0:01

You're listening to a frequency podcast.

0:03

Network production. Just.

0:07

In case you have been under

0:09

a rock for the last month,

0:11

you should know our government has

0:14

been busy assuring Canadians they understand

0:16

it's hard right now and they're

0:18

going to do stuff about it.

0:21

The federal budget they have been

0:23

telling us will help to make

0:26

life more affordable, to make housing

0:28

more attainable, and to make many

0:30

things better. Just. Listen.

0:33

The government has already previewed almost forty

0:35

billion dollars in spending about this. But

0:38

I just is is we're working on

0:40

right now. we'll be focused on both

0:42

supporting Canadians now. And will

0:44

be launching a new

0:47

child expansion. As part

0:49

of our upcoming budget we're going

0:51

to create a Canadian. Renters were

0:53

fighting every day to build an

0:56

economy that helps every generation get

0:58

ahead, including by taking significant measures

1:00

to make housing more. Will we

1:02

see the deficit current? Know.

1:07

It is one thing to tease what

1:09

is in an upcoming budget and to

1:12

tell Canadians how awesome you think all

1:14

those things will be. It.

1:17

Is another to actually deliver

1:19

those things to produce the

1:21

numbers and the details and

1:24

have people like economists dig

1:26

into that. And. Determine

1:28

how much of a difference years

1:30

super awesome budget will actually make.

1:33

To. Canadians who are struggling to pay

1:35

the bills. Yesterday.

1:38

That. Bill came do. The. Budget

1:40

came out. And

1:42

today. We'll. Find out. Is

1:45

this budget going to help you? Were.

1:49

And how much. I'm.

1:57

Jordan Heat Rawlings. This is the big

1:59

story. Jim. Stanford is an

2:01

economist and be director of the Center

2:03

for Future Work. He is somebody we

2:06

call when we need to translate a

2:08

big economic terms into things that impact

2:10

people's wallets. Hey Jim! Jordan. Howard.

2:13

I'm. Do and really well. I'm glad to talk

2:15

about this with you because this is the

2:17

affordability budget, right? That's what they call it.

2:19

Yeah, Let's. Start with this

2:21

and they've been saying that's and promising

2:23

affordability help in this budget for for

2:25

at least a month now as they've

2:28

kind of made announcements here and there,

2:30

but before we get into specifics, Broadly

2:33

speaking, How would you grade

2:35

this budget for the average Canadian who

2:37

is struggling with their bills right now.

2:40

Well. I'd give it a be to

2:42

be Franco. This budget isn't gonna solve

2:44

the affordability problem sir that most Canadians

2:46

are experiencing and and nor should we

2:48

expected to most of those problems that

2:50

have very little to do with government

2:52

and everything to do with how the

2:54

economy's doing and what companies are up

2:56

to and what prices were paying. and

2:58

those things are all beyond the a

3:00

direct control of government. So I think

3:02

there's a suite of measures so in

3:04

this none of them game changing but

3:07

all of them will offer incremental helps

3:09

a different groups of. Canadians and are

3:11

taken as a whole. I I think

3:13

this budget will maker and important positive

3:15

difference. Will. Get into what those

3:17

things are. bread First, He said nothing.

3:20

In here was a game changer. Was

3:22

there one bigger things that may be

3:24

stood out? He was something that Canadians

3:26

will really feel in their finances, either

3:28

positive or negative. Well, by far the

3:30

biggest attention and the most power I

3:33

feel like in terms of dollars in

3:35

the budget is directed towards the the

3:37

housing issue, which is obviously a crisis

3:39

affecting anyone who's trying to buy a

3:41

house or trying to rent an apartment

3:43

across the country would just seen a

3:46

terrible upsurge. In housing costs so there's

3:48

you know really fifteen to twenty different

3:50

measures are under that umbrella and all

3:52

told that the i would say a

3:55

generational ah intervention by the Federal government

3:57

in an area that isn't know typically

3:59

seen as federal jurisdiction butts that the

4:02

government heard the Canadians are are very

4:04

upset about housing and worried about up

4:06

for themselves and their kids and so

4:08

I think that that is that the

4:11

most important part of the budget. Now

4:13

most of those measures were announced in

4:15

and you know various a photo ops

4:18

that say top ministers have been having

4:20

across the country in the last deaths

4:22

as you wait so there weren't any

4:24

giant surprises their butts as seeing them

4:27

as a whole with dollar signs attached

4:29

to them. As certainly stands out as

4:31

the as the most important aspect of

4:33

the budget and and not overnight by

4:36

any means. but eventually I think it

4:38

will make a difference to to the

4:40

housing challenges we face. and the housing

4:42

policy is so massive that we're actually

4:44

going to spend another episode of this

4:46

podcast breaking down to your point, all

4:48

their fifteen to twenty measures in their

4:50

So Will talk about that more broadly

4:53

may be with you today. But.

