Confidence in Canada’s fiscal health is ‘eroding,’ says business group president

The president of the Business Council of Canada (BCC), Goldy Hyder, has raised concerns about the federal government’s handling of Canada’s fiscal health. In an interview with CBC’s The House, Hyder expressed that the business community’s confidence in the government’s financial projections is diminishing, suggesting that federal finances are being manipulated to paint a misleading picture.

Hyder pointed to recent changes in capital gains taxes and discussions about the surplus in the federal public service pension plan as indicators that the government is scrambling to find new sources of revenue. He criticized the government for what he perceives as a lack of transparency and fiscal responsibility, stating that it appears to be searching for funds to support its spending habits.

There have been speculations that the federal government may not meet the $40.1 billion deficit target set by Finance Minister Chrystia Freeland last year. Although Freeland did not confirm meeting this goal, she mentioned that the fall economic update would show a declining debt-to-GDP ratio.

Hyder emphasized that the business community lacks confidence in the government’s financial projections, leading to hesitancy in investment decisions. He highlighted the importance of inspiring confidence in both investors and the markets, particularly during a period of economic fragility.

Statistics Canada reported that the Canadian economy grew at an annualized rate of one percent in the third quarter, partly driven by increased government and household spending. Economist Armine Yalnizyan emphasized the significance of the debt-to-GDP ratio over the deficit dollar amount, noting that it is crucial for assessing the government’s financial health.

Yalnizyan also highlighted the interest payments on the federal debt, which amounted to 1.3 percent of GDP last year, one of the lowest figures in decades. She stressed the need for Canadians to prioritize between maintaining services and implementing tax cuts.

Additionally, concerns loom over U.S. president-elect Donald Trump’s threat to impose a 25 percent tariff on imports from Canada and Mexico. Yalnizyan mentioned that Trump’s approach creates uncertainty and puts governments in a defensive position, unsure of how to respond effectively.

Hyder advised Canada to strategize with businesses to address the potential impact of Trump’s tariff threat and emphasized the importance of being proactive in navigating this challenge. It is evident that the government must prioritize transparency, fiscal responsibility, and collaboration with the business community to foster economic stability and growth.