FISCAL MONITOR – CANADA – APRIL 2017 TO

NOVEMBER 2017BY: PAUL YOUNG, CPA, CGA

JANUARY 26, 2018

PAUL YOUNG - BIO

• CPA, CGA• Financial Solutions• SME – Risk Management• SME – Emerging Technology• SME – Business Process Change• SME – Close, Consolidate and Reporting• SME – Public Policy • SME – Financial Solutions• SME – Supply Chain Management

Contact information:Paul_Young_CGA@Hotmail.com

OVERVIEW

• This presentation looks at the financial performance by the government of Canada including taxation and spending.

• The presentation also covers key areas like infrastructure, GDP, middle class, refugees, etc.

AGENDA

• Surplus / (Deficit) – April 2016 to September 2016 and April 2017 to September 2017)

• Government Transfers

• Transfers to the Provinces and Cities

• Program Spending / Department

• Other Program Spending

• Key Indicators

• Blog #1 – GDP and Government

• Blog #2 – Military Spending

• Blog #3 – Refugee Costs

• Blog #4 – Poverty and Low Income

• Blog #5 – Trade

• Blog #6 – Infrastructure

• Blog #7 – First Nations

SURPLUS / (DEFICIT) – APRIL 2016 TO NOVEMBER 2016 AND APRIL 2017 TO NOVEMBER 2017)

SOURCE - HTTPS://WWW.FIN.GC.CA/FISCMON-REVFIN/2017-11-ENG.ASP

GOVERNMENT TRANSFERSSOURCE - HTTPS://WWW.FIN.GC.CA/FISCMON-REVFIN/2017-11-ENG.ASP

GOVERNMENT TRANSFERSSOURCE - HTTPS://WWW.FIN.GC.CA/FISCMON-REVFIN/2017-11-ENG.ASP

BLOG #1 – GDP AND GOVERNMENTDo you look at government financial statements? Debt started with PET was carried on by other governments

including PM Selfie. The big difference with Trudeau is that he is not in a recession other leaders including PET

faced recession. So, what is Trudeau’s excuse for running up the deficit?

Harper’s approach to fiscal management was through targeted spending and tax cuts. It is all lay out in this

presentation - https://www.slideshare.net/paulyoungcga/surplus-deficit-canada-fy-20162017 (SlideShare is

hosting site for content. The presentation ties back to various government financial statements.

GDP growth is not sustainable that is the issue. Trudeau is riding two strong quarters led by both real estate and

oil. The fundamentals are not strong in Canada and that is the issue. The last thing you do to an economy that is

stick at 2.3% growth is to inject more taxation. Liberals plan to tax small business like no tomorrow. FYI – You talk

lawyers and doctors, right? You do realised professionals like doctors and lawyers hire staff, right? The staff are

paid a salary, right? https://www.slideshare.net/paulyoungcga/middle-class-canada-september-2017 or

https://www.slideshare.net/paulyoungcga/2015-election-promise-gdp-growth-canada-september-2017 or

https://www.slideshare.net/paulyoungcga/small-business-canada-tax-proposal-79877328.

The economy also has yet to be hit with the national carbon tax. The carbon tax comes in place in 2019 -

http://business.financialpost.com/commodities/energy/ottawas-carbon-tax-plan-to-shrink-economy-by-3-billion-

hurt-loonie-in-2018-study

BLOG #2 – MILITARY SPENDING

• Liberals are nickel and dime of taxpayers to cut costs. Liberals have no fiscal plan to balance the budget. It seems small business, middle class and military are the target instead of tax havens and tax shelters -https://www.slideshare.net/paulyoungcga/military-canadian-defense-november-2017

•

• The military is already stretched including additions to headcount. http://www.forces.gc.ca/en/about-reports-pubs-report-plan-priorities/2017-spending-and-human-resources.page. It is hard to undertake missions abroad when you lack both the resources and equipment. The Liberals defense plan pushes spending out to 2020 and beyond -https://www.slideshare.net/paulyoungcga/military-canadian-defense-november-2017

•

• Where do we have peace? It is not the Middle East or Africa, right? So, how can you send peacekeepers when there is no peace? http://www.cnn.com/2017/08/15/africa/un-mission-timbuktu-attacked/index.html

• Where is the UN? UN is great asking for money, but does little to curb corruption, right? https://www.slideshare.net/paulyoungcga/foreign-aid-transparency-and-accountability-october-2017