4:55

As you mentioned, as I mentioned off

4:57

the top, it's been announced in dribs

4:59

and drabs over the past few weeks.

5:01

Them is still a massive document for

5:03

Canadians who have been paying attention to

5:05

those announcements and kind of expected this

5:07

housing stuff out. What's actually new in

5:10

this magic the kind of caught your

5:12

eye as you look through it. The.

5:14

Thing I was not expecting Jordan was

5:16

so what they did on the capital

5:18

gains tax measures. so on the revenue

5:20

side explain that to us. How does

5:22

that work? Well, A capital gain is

5:24

our what happens when you buy something

5:26

and sell it for more than you

5:28

paid. So you haven't actually done anything,

5:30

you haven't produced anything, You haven't done

5:32

any work in an economic sense. The

5:35

you you know either through good judgment

5:37

or sheer luck or just riding the

5:39

coattails of an inflating stock market. So

5:41

you ended up with an asset that

5:43

said got more valuable. Over time. in

5:45

fact, as Jordan as you want to

5:47

play derivatives, you can actually get a

5:49

capital gain out of a falling market,

5:51

a few a sort of stock and

5:53

for her end up with more money

5:55

at the end that way. So the

5:57

idea is that right now we've got

5:59

an incredibly favorable the last time that

6:02

preferences capital gains as a form of

6:04

income. we we have a parcel inclusion

6:06

a system where people who make capital

6:08

gains and the vast majority of capital

6:10

gains are captured by are very high

6:12

income people and they only have to

6:14

declare half of that game on their

6:16

income tax which is a sweet deal

6:18

he owes. You are if you flip

6:20

burgers for a living at Mcdonalds, all

6:22

of your income counts on your income

6:24

tax. If your foot stocks and bonds

6:27

said to make a speculative profit, you

6:29

only have to declare. Half which are, you

6:31

know. I think there's a moral issue there, but

6:33

there's also an economic issue in the sense that

6:35

it's sad. And incentive for

6:37

speculating on stuff. Whether you're flipping

6:40

houses, are buying and selling fine

6:42

art and bank seats, paintings or

6:44

whatever else, you're not actually encouraging

6:46

production directly. So. I

6:49

think that equality advocates for years,

6:51

myself included have said this is

6:53

a rip off for most people.

6:56

it's a very concentrated benefit that's

6:58

captured by high income people. Enter

7:00

the government now has decided this

7:02

is a moment to trying rollback

7:04

some of that south with are

7:06

some exceptions. They're going to change

7:08

that includes and rate from sixty

7:10

percent to sixty six percent two

7:12

thirds instead of half. That

7:15

frankly lower than it used to be. We just have a

7:17

seventy five percent conclusion. Rate And in Canada

7:19

And then there's the first a

7:21

million in a bit of capital

7:23

gains over your life timer our

7:26

tax free and that will continue.

7:28

And so this sixty six percent

7:30

rate only apply to people who

7:32

get over a quarter million capital

7:34

gains and given year and believe

7:36

me, that's not you and I.

7:38

So. All told I

7:40

think this is a significant to change. They do get

7:42

you know some decent revenue out of a they want

7:45

to pay for some of those other things that they're

7:47

doing. but. Maybe. The politics of

7:49

it are more important. It's a it's a

7:51

tax measure. Clearly Target had not just to

7:53

the top one percent A Really the top

7:55

one tenth of one percent of Canadians are

7:57

the ones who are gonna. The

8:00

experiencing higher taxes because of this measure.

8:02

How do you think that's gonna go

8:04

over in the business community and with

8:06

a large income Canadians I think it's

8:09

already. I'm as we speak on Tuesday

8:11

night. Ah, the most controversial thing in

8:13

this budget. Well their number of people

8:15

directly affected by it is is quite

8:17

small. They estimate about forty thousand a

8:19

taxpayer so about one tenth of one

8:22

percent right? And you know you're going

8:24

to hear from of folks are Ceos

8:26

and top bankers and deaths business lobbyists

8:28

who are among of forty. Thousand Silks

8:30

will have to take their complaints with

8:32

a grain of salt, and many of

8:35

them have got personal skyn in the

8:37

game, whereas the vast majority of Canadians

8:39

don't. There is an argument the business

8:41

makes thirty tax capital gains higher than

8:44

businesses will invest less, and frankly, I

8:46

don't buy at most of the capital

8:48

gains paid are on speculative assets, not

8:50

people starting a company or doing something

8:52

actually productive. In fact, that at the

8:55

same time the young the government's taking

8:57

with one hand, beginning with another, they've

8:59

got a new entrepreneurship. The incentive they

9:01

call at whereby if you actually did

9:03

start a business now you get an

9:06

additional two million dollars Sac capital gains

9:08

free on any gains that you make.

