Globe Editorial: How does Chrystia Freeland fight inflation? By not sending you a check. she’s right

Canadian Deputy Prime Minister Chrystia Freeland speaks with reporters following her speech at the Empire Club of Canada in Toronto on June 16.Cole Burston/The Canadian Press

There are many things we wish the Trudeau government would do.

We hope he will level with Canadians and the House of Commons on what police asked him to do earlier this year before the emergency law came into effect.

We hope you do a better job of managing long delays at airports, and even longer delays to getting a passport. We hope that the refugee adjudication system will be reformed so that claims are resolved quickly, genuine refugees are granted rapid asylum and expedited deportation of economic migrants.

We hope that it will establish the National Pharmacy Program that has been promising since 2015.

The to-do list is long. However, when Finance Minister and Deputy Prime Minister Chrystia Freeland on Thursday delivered a keynote speech widely expected to include new spending to help Canadians deal with inflation, our hope was that it would do nothing.

And nothing, fortunately, was provided by Mrs. Freeland. Rather than writing billions of dollars in new checks to Canadians, and pretending that it was somehow related to lowering inflation, her “affordability plan” was a long list of existing programs and commitments — all permanent and not specifically about fighting inflation.

We come not to criticize the inaction aimed at Mrs. Vreeland, but to commend him.

The politically appropriate way that is seen as dealing with rising prices is by giving voters money. That’s what Prime Minister Francois Legault’s government in Quebec has done, sending checks for $500 per person and promising another round if re-elected. Payments are financed with borrowed money, as are Ontario Premier Doug Ford’s discount checks for drivers and gas tax cuts.

When treating a patient, the old medical principle is, “First, do no harm.” Dropping helicopter money on voters may be politically beneficial, but in a time of inflation, it is economically counterproductive.

The current inflation is partly related to commodity prices and supply chain impediments abroad, which are beyond the reach of Canadian politicians. But the rest is caused by an increase in consumer demand – too much money chasing too few goods and services. As such, sending more government borrowed cash to rich and poor alike is a bit like trying to treat someone’s high blood pressure by prescribing pills that raise their blood pressure. Or trying to make homes more affordable by giving buyers a wallet of taxpayer money to increase prices.

The Bank of Canada raises interest rates to reduce demand for goods and services; Increasing demand by sending out “anti-inflation” checks to voters is dipping the paddle and paddling in the opposite direction. So to be congratulated is the Minister of Finance who has announced that spending in her “new affordability plan” to combat inflation is in fact the old pre-inflation affordability plan, which is about long-term affordability that will be in place long after inflation has passed. .

For example, expanding low-cost childcare and early learning, from coast to coast, will significantly reduce parental costs. But the idea, in the works for decades, is not a temporary scheme for putting money in pockets during a frenzy of inflation. It’s a permanent plan to make it easier for more women to stay in the workforce, thereby boosting the economy, while lowering the cost of childcare, and hopefully giving at-risk children an early educational boost.

It’s a similar story with previously announced improvements to benefits for Canadian workers. These payments to low-income workers are a permanent poverty-reduction measure, effective whether prices go up or down.

As in the federally funded dental care plan for low- and middle-income Canadians. Many people do not visit the dentist because they lack dental insurance, and this leads to large medical bills and poor health later in life. It’s a long-standing problem, and this is an attempt at a permanent fix. It is not a temporary measure to combat inflation.

Some of what the government does is misleading. For example, the Liberals announced last year that Old Age Security recipients age 75 or older will get a permanent 10 percent increase in their monthly OAS payments starting this summer. It’s purely a vote chase, as a lot of the money will go to middle- and high-income seniors.

Some problems can be solved by spending money on them. Inflation is not one of them.

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