Commentary Archives - Centre for Future Work

Webinar on New Report: A Sequel We Don’t Want

Jim Stanford — Tue, 16 Jun 2026 18:35:42 +0000

The Centre for Future Work recently hosted a webinar presenting results from its new report, A Sequel We Don’t Want: What the 2026 Oil Price Shock Will Cost Canadians.

The webinar featured presentations from Jim Stanford (Centre for Future Work Director, and author of the report), Atiya Jaffar (Canada Country Manager from 350.org, sponsor of a campaign for an excess profit tax on petroleum companies), and DT Cochrane (Senior Economist at the Canadian Labour Congress).

It explains the likely effects of the new global oil price shock on Canadian consumers, inflation, and interest rates. It predicts at least $50 billion in higher direct and indirect costs for consumers (including the flow-through effects of higher oil prices on prices of other products, ranging from transportation to food to housing). It also warned of the possibility of higher interest rates and even slower economic growth.

Please view the entire one-hour webinar on the Centre’s You Tube channel.

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Oil Price Spike Causing More Trouble for Canada’s Economy

Jim Stanford — Tue, 16 Jun 2026 18:29:27 +0000

Centre for Future Work Economist and Director Jim Stanford was recently interviewed on CBC News Channel regarding the outlook for Canada’s economy. He stressed that growth has been near-zero since U.S. president Donald Trump launched his trade war through big tariffs on Canadian exports. He also explained how high oil prices resulting from Trump’s attacks on Iran and the resulting disruption in global oil supplies would affect inflation in Canada, citing findings from the Centre’s recent report on the inflationary impacts of the war.

Please see the full interview here.

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Political Drama Over Technical Recession Not Justified

Jim Stanford — Tue, 16 Jun 2026 03:03:19 +0000

Canada’s economy has been growing very slowly for the last year, since Donald Trump launched his trade war against Canada’s exports. The side-effects of Trump’s attacks against Iran (including high oil prices and accelerating inflation) have further undermined growth in Canada.

Recent Statistics Canada data indicate that real GDP in Canada (adjusted for inflation) declined very slightly (by 0.036%) in the first quarter of 2026. Coming on the heels of a larger decline in real GDP in the final quarter of 2025, this signifies that Canada is experiencing a ‘technical recession” – traditionally defined as two consecutive quarters of contraction in real GDP.

There is no doubt that Canada’s economy faces serious headwinds, primarily the decline in exports to the U.S. and weak business capital spending (hurt by the uncertainty surrounding the trade environment and the economic outlook). As Centre for Future Work Director says in this commentary, originally published in the Toronto Star, whether the resulting growth is slightly above or slightly zero is not meaningful for economic policy decisions.

A technical recession is more about politics than economics

By Jim Stanford

Statistics Canada recently released its quarterly report on Canadian GDP, covering the first three months of 2026. Most economists had expected a modest increase in GDP, but the final number came in slightly below zero.

Coming on top of a small decline in the last quarter of 2025, this means Canada has experienced what is commonly called a ‘technical recession’: two consecutive quarters of shrinking real GDP (adjusted for inflation).

Opposition politicians jumped on this report as evidence that Canada’s economy is being mismanaged. They were joined by Pete Hoekstra, the famously undiplomatic U.S. ambassador to Canada, who cited the data to renew his call for Canada to become the 51st state.

‘Technical recession’ is a very rough-and-ready benchmark commonly used to determine whether the economy is shrinking. One-quarter declines in real GDP often occur, without signalling serious economy-wide trouble.

The two-quarter rule is only slightly more robust. But it is still arbitrary and subjective, and doesn’t necessarily say much about what’s actually happening in the economy.

The U.S. follows a much stricter definition. A technical committee at the National Bureau of Economic Research (NBER) monitors dozens of indicators, including employment, consumer spending, and business investment. Only when there is widespread evidence of significant contraction “spread across the economy and last[ing] more than a few months,” will it declare a recession.

Even as technical recessions go, this one is as ‘technical’ as they can get. Both of the quarters in question registered tiny declines in measured real GDP. And both of those declines reflected unusual statistical quirks, more than evidence of broader economic contraction.

In the fourth quarter of 2025, GDP declined solely because businesses sharply reduced excess inventories accumulated earlier in the year, after Donald Trump started his trade war. Statistics Canada accounts for inventory reductions as a charge against GDP. Excluding that $13 billion drawdown, GDP would have grown a modest 0.3 percent.

Then in the first quarter of 2026, GDP shrank because of an unusual surge in gold imports, which rose (coincidentally also by $13 billion) as industrial users and financial investors took advantage of softer gold prices. Without that temporary inflow of gold, GDP would have grown 0.5 percent.

