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Parliamentary Budget Officer Yves Giroux prepares to appear before a committee in Ottawa on June 13, 2022.Justin Tang/The Canadian Press

The phrase debt wall has always been a bit misleading, conjuring up an image of something that suddenly appears from the mist. But a wall doesnt just materialize; its built brick by brick. And the fiscal crisis of a debt wall doesnt happen instantly; it builds over years.

The building blocks of a debt wall are starting to pile up in federal finances, emerging from the most recent analysis by the Parliamentary Budget Officer, ahead of a budget update from the Liberals expected next month.

The most obvious is the sharp growth in the dollars spent on servicing the federal debt since the onset of the pandemic, and an unprecedented surge in borrowing. In fiscal 2019, debt charges were $23.3-billion; the PBO projects that Ottawa will pay nearly double that, $46.4-billion, in the current fiscal year, rising to $51.1-billion in five years.

That trajectory assumes no new major spending from the Liberals, the very opposite of a safe bet. The government has consistently larded extra billions of dollars in spending into each fiscal update and budget it tables. And this year, the NDP is pushing hard for a national pharmacare program, a key part of the partys parliamentary alliance with the Liberals.

The price tag for such a program would be $11.2-billion in fiscal 2025, rising to $13.4-billion by fiscal 2027, according to the PBO. Ottawa might be able to reduce that cost by convincing the provinces to shoulder some of the burden; good luck with that, when the premiers are already crying poor over health care funding.

The cost of pharmacare alone would be enough to triple the federal deficit in fiscal 2025.

Even without such added expenses, the cost of servicing the debt is headed into the danger zone, as long-term interest rates seem likely to settle at higher levels. Two years ago, former Bank of Canada governor David Dodge suggested that Finance Minister Chrystia Freeland adopt a new fiscal anchor that would aim to keep Ottawas debt-servicing costs below 10 per cent of revenue. Above that threshold, he argued, the cost of debt would start to eat up too much fiscal capacity.

The figures in the latest PBO report, although yet to be confirmed by the Finance Department, show debt charges jumping to 10.1 per cent of revenue in this fiscal year, up sharply from 7.9 per cent last year.

Despite the increase, the ratio is well below the red-line levels of the mid-1990s, when debt charges ate up more than a third of Ottawas revenue. But its headed in the wrong direction, and that rise will accelerate if more likely, when the Liberals bend to the NDPs demands for much higher permanent program spending.

The rising cost of the federal debt is cutting into Ottawas fiscal flexibility. So is the rising cost of running the government, which has soared as the Liberals bulk up the bureaucracy year after year. When the Trudeau government took power in 2015, the governments combined operating and capital amortization expenses were projected to be $81.8-billion. Those figures exclude Ottawas transfers to individuals and other levels of government.

This year, Ottawas administrative costs are forecast to hit $133.9-billion, a 64-per-cent jump. Put another way, if the Liberals had simply increased those costs in line with inflation, they would have more than $30-billion to spend or, heaven forfend, to save.

When poked by the opposition Conservatives on overspending, the Liberals habitually taunt their rivals with the question of what programs the Tories would cut.

Here is their answer: stop padding the cost of government, institute a hiring freeze and start to claw back some of the $52-billion thats been added to the cost of government under the Liberals.

The government has made a small step in this direction with its effort to refocus $4.6-billion a year in permanent spending. But that exercise avoids pruning the size of the federal civil service, the biggest source of potential savings.

There is one fiscal guardrail that is relatively intact: the size of the federal debt relative to the economy. Give or take a decimal point, that ratio is largely in line with the governments pledge to keep it on a downward trajectory. But that is true largely because the inflationary surge of the past two years has pushed up the nominal size of the economy.

Even that modest success will be at risk if the Liberals accede to the NDPs demands for major new outlays one more brick in the debt wall that is rapidly assuming shape.

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Prime Minister Justin Trudeau responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on Oct. 4. Four major developers said they plan to build more than 10,000 rental units between them because of the federal governments September move to remove the GST on purpose-built rental housing.Sean Kilpatrick/The Canadian Press

Dont look now, but the Liberals are starting to win some policy debates on the housing crisis. It just might be too late for the politics.

Justin Trudeaus Liberals spent much of 2023 getting hammered about the high price of houses, skyrocketing rents and mortgage spikes. Conservative Leader Pierre Poilievre was making hay, and gaining ground, lambasting Mr. Trudeau by channelling the resentment about 30-year-olds living in their parents homes and families struggling to afford one.

For most of the year, the Liberals hemmed and hawed and declared that all the things they had already done were the greatest ever as if they couldnt see the problem nearly everyone was feeling.

