The Carney Liberals find bad habits are hard to break

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The Carney government’s move to plump up quarterly GST credits to lower-income households is part and parcel of a pattern: Avoiding the worst excesses of the Trudeau government while still not completely breaking with all of their predecessor’s bad habits.

The Liberals unveiled what they brand as the Canada Groceries and Essentials Benefit, with a one-time boost in the first half of this year and a smaller hike through, at least, the coming five fiscal years.

The basic policy is sound: Payments target those households most in need, and are delivered through the existing channel of GST rebate payments. Indeed, that is the approach that this space argued that the Liberals should have taken in late 2024, when then-prime minister Justin Trudeau temporarily eliminated the GST on non-exempt food, some types of alcohol and other vaguely holiday-themed expenditures.

Higher-income Canadians, quite rightly, will not receive payments under the current plan, unlike the Trudeau-era proposal that was not limited to those truly in need. The current proposal also has the benefit of not forcing the cost, and confusion, of rejigging sales computer systems onto retailers twice in three months, as the Trudeau-era policy did.

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The basics are solid enough, and the economics are relatively coherent. But we can’t help but quibble about the branding. As Prime Minister Mark Carney himself noted on Monday, recipients can spend the money on anything they choose. Perhaps the Canada Money You Can Spend However You Like Benefit did not test well in focus groups.

More substantively, the Carney government has not indicated how it will pay for the cost of this program: $3.1-billion by June, and then an additional cumulative $8.6-billion through to fiscal 2031. That is $11.7-billion unaccounted for. Will there be a tax increase? Spending cuts? The answer is neither; those billions of dollars be simply added to the tab for the next generation to shoulder in coming years.

And that is where the Carney government continues in the irresponsible fiscal path trod by Mr. Trudeau: Announcing benefits without figuring out how to pay for them. Higher Old Age Security payments, dental benefits, pharmacare, school lunches and, now, higher GST credits. There are arguments for most of those (the OAS payments are an exception). But they can’t be paid for with more borrowed money.

This year’s deficit was already predicted to be an eye-watering $78.3-billion. Without offsetting changes, the program announced Monday would push that number well past $80-billion. Sooner or later (sooner we hope), Mr. Carney will need to ask Canadians to sacrifice, and stop pretending that the billions of dollars the Liberals periodically dole out come without cost or consequence.

Along with the GST credit boost, the Liberals also said they intend to increase scrutiny of competition in the food industry, as well as measures to support increased domestic food production. Those announcements hold some promise, particularly if they address obvious bottlenecks that have fuelled food-specific inflation – abattoirs are a prime example.

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Details are few, but the policies hinted at on Monday suffer from lack of ambition. The government, for instance, proposes to allow for the immediate expensing of greenhouse buildings to encourage investment. That’s fine, as far as it goes, but what about the rest of the food-supply chain? For that matter, what about the rest of the economy?

Similarly, the notion of increasing regulatory scrutiny of competition in the food industry is necessary, indeed overdue. But that scrutiny seems overly focused on food retailers. More information for consumers, such as better unit-price labelling, is a helpful if modest step. Examining anti-competitive practices in the food-supply chain is appropriate, even though some of those tactics, such as the strong-arming of suppliers, may act to dampen consumer prices.

But there are larger structural issues for the Competition Bureau, and government, to tackle, starting with the overly concentrated slaughterhouse industry. Reducing that concentration, ideally through investment by new entrants, should be a top priority in any policy to rein in food inflation.

And then there is the most obvious target for any competition-enhancing policy: Supply management, whose entire reason for existing is to avoid market pressures in setting prices. Canadians will know the Carney government is serious about addressing the high cost of food when it announces a wide-ranging review of that (sadly legal) price fixing.