So in neither case was the broader economy genuinely shrinking. Canada’s economy is not in recession, in any economically meaningful sense. This week’s strong labour force report, showing Canada created 88,000 jobs in May, confirms the economy is still growing, albeit too slowly.

Opposition politicians see the technical recession as great fodder for memes and sound bites. Indeed, Conservative leader Pierre Poilievre talked of virtually nothing else last week. Politicians should be careful, however, about putting too much emphasis on this single, arbitrary metric.

Statistics Canada regularly revises its GDP data on the basis of new information. The decline in first-quarter GDP was so tiny (just $900 million out of a $3 trillion economy, or 0.036%) it could easily switch positive with the next revision. In fact, that decline was so small Statistics Canada’s official release stated that GDP was “unchanged” – a nuance lost in the histrionics of Question Period.

Just such a revision occurred back in the third quarter of 2023. A much larger initial decline in GDP (reported as -0.4% at the time) was later changed to a small increase. If that happens again, the whole pseudo-recession will be revised right out of existence, and these politicians will rightfully look silly.

There’s no doubt Canada’s economy is facing tough times. Donald Trump’s tariffs, now followed by his war in the Persian Gulf, are the clear culprits behind weak exports and investment uncertainty. Whether GDP growth is slightly above zero, or slightly below, is irrelevant. The critical priority is to boost spending, investment, and job-creation in all sectors (including public services) fast enough to offset that shock and enhance Canada’s economic independence.

Theatrics over whether an arbitrary line has been crossed are an unhelpful distraction from that task.

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CBC Sunday Morning Feature Interview: Trump’s War and the Macroeconomic Outlook

Jim Stanford — Tue, 28 Apr 2026 18:44:37 +0000

U.S. President Donald Trump’s war against Iran has unleashed a cavalcade of global economic disruptions. Most severe is the impact of the blockage of shipping through the Straits of Hormuz on worldwide oil prices, and supply chains for other commodities (including natural gas, fertilizer, and chemicals). Even though Canada produces far more oil. Gas, and fertilizer than we use, the resulting price spike has hit us, too – as a result of our policy choice to tie domestic prices (even for our own energy) to that global roller-coaster.

In this CBC national radio interview with host Piya Chattopadhyay, Centre for Future Work Director Jim Stanford discusses the impacts of the war (on top of the disruptions from Trump’s tariff policies) on Canada’s economy, in the lead-up to the federal government’s spring fiscal update.

What the government's policy playbook might mean for your pocketbook.

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Speculation and Greed Explain the Price of Gasoline, not Supply and Demand

Jim Stanford — Thu, 23 Apr 2026 17:20:23 +0000

The economic impacts of the U.S.-Israeli war on Iran were felt by Canadians within hours of its launch. Prices for gasoline, diesel, and home heating oil (widely used in Atlantic Canada) shot up very quickly. This is both surprising and infuriating—since those products were produced, refined, and delivered long before the war started. Why do consumers have to pay more, given the war had no impact on the cost of production?

Centre for Future Work director Jim Stanford pursued this question in a commentary originally published in the Toronto Star.

Policy Choices, not Market Forces, Explain Why We’re Getting Soaked at the Pump… Again

By Jim Stanford

For beleaguered consumers, it’s déjà vu all over again. War breaks out on the other side of the world. Within 24 hours, gasoline prices take off – rising up to 50 cents a litre on average across Canada since the war started. Natural gas and heating oil prices will follow, along with costs for anything that uses petroleum intensively (like transportation services, food, and construction).

It’ll get worse when the Bank of Canada jumps into the fray with higher interest rates to counteract renewed inflation. Then the victims of oil-fired inflation will be punished again.

We’ve seen this movie before. Sadly, we haven’t learned its lessons.

In February 2022, Russia invaded Ukraine – a country that does not produce significant amounts of oil. World oil prices soared 65% in weeks, propelled unduly by speculative bets placed on financialized futures markets.

Prices subsided by the end of the year, after it became clear world oil supply was unaffected by that war (which still drags on). But the damage was done. The 2022 oil spike was the biggest single cause of the resulting inflation that caused such turmoil around the world.

In Canada, that surge in oil prices directly accounted for 43% of post-pandemic inflation, which peaked at 8% four months later. The indirect costs were even bigger: including price hikes on energy-intensive products, subsequent higher interest rates, and job losses as high rates chilled the aggregate economy. I have estimated that the cumulative toll for Canadian consumers from the 2022 oil price surge exceeded $200 billion over three years – a staggering $12,000 per household.