But if you tuned into Question Period on Monday, there was Housing Minister Sean Fraser knocking back Conservative attacks with shots of his own, claiming, albeit apocryphally, that the Tories plan to raise taxes on rental units.

Liberals could, and did, claim that private-sector actors have endorsed some of their new housing measures. Four major developers said they plan to build more than 10,000 rental units between them because of the federal governments September move to remove the GST on purpose-built rental housing. Mortgage lenders have said the expansion of the Canada Mortgage Bond Program by 50 per cent will make a significant difference for builders.

Where the Tories were landing blows at will a few months ago, now Mr. Fraser was jousting gamely, responding to a Peterborough Conservative MPs arguments that Liberal inflationary spending forced interest rates higher by pointing to a multimillion-dollar housing announcement in her riding. Though the Tories kept picking the fight, the Liberals were starting to win some of the rounds.

But if the Liberals are starting to get a grip on the issue in Question Period, it comes at a time when no one is watching. Not many people watch Commons debates, and this week, the public attention paid to Parliament was devoted almost entirely to speeches about events in the Middle East.

Its not clear, anyway, if the Liberals can still rebuild credibility after letting the housing debate get away from them.

Their late-summer epiphany came when the public outcry was rising high and Liberal poll numbers were falling low. Their biggest new measure that GST break was something the Liberals promised to do in 2015 but didnt.

Even so, the Liberals suddenly boosted housing policy on a bigger scale, with real potential. The deals Mr. Fraser is signing with cities and towns for money from Ottawas Housing Accelerator Fund could move the dials, too, if municipalities make rule changes that, for example, allow more triplexes to be built.

Mr. Fraser now likes to point out that the Liberal bill provides more extensive housing tax breaks than a bill Mr. Poilievre tabled in September hence the ministers disingenuous claim that the Conservatives would raise taxes on housing.

The Liberals now have better policy that will make a difference. But it might not change the politics for Mr. Trudeaus government.

For starters, Mr. Poilievres Conservatives have had some success in making people believe that government deficit spending and big Liberal spending, during the pandemics peak and now is the cause of inflation, and therefore the cause of high interest rates.

Finance Minister Chrystia Freeland can argue that inflation is global and declining, and Canadas deficits and debt are lower than most industrialized countries. And while the Liberals have been profligate spenders who showed little regard for controlling costs, theres no reason to believe a Conservative government would take office and bring in spending cuts that would make interest rates rapidly tumble.

But those are arguments. People feel inflation. And they keep feeling it even when the pace of price increases starts to slow. Many felt the struggle of paying a high cost of housing exacerbated by a shortage of supply, and now are feeling the pinch of higher interest rates through mortgage bills or higher rents. The Bank of Canadas rate increases seemed to park declines in Liberal poll numbers.

The new Liberal measures to increase building and alleviate the shortage, meanwhile, arent likely to have a palpable impact on the supply of housing for years and not before the scheduled 2025 election.

So now the Liberals have regained their footing in the fight over who can address the housing crisis but it is still a government eight years into power hoping to win a political argument over who has the best solutions for years in the future. Mr. Fraser is starting to win debates in the Commons on housing policy, but it might be too late to make Canadians feel things will change.

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Ryan Sawyer and his twin brother Kyle at their parents home in Fall River, N.S. on Christmas Eve 2022. Later that night Ryan, 31, was murdered outside the Halifax Alehouse. A bouncer, Alexander Levy, was charged with manslaughter and criminal negligence causing death.Contributed by the Sawyer family/Courtesy of family

Nova Scotias Opposition Liberals are hammering the governing Progressive Conservatives over their continued refusal to activate a bar bouncer law introduced 13 years ago, which may have helped a Halifax man who died after an altercation with a security guard last Christmas Eve.

Bedford South MLA Braedon Clark said Tuesday that its no particular partys fault that the 2010 Security and Investigative Services Act was never brought into force, and called on Justice Minister Brad Johns to finally proclaim the law that was supported by all three political parties.

After Ryan Sawyer, 31, was allegedly killed at the hands of a bouncer at the Halifax Alehouse on Dec. 24, 2022, there has been renewed public attention into why bouncers remain unlicensed by the province of Nova Scotia. There have been political promises going back more than a decade to impose a licensing and training regime on security guards in nightclubs.

This government does have the ability now to do the right thing by proclaiming the law and providing comfort to Ryans family and friends and ensuring that in the future, this kind of tragedy does not happen again, Mr. Clark said.

He referenced a constitutional law experts opinion that writing off the bill undermines the will of the legislature. Last month, Toronto-based lawyer Sujit Choudhry told The Globe and Mail that ministers dont have a veto and are given a responsibility or a task by the legislature, to basically implement the law.

