Economists speak with Liberal cabinet ministers in Montreal

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We’ve been focusing on the issues that matter most to Canadians to people in the middle class people working hard to join the middle class we’ve been focused on housing we’ve been focused on the cost of living we’ve been focused on economic growth that delivers those good

Jobs that are the basis for a good life Welcome Back back to a special edition of power play we’re live in Montreal Federal cabinet has been meeting at a retreat underway just behind me for the past two days Finance Minister Christa Freeland as you heard there responding to uh the cost of

Living focus at this cabinet Retreat the government is preparing to face the House of Commons next week and deliver a budget in the coming months we sat down with two of the top economists that ministers brought in today right after they briefed cabinet Arman yelian is the

Ainson fellow on the future of workers at the Atkinson Foundation and Kevin Milligan is an economics professor at the Vancouver School of Economics at the University of British Columbia hi there so good to see both of you great to be here I appreciate you

Making the time um Kevin I started I I I think I’d start with you and I and I wanted to ask you I feel like anecdotally just in my job there’s so much economic angst out there I know some of the data obviously bears that out do you have the sense that

Relatively speaking there is a higher level of economic angst among Canadians at the moment and is it Justified for from where you said yeah I think there is uh a lot of angst out there and I think it is Justified we’ve just been through like the economic shock of a

Century with the pandemic and you know with uh the impact of the pandemic on people’s lives and then after the pandemic with the inflation episode that we had um this is a really major economic shock and so people have been adjusting to it and what’s interesting

To me is kind of where we are right now and kind of at a Crossroads as the inflation is coming back down now and the question is what is the economy going to look like for the next 5 years for the next 10 years and can we get on

A track where we have middle class incomes growing and we have Canadians getting back on the track of of of building a good economic life for themselves I want to dig a little bit deeper in if those should be the objectives or what the objectives should be because I think often Canadians are

Confronted with a reality and a message that from a macro perspective it’s not that bad particularly relative to other industrialized countries but they don’t feel that way in their day-to-day life I mean uh what should the objective be when it comes to economic growth should it be a more equitable distribution of

It should it like what kind of things should the federal government be geared towards I think part of what has happened since the global financial crisis in 20089 is the commodification and of Housing and housing is such a basic part of our lives that people that own homes are kind of sweating because

Roughly 50% of the mortgages that are out there that need to be renegotiated are going to happen this year and next exactly when unemployment starts tracking up everybody’s saying that we might be in a recession right now as we’re speaking but it’s sure not going to get any more pretty in the next

Little while it might ease up in the next little while but when will interest rates come down and far how far will they come down and how far will that Cascade into rents which brings brings me to the second issue we’ve gone from an ownership Society to a whole bunch of

People in the society being owned by the way capitalism works and that’s the 25 to 40 year olds and nobody’s really talking to them directly about how to ease their life so yes it’s partly about income inequality and redistribution but a lot of it is take the basics out of

The market offset some of the costs as we did with child care as we’re doing with dental care as we we might do with pharmacare and stop the privatization of the other elements of the Care economy like long-term care child care and health care so that we pay as little as

Possible and focus that money on good quality Care so let me just jump off that and ask you Kevin because I think that there is uh a sort of other discussion happening about the constraints that are that surround government and their ability to do so the way Arman describes it I interpret

That in layman’s terms as maybe an expanded role of government with a focus on improving aspects of people’s lives that are facing you know struggle right now how would you counter the criticism that an expanded role of government isn’t a good fiscal policy to pursue

When I Look At You Know the Way That Canada’s fiscal policy sits compared to other countries compared to the kind of metrics that economists like to use it’s actually in a pretty good place in that we have a deficit that’s in the neighborhood of 1 and a half% 1.8% of

GDP and thinking about that you know whether it’s 1.8 or 1.9 and getting really excited about that I don’t think that’s where you know the bond markets are they’re not going to worry if we had you know slightly higher deficit and it’s also you know not going to hit

Canadians in the in the checkbook too much because the you know the cost of borrowing is still relatively low compared to history so when I think about that we have some room from FAL fiscal capacity there the question is what you’re going to spend it on if you’re going to throw it

Overboard that’s not good we want to make sure that we do it on things that help Canadians and one way we can do that is by expanding the capacity of our economy so a proof point of that is think of the uh Child Care uh initiative