Now prices are soaring again, following U.S.-Israeli attacks and Iranian counter-attacks. Before banging their heads against the nearest brick wall over the prospect of a painful sequel, consumers should pause to ask two fundamental questions. Why must we pay so much more for oil and gas produced, processed, and consumed right here in Canada, with no connection to the Middle East whatsoever? And who benefits from this outcome?

The gasoline stored in pumps right now sells for much more than before the war started. But it was refined weeks ago, from oil extracted months ago. Canada produces far more oil than it consumes; three-quarters of our production is exported. Of the modest volumes imported into eastern Canada, almost none comes through the Persian Gulf.

So there’s no energy ‘supply shock’ in Canada. The cost of producing and refining gasoline hasn’t changed at all. Yet Canadian consumers are already being soaked. And the worst is yet to come.

Petroleum companies profit immensely from this gap between soaring revenues and steady costs. That produced historic petroleum profits after the Ukraine invasion – almost $1 trillion worldwide in 2022 alone. In Canada, after-tax petroleum profits (upstream and downstream) totaled $154 billion from 2022 through 2024, when the inflationary burst finally subsided. That propelled after-tax corporate profits to 21% of Canadian GDP in 2022 (the highest share in history), even as Canadians struggled with affordability.

This new war has roiled real oil supplies (not just futures markets), so the price shock will likely be worse and longer lasting. But it’s not inevitable that we should tolerate the resulting economy-wide inflation and higher interest rates here at home.

Regulation could curtail the speed and extent to which foreign shocks are reflected in domestic prices. Energy prices could be tied to the actual cost of production (like we already do with electricity). And accelerating the transition to hydro, wind, solar, and geothermal (none of which traverse the Straits of Hormuz!) would further protect us.

Of course, petroleum lobbyists complain that insulating Canadian oil prices from global chaos will cause price ‘distortions’. But it’s hard to imagine anything more distortionary than inflicting another pointless cycle of inflation followed by contraction on an entire national economy – one that is blessed with far more energy than it needs.

The oil industry’s preferred solution to everything – build more export pipelines – would clearly make affordability even worse. New LNG projects, in particular, will amplify upward pressure on domestic gas prices, something the Alberta government’s recent provincial budget explicitly celebrated.

Perhaps Canada can’t do much about interminable conflict in the Middle East. But we can certainly do more to protect our own economy from its fallout.

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How do Banks Make so Much Money, Anyway?

Jim Stanford — Thu, 11 Dec 2025 06:41:17 +0000

CBC journalist Andrew Chang is known for his unique ability to break down complex topics, for his ‘About That’ program. He has recently posted an outstanding segment on how Canada’s big banks make so much money. Centre for Future Work Director Jim Stanford was one of the experts interviewed for the show.

The segment explains that a widening gap between the interest rates bank pay on money deposited in banks, and the interest they charge for mortgages and other loans, was a big driver of record profits. This year, however, an even bigger factor was income on investment banking, wealth management, and other financialized activities – in essence, capturing some of the cream from the current AI stock bubble.

One nuance that is hard to explain in a short segment is that the banks’ “net interest margin” is not solely the difference between what banks pay on Canadians’ savings accounts (currently almost nothing), and what they charge for loans. In Canada’s endogenous credit monetary system, banks don’t actually need your savings to lend out in the first place.

Issuing new loans comes first, with new credit money created by a simple computer entry. Personal deposits are handy for the banks (and cheaper for them than other forms of liquidity, like borrowing on wholesale credit markets), but not necessary. As new credit is spent, it flows through the banking system, creating deposits in all banks. Banks can easily settle overnight cash balances with other banks, or when needed by borrowing from the Bank of Canada.

Banks literally have a license to create money out of thin air. No wonder they’re profitable! It’s generally beneficial for an economy to have strong, stable banks, and that’s why some calls to break up bank into smaller, more scrappy competitors may not actually be sensible (those small, scrappy banks are more likely to engage in riskier activity, and more likely to face instability in the event of an economic downturn). Credit unions are a good, democratic alternative to commercial banks for personal and small business banking. And private banks should be more accountable for how they use their unique (and profitable) power: including through better regulations on fees and access to credit, requirements to fund domestic investments (including affordable housing or environmental projects) …and they should certainly pay higher taxes on their profits.