•

• Source -http://www.ctvnews.ca/video?binId=1.810401&cid=sm%3Atrueanthem%3Actvnews%3Apost&clipId=1254907&playlistId=1.3670791&utm_campaign=trueAnthem%3A+Trending+Content&utm_content=5a04fa1500bd470006e9f036&utm_medium=trueAnthem&utm_source=facebook

BLOG#3 – REFUGEE COST

• Auditor General for Canada - http://nationalpost.com/pmn/news-pmn/canada-news-pmn/services-provided-but-outcomes-not-tracked-for-syrians-auditor-general - The overall costs have ballooned to $950M.

• Yet many liberals complained the CPC could not account for $3.1B http://fullcomment.nationalpost.com/2013/11/28/john-ivison-the-3-1-billion-conservative-boondoggle-that-never-was/. Yet there was no money missing. (Page has been removed by the FP)

• Refugees from Syria have now become a burden to both the province and local government through welfare as well as other supports - https://www.theglobeandmail.com/news/toronto/syrian-refugees-still-struggling-to-settle-in-toronto-after-year-of-governmentsupport/article34785953// I am all for support, but there should have been an integration strategy including tracking which was not done by the Liberals. The liberals have said many times they would be more open and transparent, but have not since they took office -https://www.liberal.ca/openness-and-transparency/. My gut tells me that liberal followers only read the headlines and not the facts.

• Source - https://www.slideshare.net/paulyoungcga/refugee-border-crisis-canada-september-2017

BLOG #4 – POVERTY AND LOW INCOME

• Justin Trudeau keeps speaking in the house that his government has reduced poverty rates in Canada. The reality there is no data that supports Trudeau claim in terms poverty reduction. The whole statement comes from the Liberal 2015 election campaign - https://www.liberal.ca/realchange/fighting-poverty/.

• The reality is that since 2015 the low income has seen tax credits removed as part of the government eliminating tax credits. Fraser Institute has said 61% of the bottom 20% are paying more taxes since Trudeau took office -https://www.fraserinstitute.org/sites/default/files/effect-of-federal-income-tax-changes-on-families-in-the-bottom-20-percent-of-earners.pdf

• Harper actually help wage growth - http://business.financialpost.com/opinion/william-watson-turns-out-the-harper-government-was-actually-terri fic-for-wage-growth

• Source - https://www.slideshare.net/paulyoungcga/low-income-and-poverty-canada-november-2017

•

BLOG #5 - TRADE• Latest round of NAFTA talks are about to begin in Mexico City - http://www.industryweek.com/economy/nafta-negotiators-set-look-small-

wins-after-us-threats?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IWNews+%28IndustryWeek+Most+Recent+News%29&sfvc4enews=42&cl=article_4&NL=IW-07

• Linda Hasenfratz, chief executive officer of auto parts maker Linamar Corp., said in an earnings call last week she sees four key areas of dispute -- auto rules, the sunset clause, the dispute panels and government procurement. “There’s an opportunity to come to resolution on each of these issues if all parties want that to happen,” Hasenfratz, who sits on Canada’s NAFTA advisory council, said on a Nov. 7 earnings call

• Automotive supply chain is very integrated as such making changes to content rules related origin would be very difficult. Mexico has large automotive deficit with the USA.

• USA wants the dispute panel removed while Canada wants to keep it. The ironic thing is that Canada is most sued country in NAFTA -http://www.huffingtonpost.ca/2015/01/14/canada-sued-investor-state-dispute-ccpa_n_6471460.html/ USA has never lost a trade case with Canada under NAFTA

• Government procurement has always been a big issue as various governments want to support their local businesses.

• Income inequality has worsened in Mexico. NAFTA was supposed to lift people out of poverty in Mexico and has not achieved that goal

• Canada has large trade deficit with Mexico. Canada needs to push Mexico for more access to the Mexican market

• Each $1B of exports creates 5,500 jobs. It is estimated exports are 25% below were should be in terms of value. If Canada is losing out to $125B in new export opportunities.

• Bottom line

• I think it is likely time to rip up NAFTA and go with unilateral deals between each of the countries.

• Source - https://www.slideshare.net/paulyoungcga/trade-agreements-all-you-need-to-know-november-2017

INFRASTRUCTURE • We all know that MSM treats the Liberals with soft gloves as they do not want to upset PM Selfie.

