The COVID meltdown finally catches up with Trudeau

OTTAWA—With Parliament restarting, it’s clear that a series of deeply ingrained, long-simmering issues has solidified into a new national political calculus in the wake of COVID-19. In retrospect, apart from the pandemic per se, the seminal political event in recent years is likely to turn out to have been the truckers’ 2022 occupation of Ottawa. The outpouring of public support for the trucker rampage by thousands of people who didn’t actually take part in the blockades should have been a clear sign of how the federal political scene would evolve. Essentially, a large segment of an increasingly restive population was gearing up for what may be a wholesale rejection of the prevailing national leadership after the isolation, collective sacrifice, and unaccustomed hardships that ate up three years of everyone’s lives. Beginning in 2020, governments at all levels shielded the economy and individuals from the disastrous impact of COVID-19; Prime Minister Justin Trudeau’s government alone provided $500-billion in pandemic relief. These measures avoided a deep economic recession while saving businesses and many peoples’ residences. But the aid couldn’t forestall the national trauma and erosion of optimism accelerated by the long health emergency. By late 2022, Canadians had faced 10 consecutive months of consumer inflation above six per cent, including 10-per-cent-plus food cost hikes. StatsCan noted that grocery prices, which rose by a total of 8.6 per cent from late 2014 to late 2019, climbed 15.8 per cent in two years. After three years of COVID, average house prices were up 33 per cent, and the Bank of Canada’s housing affordability index had reached its worst point since 1990. With mortgage interest costs having jumped by 18 per cent in 2022, housing has become a matter of national distress, with fully 44 per cent of Canadians saying they are very worried about keeping a roof over their heads. Also, self-reported mental health fell markedly during the pandemic, especially among younger Canadians, and deaths attributed to alcohol and drug use reached new highs. After two years of COVID, only about half of men under age 45 told pollsters they had a strong sense of purpose in life. And, while Canada’s economic rebound from COVID has been better than that of other G7 countries, by early 2023, most Canadians believed the country was in a recession. High inflation has been seen globally, but here it nonetheless landed in Trudeau’s lap. And, as with health care, the blame for the housing affordability crisis is in large measure directed at the feds even though it’s mainly the fault of other levels of government—in this case, municipalities and the provinces. But in today’s emotion-driven political echo chambers, the fine points of federal-provincial responsibility seem irrelevant, something the premiers and federal Conservative Leader Pierre Poilievre have exploited to their benefit. Last week, the down-in-the-polls Liberals belatedly began to step up their response to these problems. But none of this is likely to be quickly resolved as the post-COVID crises are an intensification of decades-old economic fault lines. Middle-class prosperity has been eroding ever since the right-wing Thatcher-Reagan revolution. Their conservative, capitalist-championing platform contributed to the decoupling of labour compensation from economic prosperity, and helped usher in four decades of growing wealth inequality. And consumers have been put at a further disadvantage by Canada’s weak competition laws. So people were feeling cheated long before COVID. The unequal distribution of riches has been compounded by the neo-liberal habit of depriving Ottawa of revenue through corporate tax cuts. Between 2000 and 2012, Liberal and Conservative governments halved the corporate tax rate. But, contrary to the expectations of tax-cutting hawks, big companies have been increasingly inclined to spend their steadily larger profits on dividends and share buybacks rather than prosperity-building investments. This helped create the current mortgage calamity because the Bank of Canada, faced with ongoing weak business investment, felt compelled to keep interest rates at rock bottom levels for years in hopes of spurring economic expansion. This inadvertently added to the now-disastrous housing price bubble as homebuyers rushed to lock in low (but ultimately unsustainable) mortgage costs. Since 2015, the Liberals have devoted unprecedented resources to try to address Canada’s many socio-economic and environmental issues. But the frustration and anger bred over 40 years by Thatcheresque-type policies rigged against the middle class in favour of business and the rich were supercharged during three years in the COVID wilderness. Layered on top of that inchoate, convoy-curious rage are the beguiling promises of simple fixes by Canada’s Trumpian populists on the right, who seem, for the moment, to be winning the day with voters. So, as ironic as all this might seem in many ways to the Liberals, that’s where things stand. And reversing the situation will take more political finesse and timely accomplishments than the Trudeau government lately seems capable of. Les Whittington is a regular columnist for The Hill Times. The Hill Times

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The COVID meltdown finally catches up with Trudeau

Reversing the situation will take more political finesse and timely accomplishments than the Liberal government lately seems capable of.

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