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Fighting for Fair Work

Jim Stanford — Mon, 27 Oct 2025 04:13:55 +0000

For decades, David Fairey has served as an outstanding researcher and advocate on a wide range of labour and trade union issues. He served for 23 years as Director of the former Trade Union Research Bureau, based in Vancouver, B.C., legendary for the high-quality, practical, but inspiring research it performed for a vast range of union and other clients. Later he founded Labour Consulting Services to continue this work – along with numerous voluntary commitments (including founding the B.C. Employment Standards Coalition). David also generously serves as a voluntary Director of the Centre for Future Work.

David recently received the prestigious Sefton-Williams Award from the University of Toronto’s Centre for Industrial Relations and Human Resources, in recognition of his lifetime of service to the labour relations community. We are honoured to publish the remarks he delivered at the awards ceremony in Toronto on October 23, 2025.

Acceptance Speech, 2025 Sefton-Williams Award

Received by David Fairey, October 2025

I am deeply honoured to be this year’s recipient of the Sefton-Williams Award, and I am honoured to be joining the long list of distinguished previous award recipients, especially the 2023 award recipient Deena Ladd of the Toronto Workers Action Centre whose exemplary advocacy on behalf of unrepresented workers I have long admired and appreciated.

Also, I believe that I am the first award recipient from Western Canada which adds to the honour I am feeling?

So thank you to the University of Toronto Centre for Industrial Relations and Human Resources and its award selection committee for this honour.

I would like to take this opportunity to pay tribute to now deceased UBC Professor Emeritus Mark Thompson who was tragically killed while crossing a street in Mexico City on July 24^th. Most of you would have known Mark for his outstanding contribution to the fields of labour relations and human resources, both as an academic and as a practioner.

I had known Mark for many years, not only as a highly respected labour arbitrator but also as the first independent review commissioner of the BC Employment Standards Act in the 1990s. As a result of his review report many improvements were made to the BC Employment Standards Act. In recent years Mark and I have collaborated on employment standards issues, particularly in relation to the rights of farm workers that Mark was passionate about, in the Employment Standards Coalition, and on the board of the Centre for Future Work.

I was aware of the roles that Larry Sefton and Lynn Williams played in the leadership of the United Steelworkers in the 1960s having myself been a union activist in Toronto in that period. That was a tumultuous period in the labour movement in Ontario. Other Steelworkers Union leaders I engaged with in that period were Don Mongomery (Toronto Labour Council President at the time), Murray Cotterill and Frank Dray.

I have been an advocate for workers rights all of my adult life, starting with my union activism right after graduation from Western Technical high school in Toronto, working as an apprentice in the wood patternmaking trade, and becoming a local union officer, bargaining committee member, Toronto and District Labour Council delegate, and volunteer organizer in the International Molders and Allied Workers union. My volunteer union organizing was primarily in the Italian immigrant community in the Toronto area involving workers in small foundries and metal manufacturing shops where the working conditions were atrocious.

After working in the wood patternmaking trade in Toronto for about 8 years, and having experienced a serious workplace injury, I began my post-secondary education as a mature student at York University. After completing my BA at York I moved to Vancouver with my family to attend graduate school at UBC. After completing my MA I was offered and accepted employment at the Vancouver based Trade Union Research Bureau, an organization that had a longer history of providing research services to diverse unions. Eventually I ended up being the director of the Trade Union Research bureau for 23 years.

Over the past 25 years, aside from being a labour relations research consultant for diverse unions, my focus has been on the need to modernize employment standards legislation, the need to remove barriers to unionization for precariously employed workers, and for improvements to the rights of migrant and temporary foreign workers.

Of particular concern of the organizations that I have been involved with in recent years has been the widespread employer misclassification of their employees as independent contractors so as to avoid their obligations under the Employment Standards Act, the numerous exclusions and variances in the Employment Standards Regulations, and the failure of the public agencies charged with administration and enforcement of minimum employment standards to expedite resolution of worker complaints and to proactively investigate and enforce standards. Overall, the floor of the minimum employment protections and benefits that employment standards legislation is supposed to give unrepresented workers has gaping holes that are getting bigger. In this regard it is my assessment that there is serious systems failure. So there is much work to be done to close those gaping holes.

In accepting this award I do so in part on behalf of the BC Employment Standards Coalition, some members of which are here today.

So thank you once again for this honour.

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Stellantis Shows Canada’s Industrial Economy is On the Line

Jim Stanford — Tue, 21 Oct 2025 17:50:08 +0000

Automaker Stellantis recently announced it would shift production of a new vehicle from an assembly plant in Brampton, Ontario (which has been closed for re-tooling) to Indiana, in order to escape the effects of Donald Trump’s 25% tariff on Canadian-assembled vehicles. This decision seems to confirm the worst fears of Canadian economists regarding the long-run impact of Trump’s trade war: by weaponizing access to the U.S. market and pressuring global companies to relocate long-run investments to the U.S., Trump would shatter the viability of continued production in Canada and other countries.

