Former Bank of Canada governor David Dodge has made a bold prediction ahead of the unveiling of the 2024 federal budget by Deputy Prime Minister and Finance Minister Chrystia Freeland. In an interview on CTV News Channel’s Power Play with Vassy Kapelos, Dodge expressed his belief that the upcoming budget is poised to be the worst in decades.
Drawing parallels to the contentious 1982 budget crafted by then-finance minister Allan MacEachen under Prime Minister Pierre Elliott Trudeau, Dodge highlighted concerns about the direction the budget might take in terms of stimulating Canadian incomes and fostering long-term prosperity. The 1982 budget, delivered during a period of high interest rates and inflation, elicited widespread criticism for its spending measures, tax policies, and wage restraint initiatives.
Dodge’s apprehensions stem from indications suggesting that the federal government, in its bid to finance nearly $40 billion in newly announced expenditures without exacerbating the deficit, may resort to implementing individual wealth taxes or levying excess profit taxes on affluent corporations.
Expressing skepticism about the efficacy of such measures, Dodge warned against taxing wealth generators, positing that such actions could stifle economic growth. Instead, he advocated for policies aimed at boosting savings.
Moreover, Dodge voiced doubts regarding the efficacy of the Liberal government’s proposed strategies to tackle the supply side of Canada’s housing crisis, suggesting that these measures might fall short of expectations.
Prime Minister Justin Trudeau, meanwhile, addressed concerns about economic growth and taxation in a speech to a predominantly business-oriented audience. Notably absent from his remarks were any explicit references to potential wealth-targeting initiatives.
The government’s stance revolves around the belief that Canada is at a critical juncture necessitating substantial investment in areas crucial to the affordability and prosperity of millennials and Generation Z, particularly housing and employment opportunities.
Trudeau emphasized the significance of addressing the economic challenges faced by younger demographics, underscoring their pivotal role in shaping the nation’s economic landscape. He stressed the importance of instilling optimism in the economy, asserting that the strength of the economy is contingent upon fostering a sense of confidence and stability among its citizens.