Mr. Johns responded to the remarks in Question Period by saying 13 years was a long time ago and that a lot has changed.

Weve reviewed it and weve decided to go through amendments with the Alcohol, Gaming, Fuel and Tobacco Division, he said, referring to new training requirements and criminal record checks for staff working at the provinces five late-night bars that his department brought in after Mr. Sawyers death.

A fatal night out in Halifax: Bar patrons death puts bouncer rules under spotlight

However, the PC decision not to proclaim the law may go against a high court decision that ruled cabinet ministers cannot simply ignore unproclaimed laws and cautions that government politicians cannot use their delay powers as a veto.

Put simply, it would not be open to a Minister to decide that an enacted statute will never be proclaimed, Justice Lorne Sossin wrote in an Ontario Court of Appeal ruling from August. His ruling says that the legitimate grounds for delaying proclamation must be related to the conditions necessary for implementing the legislation.

In the years after the Security and Investigative Services Act was passed but not proclaimed, the Nova Scotia civil service pursued the implementation of a law that would bring bouncers into the fold of the provinces trained and regulated security professions.

Records show that back in 2015, the activation of the new law was billed as being imminent. Nova Scotia Department of Justice officials in charge of regulated professions wrote a memo to security companies saying that because the old licensing act was being phased out and the new act was being phased in, temporary licenses were to be issued and extended for a few months.

But its unclear why exactly the Security and Investigative Services Act subsequently fell into limbo.

The law was originally passed in response to an outcry over the 1999 Christmas Eve death of Stephen Giffin, a man who died as he was ejected by two bouncers from a Halifax bar. An eerie echo of that tragedy occurred last Christmas Eve, when Mr. Sawyer sustained fatal injuries outside the Halifax Alehouse.

A security staffer involved in the recent altercation is now charged with manslaughter and criminal negligence causing death. Bouncer Alexander Levy had already been facing an assault charge that was laid two months prior to Mr. Sawyers death. Had the new law been brought into force, he would have been obligated to report the assault charge to a regulator, who would have had the power to suspend his license.

The regulatory void has come into focus in the form of civil suits after the death of Mr. Sawyer.

In one case, his estate and parents, Lee and Scott Sawyer, are suing the Halifax Alehouse and its employee Alexander Levy for negligence. The suit claims Mr. Levy intentionally committed assault and battery on Mr. Sawyer, by among other things, choking him until and after he lost consciousness, causing his death. Mr. Sawyer was pronounced dead in hospital.

The suit, filed in Nova Scotia Supreme Court on Oct. 6, also claims the Alehouse owed a duty to the plaintiffs to ensure he was reasonably safe on the premises and was negligent, as they permitted Mr. Levy to be employed when they knew or ought to have known he posed a risk to the safety of customers, and as they failed to institute adequate training for employees to prevent assault and battery of customers.

Mr. Sawyers twin brother, Kyle Sawyer, is also suing the club for negligence, claiming he was injured that same night and the club failed to adequately train its staff.

The allegations have not been proven in court. The Alehouse has not yet filed a statement of defence.

The Alehouse is also facing disciplinary charges at the Nova Scotia Utility and Review Board in relation to the death of Mr. Sawyer and other alleged incidents.

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NDP Leader Jagmeet Singh visited Iqaluit on Friday alongside Nunavut MP Lori Idlout to meet with territorial politicians about the housing and cost-of-living crises.

Singh slammed the Liberals, citing in a press release that they are abandoning Nunavut and the North on essential issues like the territorys housing crisis and price-gouging by the North West Company.

In March 2022, the waitlist for public housing across Nunavut was 3,021 people. Two weeks ago, the Liberals announced an investment to build 21 housing units. The federal government is not meeting the needs of Nunavut, the press release added.

The federal government committed to close the infrastructure gap by 2030 by aggressively investing in housing for Indigenous communities, which are at times plagued by long waitlists and overcrowded homes. In February, the NDP found it would take between 58 and 141 years to hit that goal, according to figures the party obtained at the time.

Its unclear what the Liberal governments fall economic statement, due in a few weeks, will signal about Ottawas commitment on housing. In August, Finance Canada asked all cabinet ministers to find around $15 billion in spending cuts ahead of the statement.

Ottawas austerity measures will not touch Indigenous infrastructure spending moving forward, Indigenous Services Canada Minister Patty Hajdu told Canadas National Observer in a previous interview.

Meanwhile, grocery retailers supplying food to dozens of Canada's most food-insecure communities, like Nunavut, are pocketing over half of a federal subsidy to reduce hunger, researchers reported in September. In Nunavut alone, nearly half of households can't afford enough to eat.