In this commentary, originally published in the Toronto Star, Centre for Future Work Economist and Director Jim Stanford highlights the dangers of this decision – not just for the automotive sector, but for all other high-tech industries targeted by Trump’s Section 232 “national security” tariffs. But he also reminds us that Canada is not powerless in this confrontation: Canada’s large and lucrative new vehicle market gives the government great leverage to pressure Stellantis (and other companies) to maintain a proportional footprint in this country.

Here’s how we fight back against the sheer gall of Stellantis’ caving to Trump

By Jim Stanford

As the saying goes, when someone tells you who they are, you should believe them. And where cars are concerned, Donald Trump has been telling us exactly who he is.

He warned in April, “We don’t really want Canada to make cars for us.” Commerce Secretary Howard Luttnick recently confirmed this goal, telling a Canadian audience “car assembly is going to be in America, and there is nothing Canada can do about it.”

So we shouldn’t be surprised that automaker Stellantis is shifting planned production of a new Jeep from its plant in Brampton, to Illinois. This is Trump’s precise goal: weaponize access to the U.S. market, to leverage incoming investment from global companies in strategic, high-tech industries.

Nevertheless, the sheer gall of Stellantis’ action is shocking. It is breaking explicit commitments made to all its key partners: its own workers (in a binding labour contract), the federal and provincial governments (in binding covenants attached to various subsidies), and auto parts companies (which invested hundreds of millions in new tooling and capital for Brampton).

Trump’s 25% tariffs on cars are already exacting a painful toll. Vehicle exports to the U.S. are down 15% year-over-year since they came into effect; that will translate (if sustained) into a $7 billion annual loss. Trump is now implementing a 25% tariff on heavy trucks that will add to the pain.

But the biggest danger to Canada’s auto industry still lies ahead. If corporations respond to Trump’s extortion by shifting long-run investment to the U.S., Canada’s industrial capacity will be destroyed.

That’s why the Stellantis decision cannot stand. It would set a precedent that quickly spreads into all other high-tech industries.

Remember, while the auto industry has high symbolic value, Trump has his trade guns trained on the whole portfolio of Canadian high-tech industries. His tariffs fall into two broad categories.

First, there is a broad across-the-board tariff. But for now, most industries are exempt if they meet existing rules under the Canada-U.S.-Mexico Agreement (CUSMA). Most of those exempted products are resource-based commodities (energy, minerals, other raw materials) that Trump knows are essential to U.S. supply chains.

For a second category of industries, Trump is attacking full force. He is mis-using Section 232 powers under the U.S. Trade Expansion Act that allow him to unilaterally impose tariffs on grounds of “national security.” His claim these imports jeopardize U.S. security is bogus. His true goal is to force global companies in strategic industries to relocate to America.

It’s no coincidence these 232 tariffs are aimed at every one of Canada’s high-tech success stories: auto, trucks, steel and other basic metals, soon to be joined by aerospace, pharmaceuticals, semiconductors, industrial machinery, and more.

Stellantis’s decision is thus a dramatic opening battle in what will be a long, hard war to defend Canada’s status as a modern, industrial country. Yes, we will work to build new export markets, strengthen Canadian content in procurement, and expand trade within Canada. That is vital, and will take time.

In the meantime, we must at all costs defend the successful high-tech industries we have – every one of which is now in Trump’s crosshairs.

Ironically, Trump’s tariffs are clearly hurting U.S. manufacturing, not helping it. They increase input costs for U.S. factories, and create major uncertainty that holds back capital spending (notwithstanding photo-op announcements by obsequious CEOs).

U.S. manufacturing has contracted for seven consecutive months. As of August, the U.S. had lost almost 100,000 manufacturing jobs over the previous year. In contrast, Canada lost just 3,000 manufacturing jobs in the last year.

The major pain being experienced south of the border disproves the passive assumption that Canada has no leverage because of our smaller size. In reality, Canada is not small: we have the tenth largest economy in the world, with 42 million people, well-educated workers, natural riches, and a more stable democracy. The U.S. benefits from bilateral trade as much as we do.

In automotives, Canada has one of the largest and most lucrative vehicle markets in the world. We buy almost 2 million new vehicles per year, worth over $100 billion. Stellantis, and all other automakers, want a piece of it.

Last year Stellantis sold 130,000 new vehicles here – most imported, most of those from the U.S. At present Stellantis mostly avoids Canada’s 25% counter-tariff on vehicle imports from the U.S., thanks to a clever Canadian duty remission program.

