There was nowhere to hide last week as markets continued to take a pounding and economic news went from bad to worse. Stocks tumbled, with the TSX down 10% this year. The US Federal Reserve, sensing danger and hoping to tamp down inflation fears, made its most aggressive move in almost 30 years, hiking its benchmark interest rate ¾% And even as summer rolls in, a crypto winter is coming with it. Recession fears are surging amongst CEOs.
With that backdrop, Deputy Prime Minister and Minister of Finance Chrystia Freeland took the stage at the Empire Club of Canada last Thursday to deliver what had been billed as a ‘major’ address on inflation and the economy. Before diving into the heart of the matter, Minister Freeland reminded Canadians that the economy was actually in pretty good shape, while acknowledging it doesn’t feel that way. She then went on to outline the government’s ‘Affordability Plan’, made up of enhancements and indexation of various income support programs, money for housing, and the expected arrival of dental and child care programs, totalling almost $9b for Canadians who need the help right now. It would appear the thinking was for the Minister to lay out, in detail, the government’s plan and approach to tackling inflation and the cost of living crisis to an audience that has largely been responsible for much of the recent criticism it has faced.
For the government, getting your case on the record ahead of summer break makes sense, since it’s unlikely you’ll have people’s attention again until September, and who knows what shape the economy is in by then. From there, you and your caucus colleagues spend the summer connecting with Canadians on the BBQ circuit. But in touting this as a ‘major’ speech, you immediately raise expectations that you’re coming with more than just a rehash of what’s already been announced. People expect announcements or a plan. And while the typical government response would be to throw money at the problem, that’s the last thing we need right now. Hence the puzzled reactions to the speech.
And yet, it seems like a missed opportunity for the Opposition. Clearly, the issue is top of mind for most Canadians, and yet the only politician keeping the government’s feat to the fire is Pierre Poilievre, in between his calls for getting rid of ‘gatekeepers’ and a ban on vaccine mandates. Meanwhile, his party seems much more worried about semantics than politics. As for the NDP, they’ve yet to land on a clear and focused message track on an issue you’d expect them to own.
The fact is today’s economic uncertainty, which is in part due to the cost of living and inflation crisis, is a significant political risk for the government. And yet, they don’t really seem to be paying the price for it. But that could change very quickly.
So what should they do? First, start giving it the same level of attention as Canadians are and sharpen your communications accordingly. Explaining why we have inflation is important but it can come across as patronising and be seen as shirking responsibility. Instead, level with Canadians that the situation may get worse before it gets better, and that you feel their pain. Second, the day after Parliament rises, get right back to work. Have the Prime Minister and Ministers fan out across the country doing town halls (remember those?) to hear how Canadians are feeling. While potentially rough at first, never underestimate the power of listening. People will appreciate it. Third, appoint a rapid response panel made up of labour, business and economic experts to deliver a concise report on potential government actions within 60 days of creation.
The fact is, we’ll eventually get through this part of the economic cycle (let’s hope so because the alternative scenario is really bad). In the meantime there’s very little the government can actually do to alter the course of that process. But this isn’t economics class – it’s politics. And part of politics is to be seen like you’re doing something. Right now the sense amongst Canadians is that the government isn’t doing enough to help deal with this problem. If the alarm bells aren’t going off in the Prime Minister’s Office yet, they should be.