Episode Transcript
[00:00:01] Speaker A: Walk into any grocery store in Canada. Embrace yourself. The sticker shock hits before you even reach the checkout. Families are paying more for less. And somehow we're being told inflation is cooling. A bag of basics now costs what a full cart used to. And this isn't about luxury items. This is food, survival and dignity. Canadian homes saw an increase of almost 5% on groceries. And the big three grocers will see an increase of between 10 and 12% in profits, profits totaling over almost $4 billion. So on this episode, we ask the questions politicians keep dodging. How did feeding your family become unaffordable in Canada?
Well, Franco Tarazano is the federal director of the Canadian Taxpayers Federation. And this is a guy who holds government accountable for wasteful spending and higher taxes. And, and one of my favorite people to represent Canadians that you see commentating out there. Franco, thanks so much for joining us today.
[00:01:02] Speaker B: Hey, it's my pleasure. Should be fun.
[00:01:04] Speaker A: Yeah. This is unfortunately not a fun topic, most of us being affected by it. I'd say, everybody, I purport to tell you today that I believe that we are in a cost of living crisis at the moment.
Something that has never been said by our prime minister or anybody at that level of government or around him. But I think you're probably like me and you're feeling it as well.
[00:01:29] Speaker B: Yeah. Well, look, I think if you talk to anyone outside of the elite Ottawa bubble, they'll tell you that life is still unaffordable. Right? We've been going through this, what, like, for three, four years? And it's still, it's still, life is so expensive here. And we can get into some of the reasons why. But, you know, I think one of the main drivers of this is. Is government, right? The cost of living is so high because the cost of government is so high. And like, there's, there's three different ways essentially, that government in Canada is driving up the cost of living. I mean, number one, just how much money they're taking from people's pockets, right? The fastest, the simplest, the easiest way for government to make life more affordable is just to stop taking so much money in the first place. Then you have inflationary taxes where the feature of the tax, not the bug, is to make life more expensive. Right? Think carbon taxes, think alcohol taxes, things of that nature. And then finally, which we saw during the heart of the pandemic is a way that government finances its spending, its borrowing, and that's the inflation tax. And we saw that during the heart of the pandemic, where the central bank printed up hundreds of billions of dollars at a thin air largely to finance Ottawa's massive deficits. And, you know, the more dollars that the central bank prints, the less that your dollars buy. But those are the three ways that government really drives inflation.
[00:02:50] Speaker A: It's funny not to put a tack in what we're already talking about, but as you talk about government spending, one of the things that I think we're seeing reflected now is how much overspending was done throughout Covid, how much money Trudeau printed we're now paying the price for. At a time where we really need our economy working for us and our government working for us, we have to tackle those debts somehow. And it seems like this is how we're doing it.
[00:03:16] Speaker B: We got to cut spending. Right. It's. There's no other way around it. Like, look, I think at the point that we are in, in, you know, this moment that we're living in as Canadians, like, the government is not the solution.
Too much government has become the problem. Like that. That's the only way. I mean, let's talk about Prime Minister Mark Carney moving forward because, you know, we could rehash the Trudeau era, I think, you know, everyone now knows that Trudeau doubled the debt in 10 years, which is crazy. But, like, look, you have the Prime Minister, Mark Carney, now talking about cutting waste, you know, those types of platitudes. But you look at his budget, and this year, the federal government is spending $38 billion more than last year.
Spending is going up by billions of dollars every single year into the future. So, like, I know Mr. Carney. He's, he's a rookie politician, but pro tip. When you increase spending by billions of dollars every single year, you're saving money. Wrong.
[00:04:12] Speaker A: No, no, no, Franco, you don't understand. We've changed entirely how we do the budget. You have to look at it from this perspective now. I mean, that was an interesting trick as well in my mind.
So now, of course, you're not going to get an argument from me. The first thing we could do is cut spending. That would reduce what we each spend in a household.
But on that note, housing keeps going up. There's been really no fix on affordability in that realm. It continues to rise and remain, you know, out of the reach of so many Canadians.
Yeah.