And Stellantis benefits from other public supports, including subsidies for retooling that Brampton plant, and ongoing production credits for EV batteries from a new joint venture in Windsor.

All that support is contingent on Stellantis maintaining its production footprint here. It cannot be allowed to walk away from that commitment. The government must confront Stellantis with the full force of a sovereign, wealthy country.

Industry Minister Mélanie Joly has threatened legal action. That should just be the start. Ottawa should threaten full 25% tariffs on all Stellantis imports (costing $1.5 billion per year), until it recommits to completing the tooling at Brampton, paying interim income support to its workforce, and then fully utilizing the plant when it’s finished.

Pushing back against Stellantis will send a signal to companies in every other high-tech industry. If you want access to Canada’s market, Canada’s resources, and Canada’s supply chains, you must maintain a full-fledged production footprint here.

The Stellantis decision also highlights the failure of Ottawa’s strategy to appease Trump – with multiple concessions and personal flattery. While we talk nice, he races full-speed to steal as many high-tech high-wage jobs as he can.

Even worse would be a partial tariff deal that cements U.S. access to energy and other strategic inputs, while hanging our high-tech industries out to dry. By giving away our leverage without protecting our industrial jewels, that would be worse than no deal.

The Stellantis decision is a litmus test of our national courage. We have power to push back against this company, and against the autocrat it is catering to. If we don’t use it, we can expect many more companies to follow in Stellantis’ footsteps.

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This Is Not An Ordinary Federal Budget

James — Wed, 08 Oct 2025 18:13:27 +0000

As the federal government prepares to table its next budget on November 4, most of the public debate has centred on how big the deficit will be – as if that is the only metric of significance to Canadians. This is predictable and disappointing. At a moment when Canada as a country faces unprecedented challenges to our prosperity and sovereignty arising from Donald Trump’s trade war and other threats, a much more important question is how will the budget equip Canada to protect itself against Trump’s attacks, reorient away from so much dependence on the U.S. market, and invest in the things (including physical and social infrastructure) necessary to a self-reliant and sovereign economy. The single-minded focus on deficit reduction is driven primarily by those (like the corporate sector) with a vested interest in public sector austerity and tax cuts.

Centre for Future Work Director Jim Stanford appeared this week before the Senate’s National Finances committee pre-budget hearings. He tried to put deficit concerns in the context of the bigger challenges facing Canada, debunking false claims (including those from the interim Parliamentary Budget Officer) that Canada is standing on a fiscal “precipice.” Canada’s net federal debt (33% of GDP) is small by historical standards, small relative to other countries, and smaller than the private debts of Canadian businesses and households. Imposing needless austerity at this point would only worsen the more serious debt challenges facing businesses and families, and undermine an economy already staggering in the face of Trump’s trade war.

Here are Stanford’s opening remarks to the committee.

Opening Remarks

Senate Standing Committee on National Finance

Pre-Budget Hearings, October 7, 2025

By Jim Stanford, Economist and Director

Centre for Future Work

Thank you very much, Senators, for the opportunity to meet and share my views on Canada’s economic and fiscal situation in the lead-up to the upcoming federal budget.

The Centre for Future Work is a labour economics research institute, founded in Canada in 2020. We conduct research on the full range of economic issues facing working people: including the future of jobs, wages and income distribution, skills and training, sector and industry policies, globalization, the role of government, public services, and more. The Centre also develops timely and practical policy proposals to help make the world of work better for working people and their families. The Centre is independent and non-partisan.

Because of the unprecedented attacks on our prosperity and sovereignty from the Trump administration in the U.S., Canada’s economy is now at a historic juncture. This budget will be an important marker in our response to this challenge. It is not a normal budget, and it cannot be debated and analyzed through a normal lens.

Canada is in a struggle for our long-term viability as a distinct economic, democratic, and social entity. The pre-eminent importance of defending our country, protecting our industries, and sustaining our communities must shape the decisions made in this budget. The situation is not unlike a wartime budget – although I fervently hope it doesn’t come to that.

Government’s role is never to “balance its books”. Government’s role is to do whatever is necessary to protect its citizens – an imperative that is all the more urgent at a time like. This doesn’t mean that budget balances are irrelevant. Simply that they must be understood in context of the broader mission and responsibility of government.

Thank goodness Canada didn’t worry about balancing the budget during the Second World War. Thankfully, we are not in the same scenario today. But we nevertheless face a historic and overarching challenge to protect Canada, our economy, and our values. Debate over the upcoming budget must be framed in that context.

