Affordability in Canada is at a crisis point — and politicians don't have an easy fix

Political parties are presenting different visions of how to help Canadians with the rising cost of living, but experts say there needs to be strong focus on long term planning to solve tough supply challenges.

Experts say government must think long term when it comes to addressing supply

Political parties have very different approaches to fixing the problem of high energy, food and housing prices. (Evan Mitsui/CBC)

For Canadians like Missy Anderson, the cost of living is becoming a crisis.

She's 38 years old, a mother of four, and lives in Burlington, Ont. Like many other Canadians she has been forced to make difficult choices about how she spends her money.

"It's a juggling act," she said in an interview on CBC's The House that aired Saturday. On top of the costs of feeding and caring for her children, a low-dose chemotherapy treatment to address Stage 1 cervical cancer presents another challenge for the freelance writer.

Inflation in July was up 7.6 per cent in July over the same period last year. It was the first month-to-month decline since 2021, but the cost of living is still taking a bite out of Anderson's budget — and she's hoping for help from politicians.

LISTEN | Which party has the best plan to fight inflation?
Missy Anderson, a mother of four, talks about her difficulty coping with the cost of living and experts Trevor Tombe and Sean Speer discuss the politics and policy of possible solutions.

"They need to understand how the average Canadian is living. They offer benefits that I think they think sounds good — stuff like one-time $500 help for rent," Anderson told host Catherine Cullen.

"If you're in this area, that's not going to do a whole lot for help. That's like two trips to the grocery store."

Anderson is hoping for more help as soon as possible.

The federal government announced this week new measures that are aimed at helping with the affordability challenge, including the rental benefit Anderson describes, as well as boosted GST credits and a new dental benefit.

"These are things that will make a difference in people's lives right now, but they are sufficiently targeted that they will not contribute to increased inflation," said Prime Minister Justin Trudeau.

Opposition Leader Pierre Poilievre, however, argued the plan would "pour gasoline on the fire" of inflation. Scotiabank head of capital markets economics Derek Holt also criticized the government for shelling out more spending.

No easy solutions for short term pain

Trevor Tombe, an economist at the University of Calgary, told The House it was unlikely the recently announced measures would have a significant effect.

But he noted it might be hard to address the root problem of inflation quickly, so one of the things governments need to be honest about is "recognizing clearly and explicitly that there's not a lot that can be done in the very short term," he said.

Much of inflation is caused by global factors and high energy prices, Tombe said, on which government policies around spending or transfers can have limited impact. Rate hikes from the Bank of Canada will also take time to have an effect on inflation, Tombe noted.

Tiff Macklem is shown going into bank building.
Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa on June 22, 2020. Economist Trevor Tombe says it will take time for interest rate hikes to cool inflation. (Blair Gable/Reuters)

Sean Speer, a senior fellow at the Munk School of Global Affairs and former economic policy adviser to Stephen Harper agreed that long term planning was needed to comprehensively deal with major challenges facing Canada today.

"I don't think we've heard enough from the government either on short term plans either to boost supply, but more important long term plans. There are just so many areas where we find ourselves supply constrained: health care, housing, energy," he said.

NDP claims victory on benefits announcement

Speer noted Poilievre was benefiting from being out in front of the inflation issue, and there may be a battle now brewing about the federal carbon tax.

"While the purpose of the carbon tax is to raise prices over time, there has been over the past 12 months or so such a significant increase on energy prices that it risks accelerating the increases intended by the carbon tax even faster," he said.

NDP Leader Jagmeet Singh told The House the new announcement — which he's touted as a major victory — will help ease costs for Canadians, by lowering the burden of dental costs while other prices remain high.

LISTEN | NDP Leader Jagmeet Singh talks about new benefits, Poilievre's win:
NDP Leader Jagmeet Singh talks about new federal measures announced this week that are aimed at helping ease the affordability issue, and reacts to Pierre Poilievre’s election as Conservative leader.

But he said the dental benefit is only a temporary plan. He told The Canadian Press that his party would no longer be flexible with the government on this issue and expected a fulsome program next year.

But Missy Anderson is looking for action now rather than future promises.

"People have children, people are working hard every day and they can't can't afford their bills. We need something to start happening."


Christian Paas-Lang covers federal politics for CBC News in Ottawa as an associate producer with The House and a digital writer with CBC Politics. You can reach him at christian.paas-lang@cbc.ca.

With files from The Canadian Press

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