[00:04:45] Speaker B: You know, this is, this is a major problem, and I deal with it in my life as well. So I'm in my early 30s. Right. So all my friends are, I would say late twenties, till about. For forties some in their early forties. So I feel like I'm right kind of in the heart of the people who are trying to progress, you know, maybe take the next stage in their life. And I can tell you the dream of home ownership. Right. Which I think used to be a dream for people like my parents generation and their parents.
It's so hard now because the cost of living is so hard that people are just struggling to get by. And when you're just struggling to make the day to day bills work out for you and you have a hard time thinking into the future. Right. You have a hard time aspiring.
I mean, you buy the home.
[00:05:32] Speaker A: When you were growing up, a middle class family had a home.
It was a foregone conclusion that if one or both of your parents were employed, you likely lived in a home that they owned. And if, if you talk to somebody in your neighborhood who was renting, it seemed like a strange thing to do. Are you only here temporarily? Are you, you know, your parents looking for that foregone conclusion is long vaporized. You raise a good point. You're right in the category of somebody who's experienced, okay, it's completely normal to own a home.
And now you're at the other end of it experiencing how difficult that is. The government has really made no moves in this regard in this facet of the cost of living.
[00:06:14] Speaker B: Yeah, look, and when it comes to homes, right, the big problem is just that it's so hard to build homes in Canada.
Right. We were one of the largest land masses in the entire world. Right. Look at all the ample space that we have.
But you know what makes it very hard for people to build homes and that is the true problem that is driving up the housing affordability crisis is that it's just become so hard to actually build homes. Right. You have these home builders that have to go through how many different hoops, regulations, different types of taxes. You also have different types of taxes that are driving up the cost of the home building material.
Right. So it's, it's all these government regulations.
[00:06:54] Speaker A: You have compounding taxes. Now we're headed toward net zero. There's all of these policies and procedures. To be a profitable company, providing materials to the building industry must be a real challenge in this country.
[00:07:05] Speaker B: Yeah. And it's all levels of government. Right. It's not just the federal government. You got provincial government issues there. You also have municipalities, right. That are making it more difficult for people to actually build the homes. But again, this kind of goes back to my, our earlier point where more government Bureaucracy is not a solution. Right. Government bureaucracy has become the problem. And this also ties into what we're talking about now with Prime Minister Mark Carney, who created a new housing bureaucracy. What was it? Build Canada Homes.
[00:07:32] Speaker A: Yeah, right.
[00:07:33] Speaker B: Yeah, yeah, there it is.
[00:07:34] Speaker A: It almost, it almost sounds like a, a developer's name. He's kind of good at naming these things. Huh?
[00:07:40] Speaker B: Look, another government bureaucracy to improve homes like home affordability. That's a, that's an oxymoron because it's government bureaucracy that is the problem. To building more homes to bring home prices down to more Canadians can finally realize the dream of becoming homeowners.
[00:07:56] Speaker A: This shocked me a little bit. Franco, let's chime in on this. Let's look at groceries for a second, which is, you know, sort of a.
It really is the canary in the coal mine, I think for a lot of us looking at the cost of living. Yet some of the major corporations in this country are Empire, Loblaw, Metro, Walmart, have all had record breaking profitable years.
While we're paying 3 to 5% more for groceries, the grocers themselves are netting anywhere from 12 to 35% profit increases year over year.
[00:08:30] Speaker B: Yeah, so I'm not the best person to talk about the industry per se. Right. Like, it's just not really where my expertise lies. But I, but where I can really speak to it is a couple different things that governments are doing.
So, you know, when you look at how governments are influencing food prices, you got to start with certain types of taxes. Right. So before the last election, the microscope is really on the carbon tax. Right. The consumer facing carbon tax. The carbon tax directly at the gas station, on natural gas bills, things of that nature. But what some people forget about is while the Carney government ended the consumer facing carbon tax, the Carney government is moving forward with higher industrial carbon taxes. Okay. And that also makes food more expensive. And I'll give you just a concrete example. So the industrial carbon tax is on place on businesses such as fertilizer plants. Okay. Well, what is fertilizer used for and who uses fertilizer and those products?