9:10

So the argument that this is gonna

9:12

slow business investment or hurt our productivity

9:15

or so and I think is very

9:17

self serving coming from a small group

9:19

of people who are among the tiny

9:21

proportion of our population who will actually

9:23

pay something more because of this the

9:26

vast majority of Canadians? Ninety Nine Point

9:28

Nine percent. Literally, that's not an exaggeration,

9:30

Price will pay nothing because of

9:32

this tax. Well, let's focus on

9:34

that Ninety nine point nine percent then.

9:36

and you mention housing and I

9:38

know it's the biggest thing. It's something

9:41

that will take time to fix,

9:43

especially when it comes to new

9:45

builds. What are some things

9:47

in this budget or that people will notice

9:49

in the short term and me sort of

9:51

months to a year out of this year

9:54

the housing measures. By enlarge it, you won't

9:56

notice that there's the couple changes to some

9:58

of the mortgage lending. That

10:01

people will be able to take advantage

10:03

of quickly, but I don't think those

10:05

will have much impact than a bigger.

10:07

The bigger programs like loans for apartment

10:09

building and are using Canada Lands that

10:11

is federally owned land to build new

10:14

housing. Honor and idea I thought was

10:16

really creative is so they're going to

10:18

spend a billion dollars over ten years

10:20

to convert central office buildings into housing.

10:22

you know, with seats work from home

10:25

phenomenon. So on. There's a lot of

10:27

office space out there, right? and I

10:29

and there's. Growing interesting converting them to

10:31

apartments. so there is this. The federal

10:33

government itself. getting in on that self

10:35

are all of those I think are

10:37

encouraging but they are going to take

10:39

years. The things so on the portability

10:42

front or Jordan that I think people

10:44

will feel more quickly. I will be

10:46

some of the i would say sort

10:48

of social program innovations that we're seeing.

10:50

We've heard about the farmer care program

10:52

that there is money now in the

10:54

budget for that. So to drugs. Initially,

10:56

birth control and diabetes drugs will be

10:58

provided free through. that's that's. Interesting, and

11:00

that's going to millions of Canadians. The

11:03

dental care thing this rolling out will

11:05

assume cover nine million Canadians. The Disability

11:07

Benefit. The Canada Disability Benefit which has

11:09

been talked about for few years finally

11:12

has some money in it's not a

11:14

whole lot is can be two hundred

11:16

dollars a month for people with a

11:18

disability that prevents them from working. But

11:21

I think that's a step towards something

11:23

that can be expanded down the road

11:25

and will help us eliminate poverty among

11:27

people with disabilities. So I think those.

11:30

Are some things that will start

11:32

feeling and no single one of

11:34

them as a magic bullet but

11:36

taken together. Most Canadians will

11:38

get something from one of those new

11:40

programs on. I think that that will

11:42

be interesting and and certainly ah, ease

11:45

up at the cost of living Challenges

11:47

that people are feeling. How

11:53

much is this budget going to cost? And this is

11:55

something I a couple of us have talked about as.

11:58

Should. Be really care how. Government affords this

12:00

stuff when it's Canadians that are feeling

12:02

a pinch. Do we really care that

12:05

much about who you know, how balance

12:07

the budget as. Well frankly I

12:09

is. There was a non story in

12:11

this budget. It is the the deficit.

12:13

There is like virtually no change in

12:15

the deficit in the deficit to forecast

12:18

us which is interesting despite the you

12:20

know the state of new programs that

12:22

the government has announced in recent weeks.

12:24

and it's you know, a couple of

12:26

new ones in the budget today and

12:28

no change in that deficit profiles. And

12:31

that's partly because of a new revenue

12:33

that will come in from the I

12:35

capital gains tax that I mentioned than

12:37

they. They've also got to a higher

12:39

tax on tobacco and beeping products. That's

12:42

kind of chump change in the big

12:44

picture. but most of the work if

12:46

your life is just being done by

12:48

the economy per se and so that

12:50

the growth in the economy and of

12:53

course inflation itself as a bit of

12:55

a dirty secret governments actually benefit from

12:57

inflation will the rest of us for

12:59

our cursing at government revenues and in

13:01

inflationary environment like now tend to increase

13:03

a a bit faster than their expenses

13:06

and and we have seen I think.

