Trudeau’s Hands-Off Approach to Inflation Is Becoming Untenable – Takes Cabinet to Vancouver to Meet

Trudeau is riding low in opinion polls after nearly seven years in power. And the likely election next month of Pierre Poilievre as new leader of the Conservative Party will add more urgency to the inflation debate. Poilievre has focused relentlessly on the cost of living during his leadership campaign, using the label “Justinflation” as he pins the blame on Trudeau.

“Politically, that fight is going to come to this government,” Shachi Kurl, president of the Vancouver-based Angus Reid Institute, said by phone. “It will come large and will come hard.”

Polling from Kurl’s research group found that four in five Canadians have been forced to cut spending in the face of rising costs.

In the absence of new measures from Trudeau, Canada’s provincial leaders have stepped in.

Ontario, the most populous province, temporarily suspended fuel taxes. Quebec’s premier, who began his campaign for a second term this weekend, is promising more direct inflation relief if re-elected. And oil- and fertilizer-producing Saskatchewan is sending out an “affordability cheque” to every resident this fall.

Canada’s economy is doing better than most, thanks to high prices for commodities, its abundance of energy and strong population growth. Worker shortages are widespread. That means the nation would probably struggle more than peers to absorb more government spending that adds to demand.

“I have noticed that other countries have been adding to their spending in recent months,” Finance Minister Chrystia Freeland told reporters last month after a meeting with her Group of 20 counterparts in Indonesia. “Canada has been restrained there as well, precisely because inflation is elevated.”

From a short-term fiscal perspective, the government can use revenue windfalls to pay for any new measures it wants to take. The most likely scenario is something along the margins, targeted to those who need it most and in line with the Trudeau government’s net-zero commitments — so no blanket rebates for drivers filling up their cars with gasoline.

So far this year, the government has been pulling in billions more than anticipated.