Predictably, most of the public discourse around the budget is focusing too narrowly on how big will the deficit be. This focus is unhelpful. The deficit will be significant, no doubt about it. And it should be.

Partly because Canada is on the verge of recession (if we are not already in one). Deficits are appropriate in that situation. But more importantly because of the enormous responsibilities government faces right now, which will clearly require deficit funding: including aid to export industries, investments in infrastructure, strengthening income supports (like EI) and public services for Canadians who need them, defense spending, and more. Those things have to be done. And as Keynes famously showed, if we can do something, we can afford it.

The federal government’s net financial debt as of June 30 this year was equivalent to 33% of GDP (Statistics Canada Table 38-10-0237-01). Its accumulated deficit (including actuarial liabilities) at end of fiscal 2024 equaled 42% of GDP (Finance Canada Fiscal Reference Tables, Table 2). Deficits are expected for the past and next fiscal years in the order of 2-3% of GDP.

Contrary to the exaggerated claims of some critics, this does not constitute an emergency in any way, shape or form. Indeed, given an appropriate macroeconomic context (with decent growth and moderate interest rates), deficits of that scale could be incurred every year, while maintaining stability in the debt-to-GDP ratio (which is a much more relevant measure of fiscal position than the size of the nominal deficit measured in billions of dollars).

Canada’s deficit and debt are small relative to other industrial countries. Many of those other countries face similar challenges to Canada – although Canada is more exposed to the consequences of Mr. Trump’s madness than almost any other country. So, if anything, our deficit should be bigger than those other countries, not smaller.

Government debt is smaller in relative terms than private debt in Canada. The debt of non-financial corporations equals 150% of GDP. The debt of Canadian households equals 175% of their disposable income. Businesses and households pay higher interest on their debt, have less capacity to manage the broader environment in which they operate, and are more financially precarious than governments (which cannot go bankrupt). Reducing the federal government’s debt by shifting a fiscal burden to households or businesses (through spending cuts) makes the overall debt situation worse, not better.

In this context, I feel it necessary to express my disappointment at the recent interventions from the interim Parliamentary Budget Officer, Mr. Jacques. His judgments that Canada stands “at the precipice” of fiscal crisis, and that the federal fiscal situation is “stupefying” and “shocking”, are economically and historically false, and frankly irresponsible. His mandate is to provide neutral information on budget issues to Parliamentarians, but both the content and the mode of delivery of his remarks have veered far into advocacy, and have done a disservice to informed policy discourse. He should correct those statements. They undermine the credibility of any future research his office produces.

I am very sympathetic to the concept, floated by the federal government, of treating investment and current spending separately in fiscal policy and planning. Of course, we already do that (with accrual accounting and depreciation methods). But a more explicit disaggregation of capital and current spending is helpful, in part so Canadians can better understand the purpose and value of public debt in the context of investment.

When debt is used to finance construction or acquisition of a productive asset, its impact on fiscal sustainability is quite neutral: entries appear on both sides of the balance sheet, and the gradual cost of future depreciation can be offset by proceeds generated by the productive asset.

However, this distinction between investing and saving is not justification for austerity in current program spending. To the contrary, treating public investment as a distinct pillar of fiscal policy provides more fiscal (and political) room for continued federal support for current programs, not less. There is no evidence by any relevant indicator (program spending relative to GDP, federal public sector employment as a share of employment, etc.) that current federal program spending is too high or needs to be cut back. Austerity imposed on current programs would impart a strong and needless contractionary drag on Canada’s economy at a moment when it is already struggling to maintain growth. As always, cutting back government spending in a time of macroeconomic weakness is self-defeating and destabilizing.

To sum up, buttressing Canada’s economy in the face of Mr. Trump’s trade war will require a combination of urgent measures, all of which will require more powerful and determined federal intervention:

- Supporting Canadian export industries to survive Trump’s tariffs, with emergency aid for firms and workers, and help with retooling and reorienting production and marketing away from the U.S.
- Investing in public energy, transportation, and social infrastructure to support industrial diversification, productivity growth, and quality of life.
- Supporting defense spending and other international engagements to strengthen relationships with other countries and promote international stability.
- Continuing to support current public programs, including provincial transfers for health care and education, and the new federal commitments for pharmacare and dental care.

These are historic priorities. The federal government has abundant fiscal capacity to fulfil its responsibility to lead Canada into a new chapter in its economic history.

The post This Is Not An Ordinary Federal Budget appeared first on Centre for Future Work.

Bringing Capital Home Would Boost Canadian Growth, Reduce Trade Imbalance with U.S.

