Unsurprisingly, much of it relies on the government taking a step back.
Inflation was already high before Russia invaded Ukraine.
Now, it’s set to surge even more, exacerbated by the impact of limited energy supplies and the fact that Ukraine and Russia are both large grain exporters.
Gas prices have already surged, and food prices are going to rise as well.
Of course, those in power will attempt to retcon all recent inflation increases as being related to the war in Europe, but we know that’s not the case.
Rather, many government policies had put our country in a situation in which the cost-of-living was already surging, leaving Canadians financially vulnerable to external events.
What that means, however, is that Canadians are not simply at the mercy of those external events.
There are things our country could do to mitigate the growing burden of inflation.
Here are 7 ideas on how that could be done:
Repeal the carbon tax
Ever since the carbon tax was introduced, opponents of the policy have warned it would make life more expensive.
Now, even the head of the Bank of Canada is agreeing:
“The federal carbon tax has boosted inflation by nearly half-a-percentage point, Bank of Canada Governor Tiff Macklem told members of the House of Commons Standing Committee on Finance in a letter obtained by Global News.
Macklem testified before the committee on March 3. While there he was asked by Conservative MP Philip Lawrence what the total impact of the carbon tax was on the rate of inflation. Macklem did not have that number with him at the time but promised a written reply to the committee, a reply he provided Friday.
“I committed to reply to the question of the impact of the carbon pollution charge on the rate of inflation,” Macklem wrote. “According to the Bank’s calculations, if the charge were to be removed from the three main fuel components of the consumer price index (gasoline, natural gas and fuel oil) it would reduce the inflation rate by 0.4 percentage points. In other words, if that policy had come into effect at the start of the year, January’s inflation rate would have been 4.7 per cent instead of 5.1 per cent.””
With that in mind, scrapping the carbon tax would have an immediate benefit for Canadians and would take some of the sting out of higher gas & energy prices.
Freeze government spending everywhere except the military
Canada needs a large-scale, and rapid military build-up.
We should have been building it up for years, but since we don’t have a time machine the next best time to build it up is right now.
We need at least $20 billion more per year spent on our armed forces, and spending for the next two or three years should actually increase by $30-$40 billion to more rapidly make up for years of neglect.
Canadians are realizing that we – as an arctic nation – share a border with Russia, and that we can’t bury our heads in the sand and just hope for the best when it comes to our national defense.
We need new planes, new ships, new missiles, new bases, recruitment incentives, and support for our Veterans.
All of that costs money, and we need to spend that money.
With that in mind, such a large increase in government spending will have in inflationary impact, since it it will be funded largely through borrowed money.
A way to mitigate that impact is to freeze government spending everywhere else.
Government spending has been going up dramatically during the time the Liberals have been in office, meaning our country can easily manage a spending freeze. A freeze would simply bring us back the spending levels of two or three years ago, levels that were already high.
Aside from military spending, now is the time for fiscal restraint.
A temporary sales tax cut
A great way to further mitigate the impact of inflation would be to institute a temporary cut in the GST, bringing it from 5% to 4%. That would immediately put more money in the pockets of Canadians, at a time when people desperately need it.
Eliminate anti-pipeline legislation
A key reason our gas prices are surging – from levels that were already high – is that our country is not as self-sufficient as we should be.
Years of a federal government that expressed hostility to the energy sector has driven away investment, not to mention legislation that has made pipeline and energy project approvals nearly impossible.
Had that legislation not been brought in, and had our country taken a more supportive approach to the energy sector, we would be producing more oil and natural gas, benefitting both from increased export revenue and and increased supply here at home, driving down domestic prices.
Additionally, we would be able to better help our democratic allies in the United States & Europe wean themselves of Russian oil & gas.
Sticking with the previous theme, while the best time to get rid of anti-pipeline legislation was years ago, the next best time is right now.
Move closer to CANZUK
The idea of a free-trade and free movement zone between Canada, Australia, New Zealand, and the UK would take significant negotiations.
Under normal circumstances, it would take years.
However, with the free world that increasingly realizes the danger of economic dependence on nations like Russia & China, deepening the ties with our like-minded allies is essential.
Free trade often comes with serious drawbacks, but those drawbacks have been mostly related to dealing with mercantilist states like China.
By contrast, deepening trade with our allies could play a role in bringing down costs and lowering inflation.
Break down interprovincial trade barriers
When it comes to trade and lowering prices, the best thing we could do would be to immediately demolish all barriers to trade between Canadian provinces.
The fact that there are trade barriers at all within our nation is an absurdity.
In normal times, people may not have felt that much urgency in dealing with this, but as inflation surges out of control and national security and economic security become more and more linked, we need to move rapidly to ensure that we can freely trade within our country. That would help bring down prices for some goods, and generate more wealth, both of which would somewhat mitigate the damage of inflation.
Publicly discuss interest rate hikes and fiscal restraint
During the inflation surge in the 1970’s, one of the key problems was the psychological aspect of inflation, meaning that when people think inflation is going to rise inflation is more likely to rise.
That perception was fueled by the the – often correct – view that central banks were unwilling to combat inflation by raising interest rates.
Only when central bankers – most notably Paul Volcker during the Reagan Administration in the US – made it clear that they would take real action against inflation was there a recognition that inflation wasn’t going to keep surging.
Here in Canada we face a similar problem.
The attitude of the Liberal government has been to spend and spend, and then spend some more. The Bank of Canada has enabled much of that spending through low interest rates and through expansion of the money supply.
Until people start to think that the tide is turning in terms of policy, the expectation will be that inflation will continue to rise.
Tackling inflation means making difficult decisions, and cutting spending/increasing interest rates are unpopular with much of the public. However, avoiding the short-term pain of those decisions leads to even more pain and more damage down the road, and given all that is happening in the world we cannot afford to ignore reality.
The seven ideas detailed above can serve as a starting point for a needed discussion on how our country can mitigate the burden of inflation and help Canadians make ends meet at a time of chaos and uncertainty in the world.
Spencer Fernando
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