That was put in place in 2021 2022 we saw some billions of dollars being spent that was fiscal capacity being used what we’ve seen though is that women especially women with kids are at the highest ever level in Canadian history for labor force participation we have 10 percentage points higher labor force

Participation for women in Canada compared to the United States this is great for Canadian women this is great for our economy that’s the kind of way you can use fiscal capacity to grow our economy if I understand it correctly it’s almost about to use kind of a Cheesy term like return on investment

Right if we’re going to expand the role of government there needs to be a substantial return on investment for Canadians what’s another example in your mind Arman of something the federal government can pursue going forward that would do that basically protect the amount of affordable housing we have

Prevent further erosion of the stock because you do not want to see people that were in the middle class falling out of the middle class because of the cost of housing and then finding themselves homeless we are seeing a real tick up in the number of homeless people

And people that never thought they would be homeless this is preventable because once you get into that status it’s very hard to get into the housing market again and then there’s all sort all sorts of Cascades of costs once people become underhouse badly housed then they

Get sicker quicker and so we end up paying more anyway if we pay up front it’s like what your grandma said an ounce of prevention is worth a pound of cure so just quickly to follow up on that what does that mean from a tangible tangible perspective does it mean going

Beyond for example using Federal money to incentivize quicker construction Municipal levels does it mean Direct for uh federal government investment in housing stock and the type of housing stock that’s created how do you envision that I think we need to take more of the housing stock out of the market that

Means Federal governments that invest in buying and building now the building will happen through private sector but who owns the asset if it’s so great for developers why isn’t it great for taxpayers it’s a steady flow of income so why aren’t we owning more of the

Stock that we need in the part of the market that business does not want to invest in because the math doesn’t work we can do this and we can actually have Returns on investment for ourselves and frankly one of one of the greatest sources of equity for this is our

Pension plans they invest elsewhere why don’t they invest in Canada is there a way for the federal government to do that now Kevin that will uh produce results that have an impact in the short term or the near-term versus the long term which is what a lot of the supply

Generating activities now are are designed to impact yeah that’s a challenge sometimes Economic Policy doesn’t work on a political uh uh you know uh timetable but it’s not just politics right people are hurting and feeling those stresses right now and they want to see a path you know towards

A better future and so I think that um putting in place things that allow people to Envision that trajectory get back on a good trajectory whether it’s people who aren’t housed and getting them into that trajectory of into housing whether that’s a student who gets a you know a federal government

Funded internship or something like that that gets them into a trajectory into that career into that job that ends up leading them into the middle class that’s the kind of thing people want is to see some hope some trajectory there are some things today that could be done

That that start that trajectory yeah frankly you know we could be making every job a good job in the care economy where 20% of the labor force already works it’s like the the base of the middle class in the 50s to the 70s was manufacturing 20% of the labor force

Worked in manufacturing and we made many of those jobs terrific jobs if we did the same thing to the care economy people providing long-term care child care and health heare we could be building basically from the bottom up and middle out the type of economy that supports everyone I have like 15 seconds

How do they do that absolutely you need governments to invest in it this cannot be done through the market okay I’m going to leave it on that note thank you very much for both of you for sharing your perspectives today I appreciate it thank you that’s our mean the alian and Kevin

Milligan both of whom brief cabinet this afternoon coming up some of the other

Economists Kevin Milligan and Armine Yalnizyan discuss what they told Liberal cabinet ministers at their retreat in Montreal.

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33 COMMENTS

  1. She's focused on keeping her job mostly, and finding where she lands after the liberals are put out in the next elections. Also, focused on mastering the art of never answering a question directly?

  2. Let's put things in perspective, taking housing as an example. We are 5 million family residences in arrears. The total number of Canadian males in the age range of 22 to 44 is about 6million. How fast are we going to build houses?

  3. We need to build our economy around the care economy but we have a universal healthcare system? It's like saying building a economy around raising kids, great….. what the hell does that mean?

  4. Oh my goodness and she’s a professor at UBC? Makes me not want my kids to go to University. Why not stop taxing the shite out of your citizens and allow for a competitive private market? Llook what government involvement has done to our schools and health care system.

  5. 4:38 just want to tell this expert a fact:
    Average per-person incomes in Canada have stagnated from 2016 ($54,154) to 2022 ($55,863). Meanwhile, the United States has seen an increase from $65,792 to $73,565. The average Canadian now earns $17,700 less annually than the average American.

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