• http://www.ctvnews.ca/politics/liberals-to-delay-billions-in-planned-infrastructure-spending-cp-1.3654609?cid=sm%3Atrueanthem%3Actvnews%3Apost&utm_campaign=trueAnthem%3A+Trending+Content&utm_content=59f7063304d30133dcb791a8&utm_medium=trueAnthem&utm_source=facebook

• I have done this presentation to highlight a few myths about infrastructure - https://www.slideshare.net/paulyoungcga/government-policies-and-issues-municipalities-and-cities-canada-july-2017

•

• CPC increased funding to local governments for infrastructure funding through the creation of Build Canada and Gas Tax Fund. The Liberals keep saying in the CPC did nothing on infrastructure is a myth - https://www.youtube.com/watch?v=8BZ3RFwPx7o

• Construction Association https://www.on-sitemag.com/features/government-spending-infrastructure-slowly-making-way-pipe/

• Aecon - https://beta.theglobeandmail.com/news/politics/us-watchdog-warns-aecon-takeover-may-block-firms-access-to-infrastructure-projects/article36761079/?ref=http://www.theglobeandmail.com&

• There are systemic issues with municipalities that need to be address, but have not for over a decade.

• Jack Mintz wrote a very good blog on the infrastructure bank - http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/fp-comment/jack-m-mintz-beware-a-new-infrastructure-bank-canadas-had-enough-of-these-failures-already&pubdate=2017-05-19

• Transit projects receive operational grants from cities as part of their budgets. https://www.slideshare.net/paulyoungcga/pension-funds-and-infrastructure-investments-june-2017

• CPPIB is concern with projects that meet their investment criteria - http://www.timescolonist.com/canadian-infrastructure-deals-scarce-but-would-be-welcome-cppib-chief-executive-1.20033106

•

• I cannot believe that Minister Sohi has the gal to say CPC did nothing on infrastructure as that comment is beyond absurd, but a lie -https://www.youtube.com/watch?v=sMx--jYi07I

BLOG #7 – FIRST NATIONS

• Source - https://www.theglobeandmail.com/news/politics/feds-to-give-10-year-grants-to-first-nations-with-less-reporting-on-how-money-is-spent/article37438522/?click=sf_globefb

•

• “First Nations with good financial track records will no longer be required to account to Ottawa for every dollar of federal money they spend on things such as health-care, education and social services under a new program being proposed by the Trudeau government.

• The plan to guarantee long-term funding with a minimum of bureaucratic oversight for 100 First Nations communities by April 2019 is the first concrete step in what Jane Philpott, the Minister of Indigenous Services, says will be a new fiscal relationship with Canada's Indigenous people.

• It is also a significant shift from the policies of former Conservative prime minister Stephen Harper who raised the ire of chiefs by passing legislation that required First Nations to submit their audited consolidated financial statements and information about salaries and expenses to the government for posting on the Indigenous Affairs website. The Liberal government stopped enforcing that law shortly after taking power in 2015.

•

• First Nations need to be accountable with how dollars are spent as part of value for money audits (outcomes) -http://o.canada.com/news/national/first-nations-audits-should-focus-on-value-for-money-former-minister-chuck-strahl-says

• There will be court challenges when results to happen in terms of water, housing, jobs, etc. - https://globalnews.ca/news/3536577/court-order-gives-onion-lake-cree-nation-30-days-to-disclose-basic-financial-records/

• There have been numerous cases of fraud by band members - http://www.bbc.com/news/world-us-canada-42171946 or https://www.theglobeandmail.com/news/politics/ottawa-took-years-to-warn-ontario-first-nations-about-fraud/article33977472/ or https://www.tbnewswatch.com/local-news/don-rusnak-comments-on-alleged-misuse-of-first-nations-funding-741898 or http://www.chathamdailynews.ca/2017/09/08/caldwell-first-nation-its-chief-isnt-talking-in-wake-of-audit-finding-large-sum-unsupported-in-wake-of-band-celebration or http://nationalpost.com/news/canada/chief-and-band-councillor-at-first-nation-removed-following-audit-of-nearly-600k-powwow

• Source - https://www.slideshare.net/paulyoungcga/government-policies-aboriginal-affairs-canada-december-2017