Farmers. Right, Right. So you drive up the cost of farming, you drive up the cost of actually producing and growing the food. What happens throughout the supply chain? Right. Those costs?
[00:09:43] Speaker A: Not only that, but it has to be, it has to be put on a truck, it has to be processed. All of these energy costs and requirements for net zero.
You know, I can see that the, I can see the pressure on industry alongside the pressure on consumers. I can certainly see that.
[00:10:01] Speaker B: And it just, it just flows throughout the entire economy. Right. So when, when you hit the economy with this type of tax, this type of energy tax at the base of the economy, where everything else is then reliant on that form of energy, well, what are you going to do to the end consumer?
Right. You're going to make it more expensive. And look, Carney's talked about. Oh, don't worry folks. It's just the large businesses that are going to pay this industrial carbon tax. Well, you know, fortunately Canadians don't buy that at all. We just released some leger polling showing that about 70% of Canadians say no, no, no, no, no, the industrial carbon tax, most or some of those costs are going to be passed on to the consumer at the end of the day through higher prices.
[00:10:40] Speaker A: Yeah, yeah, no, that's. And that's consistent over the last decade, frankly that, you know, we see it, it's at the last, it's at the last point, the consumer point, but we do feel it eventually, no matter what. It's what is said at the provincial and or federal level. This is interesting. I took a look today online and found the stages of a cost of living crisis. You interested in this?
[00:11:06] Speaker B: Yeah, let's hear it.
[00:11:07] Speaker A: Might sound a little familiar. It starts with a housing cost explosion. Rents, mortgages, property taxes, insurance, utilities, all go up at the same time. And housing alone now eats an unsustainable share of the household income. Sound familiar?
Food prices are the next to surge, driven by fuel costs, carbon taxes, fertilizer prices, transport, supply chain fragility and market concentration. And grocery retail. That limits real competition. We only have three energy, maybe four. Energy and fuel costs ripple through everything higher. Gas, diesel, home heating, push up the cost of transporting goods, running businesses, even just getting to work. And then wages fail to keep up.
Well, all of this is put into place.
Government policies, new taxes, new procedures, higher costs along the way, we fail to earn more. And then the next thing that happens is government policy amplifies the pressure with taxes, fees and regulatory costs.
[00:12:08] Speaker B: Yeah, and that's the government. Right? Like they create the problem in the first place and then they try to solve it, which makes the problem even worse.
[00:12:15] Speaker A: Right.
[00:12:15] Speaker B: It's like the government breaks your legs and then hands you a crutch and then expects a thank you. Right. This is, this is like kind of, this is, I mean economists, very well, the good economists at least have been talking about this for a very long time where it's the government that originally creates the problem and then the government tries to fix the problem. It created. And then the government makes the situation even worse.
[00:12:38] Speaker A: I think if you. Sounds like Canada, if you approached any Canadian and said to them it's a good thing to keep printing money, right? They would. Everybody to. To. I think 100 of people you asked would say, no, don't print more money. We're in trouble already. You know, And I think that we've been. I don't know how that we've succumbed to this pressure to allow the deficits to get this high, to allow taxation to get into a place where it's the only way to solve the problem.
Do you see any.
Any cracks on the horizon of light that we can look at that might make it better for Canadians from a cost of living standpoint? Franco?
[00:13:16] Speaker B: Well, hey, let me just explain the inflation tax real quick, because this is really one of the worst forms of taxation.
