• Ted Fraser

Justin Trudeau's Report Card


The new government has acted quickly since Prime Minister Trudeau's swearing in on November 4th, responding to a multitude of issues including climate change, the increasingly hot housing market, the refugee crisis, and more. Although their first month in government has been far from perfect, the Liberals have made strides to fulfill their bold campaign promises.

Fiscal Policy: B-

Calling Parliament to sit for two weeks before the holiday break was a strategic move. It allowed the government to institute one of the pillars of their platform: the "middle-class" (defined as any individual making $44,000 to $88,000) tax cut, which will bring the tax rate down from 22% to 20.5%. However, in their platform, the Liberals estimated that the cost of cutting taxes on the middle-class would be $3 billion. They would offset this by raising taxes on the wealthiest 1% of Canadians (those making upwards of $200,000 a year), which they estimated would raise $3 billion. Unfortunately, it appears that they underestimated how much it would actually cost and overestimated how much it would raise. Now, the government is reporting that the real cost of the cut is $3.4 billion, and the hike will only generate $2 billion (with the C.D. Howe Institute estimating it will bring in a dismal $1 billion).

Environment: A-

In terms of the environment, the Liberals have invested $2.65 billion over five years to help developing countries fight climate change. This doubled the previous government's commitment of $1.2 billion over five years. The Prime Minister, along with the premiers, is currently at the Paris climate talks, working towards putting together a significant international treaty, the main goal of the talks to prevent a 1.5C increase since pre-industrial levels. Trudeau did not put forward a concrete proposal for a country-wide carbon tax or cap-and-trade system, instead deciding to "work collaboratively and constructively with the provinces."

Refugees: B

The Liberals' original campaign promise to bring in 25,000 government sponsored refugees by January 1st was altered, after many Canadians, including Saskatchewan premier Brad Wall, argued that the deadline could jeopardize Canadians' safety and sacrifice proper security screening. Instead, the government opted to prolong the deadline till March, while pledging to bring in a much more manageable and realistic number of 10,000 refugees by 2016. This was seen by some as a failed promise, but by others as a logical and understandable adjustment.

Infrastructure and Spending: B-

The ambitious infrastructure program -- $60 billion over 10 years -- will not experience any changes, despite fears of a higher-than-promised deficit. The complementary tax hike and cut have exacerbated the Liberals' proposed $9.7 billion deficit spending package for the 2016/'17 year, in addition to lower-than-estimated real GDP growth in upcoming years. Indeed, the government's recent fiscal update downgraded federal expectations for GDP growth in 2016 to 2%, down from a predicted 2.2%. Additionally, 2015's growth prediction was also downgraded, from 2% to 1.2%. More conservative economists and pundits have denounced the Liberals' proposed spending, saying it will lead to chronic deficits and inevitable program spending cuts and tax hikes.

The argument for deficit-spending is strong however, with Canada's federal debt-to-GDP ratio at an all-time low, interest rates exceptionally low, and essentially stagnant economic growth. Furthermore, estimates have found that for every $1 billion spent on infrastructure, roughly 18,000 jobs are created. This could help in provinces like Alberta, where the unemployment rate has increased 2.2 points since last year.

Housing Market: A

Finance Minister Bill Morneau recently introduced new measures to minimize the risk of a housing bubble, like the one experienced in 2008. The government will boost the minimum down payment on houses over $500,000 to 10% from 5%. Beginning in 2016, if someone wanted to buy a $700,000 home, he/she would pay 5% on the first $500,000 of the home ($25,000) + 10% on the remaining $200,000 ($20,000), coming to a total down payment of $45,000. For this specific example, a buyer will now need an additional $10,000 to buy this $700,000 house. Many have praised Morneau for this decision, including NDP finance critic Guy Caron, calling the policy "prudent".

Other: A+

Also, the new government has promised to reintroduce smaller, yet still meaningful, policies. This includes the reinstitution of the long-form census, controversially scrapped by the Conservative government five years ago. As well, Prime Minister Trudeau has allowed climate scientists to present their findings without government interference. Trudeau's cabinet has an equal number of men and women, which was the first campaign promise fulfilled. The government has stated it will end Canada's bombing mission in Iraq and Syria in March 2016, once the current mission is completed. Finally, they have declared that they will begin taking strides towards legalizing and regulating recreational use of marijuana.

Average: B+

Overall, the new Liberal government has gotten off to a successful start. Despite abandoning their promise to take in 25,000 refugees by the New Year and adding an additional $1.4 billion to their $10 billion deficit, they have been diligent, open, and efficient. At the moment, a new, unfamiliar global spotlight is fixated on Canada, admittedly in large part due to Trudeau's good looks, but also because of his efforts to reinvent Canada as a worldwide leader in climate change, refugee policy, and more.

To convert the government's letter grades to IB marks/numerical values, follow this link: https://ib.ednet.ns.ca/IB-in-NS/transcripts-grades