Cost of living concerns must be balanced with fiscal restraint, Chrystia Freeland says
Finance minister says she's well aware of inflation, public frustration
Finance Minister Chrystia Freeland says she must strike a balance between helping Canadians suffering from the effects of inflation and pursuing a policy of fiscal restraint — or risk making the cost of living problem worse.
In an interview airing Sunday on Rosemary Barton Live, Freeland, who also serves as deputy prime minister, said she was open to further action on affordability issues but that she believes measures already underway — worth $8.9 billion — would help alleviate the impact on Canadians.
"I have to strike a balance. One is supporting Canadians with affordability challenges and the other is fiscal restraint, because I don't want to make the Bank of Canada's job harder than it already is," Freeland told CBC chief political correspondent Rosemary Barton.
The Bank of Canada has a mandate to maintain Canada's inflation target, which is two per cent (within a one to three per cent range) per year. Freeland said it was the bank's responsibility to deal with inflation and she respected its independence.
In a speech earlier this month, she argued that previously announced programs — including boosts to benefits for low-income workers, increasing other inflation-indexed benefits and implementing the government's child-care and dental programs — would help with affordability concerns.
Freeland reiterated that view in the interview airing Sunday, saying money from those programs was already on its way to Canadians.
'It's OK to be mad'
The finance minister acknowledged the frustration felt by many Canadians around rising prices, particularly for key everyday goods. She said friends have been sending her pictures of prices at the pumps, and she's aware that groceries are more expensive.
"And for a lot of Canadians, it is causing real hardship. I really understand that," she said.
Asked about the general unease many Canadians feel about the economy, Freeland struck a similar tone.
"I say it's OK to be mad," she said. "It's OK to be mad at me. I really understand that this is an incredibly challenging economic time. It's really, really hard for a lot of people."
The federal government has been under fire concerning inflation from both the opposition Conservatives and the New Democrats. The Liberals have a supply-and-confidence agreement with the NDP to keep the minority government afloat on key votes.
Opposition on the attack
In response to Freeland's speech, Conservative MPs Dan Albas and Gérard Deltell issued a statement criticizing what they call the government's "tax-and-spend" strategy.
"This flawed economic approach eats away at the earnings of hard-working Canadians and ignores the most basic principle of economics: that spending during an inflationary crisis will only fuel inflation further. Yet, the Liberals continue down this path with reckless abandon, inflicting more inflationary pain on Canadians."
- Chrystia Freeland details $8.9B in measures to tackle affordability in first major speech since budget
The NDP, which has argued that corporations are taking advantage of inflation to increase profits, says the government should put an "excess profits tax" on oil and gas companies and give money back to Canadians through the GST/HST credit and child benefit.
Leader Jagmeet Singh called Freeland's approach "absolutely insulting."
'Soft landing' still possible
Freeland met earlier this week with U.S. Treasury Secretary Janet Yellen, who said recently that a recession in the United States is not "inevitable," although inflation is "unacceptably high."
Canada still has a path to a "soft landing," Freeland said, where the country could stabilize economically following the enormous blow of the COVID-19 pandemic without the severe recession feared by many.
Freeland maintained an upbeat tone about Canada's ability to weather global economic uncertainty, especially when compared with other G7 countries.
"The challenge is not over, but I truly believe that we're going to get through this together," she said.
With files from Rosemary Barton and Tyler Buist