13:08

Through a combination of stronger than expected

13:10

economic performance, many economists expect that a

13:12

recession this year, but that hasn't happened

13:15

and they the forecast in the budget

13:17

doesn't expect one in they see growth

13:19

picking up next year which is a

13:21

good science and combined with higher prices

13:24

means the government revenue profile is stronger

13:26

than expected and that's where most of

13:28

the money is on in some. So

13:30

I think for you know some of

13:33

the government's critics who have been focusing

13:35

on that deficit issue the budget today

13:37

in a way neutralizes. That to really

13:39

hardly any news there at all. The numbers

13:41

are almost exactly the same on the bottom

13:43

line as they were last year. What about

13:46

smaller items? and a you mentioned the farmer

13:48

care program that's not exactly small butters, Things

13:50

that are even smaller than that that are

13:52

just a interesting and things that people should

13:54

notes. As you know they look at their

13:56

finances going forward or even just as they

13:58

walk around in Canada when. What will

14:00

this budget change? Ah well, ah

14:02

again. there's There's such a range

14:04

of different initiatives aimed at different

14:07

obviously targeted the voter block, so

14:09

essentially us one of them. I,

14:11

I think that's interesting is this

14:13

focus on young people's in the

14:15

budget. Now I think the Liberals

14:17

traditionally took for granted that that

14:19

they would be supported by young

14:21

people more so than the Conservatives.

14:23

Anyway, I think their youth support

14:26

of probably strongest for the Ndp

14:28

in the Greens mans the Liberals.

14:30

You know what position themselves as appealing

14:32

to youth and modern generation, etc. but

14:34

they have seen some of that you

14:36

support target siphoned off towards the Conservatives

14:39

and so they. they clearly made an

14:41

effort in this that it to address

14:43

youth issues. So here's an interesting one

14:45

that I I didn't see coming I

14:48

hadn't heard about and initial or five

14:50

hundred million dollars for a youth mental

14:52

health program to try and get extra

14:54

support for young people to access mental

14:56

health services. Anyone who's had someone in

14:59

their family with. Mental Health Town

15:01

just knows how hard it is

15:03

to get counseling, support, a medical

15:05

support and other other types of

15:07

help during a terrible time. So

15:09

that said that's an interesting initiative

15:11

and also some new money for

15:13

grants and loans for students are

15:16

going to college or university combined

15:18

with that are part of the

15:20

housing program is obviously him to

15:22

getting people to some special grants

15:24

for young people trying to get

15:26

into the market. that more relevant

15:28

I think will be. As some

15:30

protections for renters most young people of

15:33

course our rents are, so I thought

15:35

that was an interesting twists to see

15:37

how they're trying to. You.

15:39

Know put together a package that would

15:42

appeal to the millennial generation of voters

15:44

and I guess try to shirk shore

15:46

up their support among younger Canadians. I

15:48

know you're an economist, I'm not a

15:50

political analyst, but has since you mentioned

15:52

you know where the government is coming

15:54

from on this one. Impressive. Do you

15:57

take away from this budget about. What?

15:59

This government thinks of it's own

16:01

political situation in and how it's

16:04

trying to maneuver well clearly others

16:06

an element of desperation that as

16:08

motivated the government's to come out

16:10

bed with. First of all so

16:12

many different initiatives and you know

16:14

as much show real money behind

16:16

them as they have provided and

16:18

again you despite that they're they're

16:20

able to meet their previous a

16:23

deficit target so we've all seen

16:25

of the polls and and this

16:27

folly of is far ahead of

16:29

the liberals. The at this moment

16:31

and an election is is coming

16:33

up in eighteen months, so clearly

16:35

they political pressure is motivating the

16:37

government to. Both. Try

16:39

to do more to help Canadians

16:41

and be seen to be helping

16:43

Canadians, but also in a a

16:45

kind of strategic way that they

16:47

hope will neutralize some of the

16:49

attacks that they're getting from the

16:52

conservative soaps. The Conservatives certainly have

16:54

been exploiting the anger over the

16:56

cost of living in the housing

16:58

crisis and so on, trying to

17:00

blame government for big spending and

17:02

causing inflation and high interest rates

17:04

which city frankly is a far

17:06

fetched story and in economic terms.