The $131-million annual Nutrition North subsidy is paid directly to most grocery retailers serving over 120 remote northern communities from Labrador to Yukon. The biggest retailer in northern Canada, the North West Company, reported $125 million in net income last year. It receives over half of the Nutrition North subsidy.

While Liberals are busy protecting the profits of the North West Company, the NDP is fighting to lower food prices for everyone, the NDP press release said.

With files from Marc Fawcett-Atkinson

Matteo Cimellaro / Canadas National Observer / Local Journalism Initiative

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NDP slam Liberals for inaction on housing shortfalls, grocer price ... - Canada's National Observer

~BW Uzelman

The housing affordability crisis is a serious and pervasive problem. Ontario and British Columbia have most actively addressed the issue, but all provincial governments have taken too long to react.

The federal government has been even more tardy. The Liberals proposed the $4 billion Housing Accelerator Fund in the election campaign in August of 2021. The Accelerator program was unsuitably named; it was eight months into the Liberals mandate before it was introduced in the 2022 Budget, 14 more months for the application portal to open and yet another three months for the first agreement with a municipality. In those 25 months, the housing shortage burgeoned into a severe housing deficit.

The Fraser Institute has just released a housing study. Josef Filipowicz, senior fellow at the institute, wrote, Never in the past half-century has population growth been so much higher than housing completions in so many parts of the country than in 2022.

Canadas housing crisis is a result of escalating demand and stagnating supply. A rapidly growing population has fueled demand, while government policy deficiencies have depressed housing construction. The Liberal government, first progressively, and in 2022 massively, increased the number of immigrants, foreign workers and foreign students admitted to the country. As well, governments at both levels have focused on helping buyers get into the housing market. These actions have pumped up demand, while government measures to supplement supply were absent.

Predictably, both housing availability and housing affordability have strikingly deteriorated. As more people competed for too few homes, vacancy rates (in the post-pandemic period in particular) have neared zero in many provinces, and home prices and rent have risen substantially. High interest rates have further driven up housing costs. The CMHC estimates that 5.8 million homes will have to be built by 2030 to restore the levels of affordability existing in 2003/2004.

The Fraser Institute research compares annual population growth with housing completions in the previous year. Filipowiczs data (garnered from Statistics Canada) shows from that from 1972 to the mid-2010s, population growth was one to two people per housing unit completed. From the mid-2010s to 2021, it was two to three people per completion, the only exception being the pandemic year of 2020. In 2022, population growth was a whopping 4.7 times the level of housing completions.

With the policies the federal Liberals had introduced, and had not introduced, the market was destined to fail. Only when public and opposition party pressure peaked and when the Liberals trailed the Conservatives by double digits in the polls, did they get serious about spurring housing supply. Then, in the autumn, there was a flurry of Housing Accelerator Fund agreements with municipalities, and the government soon created a GST exemption for new rental housing projects. These are the correct policy responses, but the Liberals had to be forced to deliver them, and they arrived much too late to alleviate the acute housing shortages and affordability problems visited on Canadians from 2021 through 2023.

PM Trudeau, earlier in 2023, drew criticism for stating that provision of housing is largely a provincial responsibility. He was correct. Housing primarily falls within provincial jurisdiction. But it is the federal government which controls the admission of immigrants and foreign workers and students. The Liberals have steadily increased admissions since 2015, and in 2022 they more than doubled the 2021 number, admitting over 1 million people. If the government was determined to engineer this escalation, it had a responsibility to help solve the pan-Canadian housing shortage. It has neglected this duty far too long.

It will not be the first time a federal government has intervened to develop housing. But the Liberals need to be careful to respect provincial jurisdiction. The GST exemption is the correct tool in this regard. It will do little to distort provincial policy, and will likely support the targets of provincial programs.

Benjamin Dachis of the C.D. Howe Institute urges the federal government to tread lightly with Accelerator funding. He writes, Direct intervention on city-by-city zoning decisions would be unwise and would likely only worsen the housing crisis. BC and Ontario already develop municipal housing targets and monitor achievement. Dachis suggests that the federal and provincial governments develop the targets together, and award Accelerator funding only to those meeting the targets. This is smart policy. It would avoid conflict between federal and provincial criteria and protect provincial jurisdiction.

Ottawa should also seriously consider stemming population growth for a time, until housing supply catches up with demand. This is unfortunate, but is now necessary. Lastly, all provinces would be wise to emulate the Ontario and BC models to boost housing supply. Those or similar policies are essential.

bruce

Bruce W Uzelman

I attended the University of Saskatchewan in Saskatoon.I obtained a Bachelor of Arts, Advanced with majors in Economics and Political Science in 1982.

I have maintained a healthy interest in politics throughout my adult years, and wish to put that and my research skills to work as a political columnist.

Contact: urbangeneral@shaw.ca

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