It's a fundamentally undemocratic form of taxation. And make no mistake about it, it is a form of taxation. And that's when the central bank creates new dollars right out of thin air, buying financial assets, largely government bonds, I. E. You know, financing massive deficits in Ottawa. Okay? And the. The key problem, this is where inflation really stems, because throughout the economy, you can get some prices going up, but if you're not creating new dollars, then other prices would go down, right? If there's only so many dollars in the economy, one price goes up, another price goes down. Now, what creates this general increase in inflation year after year after year is. Is the money printer, okay? The fact that through the central bank, the government can essentially create a new dollar at a thin air with the click of a keypad. Well, the problem for normal people is that you can't create farmland with a click of the keypad. You can't create gasoline with a click of a keypad. So through the central bank, and we saw this big time during the pandemic where the bank of Canada printed up more than $300 billion out of thin air is that you create the perfect storm of inflation, which is too many dollars chasing too few goods. And, oh, by the way, Canadians never voted on that. Right? Fundamentally undemocratic, that is the inflation tax, folks. Now, do I. I like to think of myself as an optimist. So if I can see any optimism here, it's that at least the governing liberals under Carney, at least they have to admit that they need to control spending, right? They're still increasing spending by $38 billion this year, but they're starting to understand that they can't lose Any more credibility on the finances. So they at least have to pay lip service to reining in spending. Now they're not reigning in spending, but they at least have to say lip service to it.
[00:15:14] Speaker A: Yeah, it's interesting. That just sounds like Ozzy Osbourne waking up after a night of partying in his hotel room after trashing it and saying, you know what, I really got to slow down.
But it's already. The damage is already done.
But having said that, it does seem to me that we might be in for a long haul because a lot of money was printed. We have a huge deficit. There is only one way forward and that is to start to rein that in. This feels to me like for taxpayers this is a long haul. And I don't even know if a change of government could make a difference to that.
[00:15:47] Speaker B: Well, you certainly need a change in culture, right? That, like, I think that has to go. I think that has to go with it. You know, I see that there's kind of two paths forward, but, but both have to be done, right? So number one, you have to cut spending. You can't just keep running these massive deficits. Like the Carney government's going to borrow $80 billion this year. 78 billion according to Budget 2025. No plan to stop borrowing money. No plan to balance budget. Balance the budget. So what has to happen from the federal government is, is you have to cut spending. You have to cut spending. You can't keep borrowing money like this. You got to start paying down the debt. That has to happen. Now we saw, the closest thing that I think that we're facing today is similar to the mid-90s in Ottawa. Right. Remember that we actually had to cut spending, balance the budget. The second thing that you have to do is you have to make more of stuff that the money buys. Right. So you have to get the government out of the way so that the economy can grow and that we can produce more stuff. Like those are the two things that has to happen.
[00:16:49] Speaker A: It's funny, we say that we're the biggest resource rich country within any, any stretch of the eye, and yet we have so many restrictions put upon us to get those resources. You know, we got them, but we don't process them. We, we ship them away.
We find ways to stop producing. For some reason, we as a country need to start making stuff again.
[00:17:13] Speaker B: Yeah. And that all starts with the government getting out of the way. Like, like, like folks like, we should be the freest, most prosperous country in the world. Like, think about all the different natural resources that we have all over Canada. All over Canada. Not only that, we have a very well educated population.
Like we should be the freest and most prosperous place in the world. Why are we not significant government regulations strangling our ability to grow, specifically our natural resource sector. Like we should be a natural resource powerhouse, right? But hey, the federal government brings in a carbon tax, then a second carbon tax and an industrial carbon tax, then a no more pipelines law, then a discriminatory tanker ban on the west coast. The government flirts with a production cap on oil and gas. Right? Look, the government moves the regulatory goalposts on the energy east pipeline, rejects the northern gateway pipeline. I could go on and on and on. Why? Why are we stagnating? Because Ottawa, we need Ottawa to get out of the way.
[00:18:13] Speaker A: We don't move Ottawa. Would be better to just stand to the side for a moment. Maybe while Mark Carney's off flying around wherever his next trip is, everybody could just take a step to the side and we'll get back to work.
Franco, I really appreciate this. You can't even imagine where can people find out more about what you're doing and how they can support it?
[00:18:34] Speaker B: Hey, that was fun. I really appreciate it. Folks, the best way to learn more about the Canadian Taxpayers Federation is to go to taxpayer.com taxpayer.com A lot of great resources there for you.
[00:18:44] Speaker A: You know, I'll be in touch with you again, right? In the new year, if not before. Thanks so much, Franco.
[00:18:49] Speaker B: Hey, that was fun. Thank you.
