Finally, an issue the Conservatives’ unlikely populists can work with

OTTAWA—As with the housing market, hollowed-out commercial real estate, remote work, and the massive rethink of desirable jobs, the global tornado known as the pandemic has produced an unexpected spike in inflation rivalling anything seen in decades. Next week’s fiscal update by Finance Minister Chrystia Freeland will be delivered against a backdrop of public angst over consumer price increases in Canada now approaching five per cent, with little likelihood of a significant retreat in inflation until late 2022. With gasoline up 41 per cent, year over year, and food and housing costs rising sharply, affordability is quickly becoming the overriding issue for Canadians trying to keep within their household budgets—a cost-escalation problem many are facing for the first time after a long era of minimal inflation. Other advanced economies are of course confronting similar explosions in consumer prices driven by COVID-related demand pressures and what is basically a breakdown in deeply integrated global supply chains. Just to give one example, logistics company Flexport Research says it now takes 105 days to ship items from China to the U.S., double the length of time pre-pandemic. Ports are clogged and shipping costs are at record levels, five times higher than the average over the past decade. All that obviously doesn’t matter to politicians who see a winning hand in the mounting pain Canadian consumers are feeling. Despite losing two elections in a row running a subliminal Trumpish campaign, the Conservatives continue to fashion their opposition strategy around the populist concept of angrily defending, or pretending to defend, the average “forgotten” people against the supposed uncaring elites (read: Prime Minister Justin Trudeau and the Liberals). It’s not a routine that has worked particularly well for Conservative Leader Erin O’Toole, a former Bay Street corporate lawyer with no sharp edges who looks every bit the successful, secure, middle-of-the-road type that he is. As for Conservative finance critic Pierre Poilievre, his attacks on the elite are laughable. With little experience of other jobs, he was elected to Parliament in 2004 at age 24. Despite having once argued MPs should not become fixtures in the Commons, he’s been there ever since, collecting an MP’s salary courtesy of taxpayers. That’s now $185,000 a year, compared to $54,600 on average for other Canadians. And he will be eligible at age 55 to collect an indexed pension probably well more than $100,000 annually. So, what he has in common with the so-called “left-behind” and “forgotten” Canadians the Conservatives are trying to court with their anti-elitist pitch is difficult to imagine. No one who looks at it objectively is singling out the Trudeau government’s financial outlays to help individuals and business cope with COVID-19 as the chief driver of inflation. But it’s a ready-made issue for any party keen to accuse the government of not caring about everyday Canadians and it’s not one O'Toole is about to let go to waste. Hopscotching between the Conservatives’ support for COVID aid programs and his current criticism, O’Toole, along with Poilievre, now blames the Liberals’ “reckless spending” for today’s steep inflation. And, in keeping with the Conservatives’ populist habit of vilifying their opponents, he makes it personal: “Canadians know … the prime minister does not understand the pressures families are facing, because he has never had to face pressures in his life.” This nasty approach likely undermines O’Toole’s point with some Canadians. But there’s no playing down the significance and potential game-changing nature of a prolonged period of damaging consumer price increases. To put it briefly, the pain is obvious to all, it’s not easy to fix, and the party in power will bear a good deal of the blame even if it’s a global problem beyond Ottawa’s control. As a short-term matter, Freeland would be wise to use the mini-budget to signal a readiness to move quickly on Liberal election campaign commitments aimed at addressing affordability and house-pricing problems. A fall update that sticks to the fiscal numbers and sidesteps affordability would set the stage for a political disaster for her party. In the wider scope, the Trudeau Liberals will have to give some serious thought in advance of the 2022 budget to their priorities and how the cost-of-living crunch intersects with policies on climate change, the green energy transition and other issues. Upward price pressures are likely to last for many months and, to head off runaway inflation, the Bank of Canada will probably start raising interest rates sometime in 2022, producing another economic headache for thousands of over-leveraged homeowners and consumers. So, just when people thought the Sept. 20 election might have served to affirm Trudeau’s agenda, COVID-19 once again is threatening to scramble the national political context. Les Whittington is a regular columnist for The Hill Times. The Hill Times