so far denied Trudeau's allegations and since branded Canada a "safe haven for terrorists, extremists" and "anti-India activities."[26]


(3) Britain

Roughly half (54%) agree (20% strongly/33% somewhat) that now that Queen Elizabeth II’s reign has ended, Canada should end its formal ties to the British monarchy[27]. In a past Angus Reid poll, more than half of respondents (52 per cent) said they don't want Canada to continue as a constitutional monarchy for generations to come, and of them, the vast majority (88 per cent) said they'd be fine with opening the constitution to break the ties. In Quebec, 66 per cent of respondents are against Canada remaining a constitutional monarchy. most respondents (60 per cent) oppose even recognizing Charles as King. Just 28 per cent say they have a favourable view of Charles, while nearly half (48 per cent) do not[28]. The effects on Canada as a Common Wealth country are yet to be confirmed.


(4) Saud Arabia

For a long period since 2018, bilateral relations have gradually soured as a high-profile diplomatic spat began over the Canadian government's public condemnation of the Saudi government's human rights abuses. Canada had called for the immediate release of Saudi activist Raif Badawi and his sister Samar Badawi on 5 August 2018 after they were arrested by Saudi authorities on varying charges. In response, the Canadian government was accused of interfering in Saudi Arabia's internal affairs; the Canadian ambassador in Riyadh was declared persona non grata and expelled from the country, having been given 48 hours to leave. The Saudi ambassador in Ottawa was also recalled, and the Saudi government suspended all new trade (excluding oil sales) with Canada, terminated all flights and services of Saudia to Toronto, and cancelled the scholarships of thousands of Saudi students in Canada[29].


In May 2023, Canada and Saudi Arabia restored their diplomatic ties, but with limitations.


III. Policy Options

1. Keep the Status Quo

As all can see, the present situation is not what Canadians want. Many have left their family behind and burnt the bridge to come to their land of dream, only to find this land is getting more and more barren, more and more bizarre. Actions need to be taken when it is still not too late.


2. Make Some Changes

Changes must be made to address the macro-economic problems. We may not know what works for some areas, but we know what does not work. We can learn from the past of our history, and we can also learn from our peers active on the international stage.


IV. Conclusion

Now is the high time to reflect on our macro-economic policies, make a solid break and turn to a much brighter future as we have our next generation behind as well as the gaze of foreign onlookers upon us.








[1] “$50B orgy of spending”: Poilievre mocks Trudeau for latest federal budget, Global News, 17 April 2024,

[2] Trading Economics: Canada - Imports Of Goods And Services (% Of GDP), April 2024.

[4] Ziheng: Canada continues to tighten this policy, give anyone a way to live? Is Trudeau's forward-thinking policy reckless? High Perspective Information, Dec 12, 2023. Please check

[5] SaskatchewanGovernmnet:Saskatchewan Responds To Unaffordable, Unconstitutional And Unattainable Proposed Federal Clean Electricity Regulations, Nov 21, 2023. Please check

[6] Ross McKitrick and Elmira Aliakbari: Here’s what the Trudeau government won’t tell you about its $170 carbon tax, Calgary Sun, May 1, 2021. Please take time to read the article

[7] Elmira Aliakbari and Jairo Yunis: Ottawa must be transparent about real cost of carbon tax, Calgary Sun, April 13, 2022. Please take time to read the article by clicking the link

[8] Daniel Johnson: Auto leader says EV sales targets 'need realism, BNN Bloomberg, 3 Jan 2024,

[9] The environmental costs of EV batteries that politicians don't tend to talk about, CBC, December 30, 2023. Please take time to read the article by clicking the link

[10] Kenneth P. Green:Trudeau shatters myth of ‘ideal’ carbon tax,Ottawa Sun, November 22, 2023. Please take time to read the article by clicking the link

[11] Shivangi Sharma: Carbon tax raised, protest from prairie premiers, the Carillon, 11 April 2024,

[12] Please take your precious time to read the comprehensive article by clicking the link

[13] Nelson Bennett: Can Canada have an effective climate action policy without a carbon tax? Business Intelligence for B. C., 22 April 2024. Please check the article by clicking the link

[14] Nelson Bennett: Can Canada have an effective climate action policy without a carbon tax? Business Intelligence for B. C., 22 April 2024. Please check the article by clicking the link

[15] Daniel Johnson: Canada's population growth was 'too much, too soon,' despite some positives: economist, BNN Bloomberg, 18 April 2024. Please also check the website by clicking the link:

[16] Statista Research Department: Number of Immigrants in Canada from 2000 to 2023, 11 Mar 2024,

[17] Statista Research Department: Immigration in Canada: Statistics & Facts, 16 April 2024,

[18] UNHCR: Refugees in Canada, as accessed on 23 April 2024. Please also take time to check the data by clicking

[19] The Truth behind Indian Immigrants Taking over Canada (in Chinese), David on Exploring Canada, 16 April 2024,

[20] What has happened in Canada when the immigration situation has taken a turn for the worse (in Chinese)? David on Exploring Canada, 2 April 2024. Please take time to read the article by clicking

[21] What has happened in Canada when the immigration situation has taken a turn for the worse (in Chinese)? David on Exploring Canada, 2 April 2024. Please take time to read the article by clicking

[22] James McCarten: A 'watershed year' for Canada-U.S. relations, but guess who's lurking in the wings? CTV News, 24 Dec 2023. Please click the link below to view the interesting article

[23] Reuters: Developer officially cancels Keystone XL pipeline project blocked by Biden, 11 June 2021. Please take your precious time to read the whole comprehensive article by clicking the link,of%20the%201%2C200-mile%20project.

[26] Saloni Bhugra, Satbir Aulakh: Why Canada is becoming the focus of India's concerns about the Sikh separatist movement, CBC News, 15 Oct 2023. Please take your time to read the article

[27] Canadians Conflicted on Future Role of Monarchy as Half (54%) Say Canada Should End Ties to Monarchy, Ipsos, 18 Sept 2022. Please check the article by clicking the link at,up%20from%2044%25%20in%20201.

[28] Poll suggests most Canadians don't want Charles as King, CBC News, 24 Apr 2023.

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