Jim Stanford — Sun, 28 Sep 2025 04:38:42 +0000

Donald Trump claims his aggressive trade actions are justified because of ‘unfair’ trade practices by other countries, that result in big U.S. trade deficits. But the real cause of those perpetual U.S. trade deficits is ongoing capital inflows to the U.S. from other countries – including Canada. In this commentary originally published in the Toronto Star, Centre for Future Work Director Jim Stanford shows that Canada is now a huge net lender to the U.S., with a positive foreign investment balance there of $1.6 trillion. Bringing some of that capital back to Canada would not only help to finance the major projects we are undertaking to protect our economy against Trump’s attacks, but they would also help reduce the U.S. trade deficit. Therefore, Donald Trump should thank us!

Let’s Help Donald Trump Reduce his Trade Deficit… by Bringing Our Capital Home

By Jim Stanford

Donald Trump justifies tariffs on Canada and other countries by pointing to the chronic U.S. trade deficit. Since the U.S. imports more from the rest of the world, than it exports, it has a trade deficit.

In 2024 that deficit equaled $917 billion (U.S.). That sounds like a lot, but equaled only 3% of U.S. GDP (smaller than previous years). Canada gets much of the blame in Trump’s rants. Yet we account for just 4% ($35 billion) of that total, tenth among U.S. trading partners.

Trump claims the deficit results from unfair treatment by the rest of the world. America can’t sell more abroad, he cries, because of obvious or hidden trade barriers. By imposing tariffs on all other countries (and even some uninhabited islands), and then using those tariffs to leverage other concessions, Trump predicts America will export more and import less. Voila, the deficit will disappear.

Economists of all stripes, however, ridicule this narrative. Trade deficits are affected by many factors, including differences in macroeconomic performance, changes in competitiveness, and exchange rate fluctuations. But the U.S. deficit is a chronic, structural feature: it has existed for 50 consecutive years.

That is only possible if a country continuously imports capital from the rest of the world, allowing it to pay for its trade deficit. And indeed, every year the U.S. takes in trillions of dollars of capital from other countries.

Those capital inflows come in all forms: loans, equities, derivatives, private equity, property, even cryptocurrency. They originate from many different actors: wealthy investors, investment funds, banks, central banks, and even foreign governments.

In total, those capital inflows are necessarily identical and opposite to America’s trade deficit. Indeed, by definition a country’s capital account (which measures net inflows and outflows of capital) must equal the opposite of its current account (consisting of the trade deficit and other current revenue flows).

America’s ability to attract foreign capital is usually seen as a strength, not a weakness. On average, U.S. investments are highly profitable (largely thanks to the very corporate-friendly structure of taxes, labour markets, and competition policy there). And U.S. assets, including the dollar itself, were long considered safe harbours in an uncertain and volatile financial world. (Under Trump, of course, that reputation is fading fast.)

Massive capital inflows give America (in aggregate) more money to spend in the world economy, than it earns. Far from “subsidizing” Canada and other countries through its trade deficit, it’s America that has its hand out.

So if Trump really wants to reduce the trade deficit, America must stop taking in so much capital from the rest of the world. Here’s where Canada comes in.

There’s been a historic but underappreciated change in our economic relationship with the U.S. over the last generation. We’ve gone from being dependent on incoming foreign investment from the U.S. (whether to build industries or finance deficits) to the opposite. We are now a huge net source of capital for the U.S.

Canada has an investment surplus with the U.S. of $1.6 trillion, or 50% of our GDP. The growth in our U.S. holdings over the last decade closely conforms to the cumulative U.S. trade deficit with Canada over the same time. America needs ‘handouts’ from the rest of the world to finance its perpetual trade deficit – and Canada has done our bit.

Our U.S. investments take all forms: individual holdings, mutual funds, pension funds. Shockingly, our own Canada Pension Plan has half its total assets in the U.S.

Canada can help Trump in his mission to reduce his trade deficit, by bringing some of that capital home. In the face of his attacks, we face an urgent challenge to build a more sovereign and self-reliant economy. We need to diversify not just where we sell exports, but what we sell – breaking free of our precarious reliance on raw resource exports. We need to build infrastructure, high-tech industries, and affordable housing.

All that will require massive amounts of capital – and we have $1.6 trillion sitting in the U.S. So let’s bring it home, including by repatriating some of those tax-subsidized pension investments. That will shrink the U.S. trade deficit.

And Donald Trump should thank us for it.

The post Bringing Capital Home Would Boost Canadian Growth, Reduce Trade Imbalance with U.S. appeared first on Centre for Future Work.