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Analysis | Economic statement: a band-aid and not a miracle cure

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Federal Finance Minister and Deputy Prime Minister, Chrystia Freeland, upon her arrival at a Trudeau cabinet meeting in Ottawa , November 21, 2023.

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Chrystia Freeland must create a path between the imperative to relieve the middle class, caught by the throat by rising interest rates, and the need not to fuel inflation. And the path the federal finance minister walks is far too narrow for comfort.

Politically, Ms. Freeland risks losing the balance, between the conservatives who consider her to spend too much and the New Democrats who demand more social programs.

Hurry up. She has less than two years left, before the next elections, to prove that the path she is taking does not lead to a dead end.

With room to maneuver weighed down by significant spending in recent years, Chrystia Freeland tabled an economic statement focused on two urgent needs: housing and the cost of living.

The Liberals, who had accustomed the electorate to ambitious and flamboyant programs, such as the daycare program and the child allowance, must now be content with modest and targeted measures.

So, to help people make ends meet, Minister Freeland is proposing to strengthen the powers of the Competition Bureau, crack down on unwanted fees and eliminate taxes on psychotherapy services.

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A project in Yellowknife financed with a payment of $33.7 million from the Canada Mortgage and Housing Corporation .

For housing, it is offering $15 billion in apartment construction loans to create 30,000 new homes. It is also putting forward a budget of 1 billion over three years for the construction of 7,000 affordable housing units as well as 300 million to encourage housing cooperatives.

The Minister Freeland is working on a mortgage charter and tightening the screws on owners to discourage short-term rentals such as Airbnb.

These measures will – at best – create a few tens of thousands of housing units, while the scale of the challenge is immense. CMHC estimates that 3.5 million additional housing units will be needed by 2030 to remain affordable for Canadians.

Si Chrystia Freeland recognizes that people are suffering from inflation and lack of access to housing, the measures she announced Tuesday are more like a bandage on a wound than a miracle cure.

Much of the federal government's economic predicament is beyond its control: global political instability and rising interest rates ;interest have darkened the economic landscape.

It's the same thing for housing: decades of lack of investment and shoveling forward have paved the way for an untenable situation. Other levels of government must also share the blame for this inaction.

But in both cases, the Liberals also put in their two cents .

Many economists agree that spending remained too high after the worst of the pandemic had passed. Anyone who purchases a living room set using the time-honored “buy now, pay later” formula knows that they are exposing themselves to the risks of the unexpected. The Trudeau government has benefited from its living room furniture, but now it has to pay.

However, the debt service is reaching new heights: 30.6 billion more in interest over the next five years.

We also increased immigration targets without aligning them with an increase in housing supply, which exacerbated the problem that had been looming for a long time.

The Liberals must now defend their record in the political arena, while the Conservatives have the wind in their sails and their leader, Pierre Poilievre, has been saying for months that Canada is broken.

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Conservative Party of Canada Leader Pierre Poilievre is dissatisfied with the budget and says it does not go far enough, while Canadians are experiencing the worst inflation in 40 years.

From the first lines of her statement, Chrystia Freeland wanted to respond to him. Canada is not and has never been broken, she wrote.

In this battle of narratives , liberals and conservatives are trying to convince the same segment of the electorate: the middle class.

The Liberals have pampered it for years: pan-Canadian daycare program, dental insurance, Canadian emergency response benefit… But this middle class is now tearing its hair out because it is struggling to pay for it. #x27;groceries, because she has to renew the mortgage at an exorbitant interest rate or because she can no longer find housing at a reasonable price.

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The pan-Canadian daycare program is one of the measures offered to the middle class by the liberals. (File photo)

Justin Trudeau's troops continue to plead for an optimistic vision, but their message is often buried by that of Pierre Poilievre, who knows how to very effectively channel the frustration of those who cannot make ends meet. His message appeals, and if polls are to be believed, many voters believe, like the Conservative leader, that the country is broken.

The Liberals have less than two years left – and limited financial room – to try to prove them wrong.

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