17:08

But politically, it's been. Beneficial

17:11

for the Conservatives And so now you see

17:14

the government responding and say, well, we're actually

17:16

going to do something about these costs of

17:18

living pressures and housing situation with by the

17:20

way, a budget that spends a little bit

17:23

more than it did before. So

17:25

I think they have set up. A

17:28

fairly clear contrast between their approach

17:31

to these issues and the Conservatives,

17:33

and clearly that's been motivated by

17:35

ah, by the political pressures the

17:38

government feels. With. Talks a lot

17:40

about affordability measures. What's ambitious in this

17:42

budgets. I hear that there is a

17:44

significant amount of money may be set

17:46

aside for artificial intelligence which is an

17:49

interesting thing to put her in a

17:51

federal budget. Yeah, it is that and

17:53

Jordan. I just hope that section on

17:55

the budget was written by human being

17:57

and not chat gp process but scientists.

18:00

They have put a couple billion

18:02

dollars towards supporting mostly the development

18:04

supercomputers said in Canada, You know

18:06

that all the ai programmers need

18:08

these massive computers to you know

18:10

so that their their coding actually

18:12

makes a difference in where I'd

18:14

say behind the curve internationally on

18:16

that night they they put the

18:18

money into that. They've also puts

18:20

extra money into other forms of

18:22

research or both commercial researching, university

18:24

research and so on self on.

18:26

The sort of technology and innovation

18:28

front I think they recognize. That there's

18:30

more to be done in Canada and those and in

18:32

both those initiatives will be helpful. This

18:35

is the last and I'll ask

18:37

you and maybe I should have

18:39

asked and off the topic. As

18:41

you mentioned, so many different things

18:43

are in this budget and a

18:45

little something for everybody. So how

18:47

does this budget compared to ah,

18:49

a traditional budget? Whether that is

18:51

by a conservative or liberal governments

18:53

or just even previous, our budgets

18:55

by the government. Well

18:58

as I mean this government since

19:00

Twain's esteem when when when Trudeau

19:02

was first elected has I would

19:04

say generally been active in it's

19:06

budgets and and initially that was

19:08

through changing some of the attacks

19:10

parameters for example the middle class

19:12

tax.and the increasing taxes for the

19:14

highest income category and some on

19:16

the social and environmental policy from

19:18

for sure, the National Child care

19:21

program, etc. So I think in

19:23

a way there's a bit of

19:25

continuity between what this government's. Been

19:27

doing and what it's done now

19:29

but clearly they've shifted the focus

19:31

and the framework for this. The

19:33

last budget had a lot of

19:36

initiatives in it seemed around climate

19:38

change and the energy transition and

19:40

the big gas ambitious programs to

19:42

build a clean energy industries in

19:44

Canada. Now they've seen in the

19:46

last year that the politics and

19:48

concerns of Canadians chains and them

19:51

and the budget has changed staff.

19:53

It's focus accordingly so you know

19:55

I in away with Al. Gore

19:57

flying and I'd say this is democracy in action.

20:00

Both them all. All the major

20:02

parties have a sense that Canadians

20:04

are angry about the cost of

20:06

living there. Very angry about what

20:08

corporations are charging them in in

20:10

prices. They're very worried about a

20:13

housing for themselves and the kids.

20:15

And so this budget has responded

20:17

to those concerns. And I expect

20:19

the opposition parties are both the

20:21

conservatism the Ndp in English Canada

20:24

are going to be. China.

20:26

Take their own response to the same

20:29

sorts of concerns that Canadians have expressed.

20:31

So this budget isn't going to fix

20:33

the problem for sure, but it's gonna

20:35

help a lot of people incrementally and

20:38

I think it shows that's in Canada

20:40

or democratic system works and asks that

20:42

governments listen to Canadians and respond when

20:45

we're pissed off about some as a

20:47

perfect way to put a thanks Jim

20:49

thank you very much. Gym

20:54

Stanford Economist and Director of Beast

20:57

or for future. That

21:00

was the big story. For more from

21:02

Us including previous episodes with Gem, you

21:04

can head to the Big Story podcast.cia.

21:07

You. Can always send us feedback positive,

21:09

negative indifference wherever you like. The

21:11

way to do that is via

21:13

email, hello at the Big Story

21:16

Podcast.cia or of course giving us

21:18

an old fashioned phone call. The

21:20

number is Four one six nine

21:22

three five five Nine three five.

21:25

We. Won't actually answer the phone, but can

21:27

leave a voicemail and rant for as

21:29

long as you require. Thanks

21:32

for listening and Jordan he drawings

21:34

will talk tomorrow.