GST Holiday And Abacus
On Today's News
Today has seen two significant events in Canadian politics. The release of the first high quality, fully post-Trump poll is a big deal, especially because it has the Liberal deficit at 22%, and the Liberals and NDP tied at 21%. The lack of a Trump Bump, the lynchpin of this government’s (what passes for a) strategy these days, is notable. On the other front, the GST holiday is the government’s attempt to show that they care about affordability (and greasing the wheels of the NDP), but it’s a mixed bag.
This isn’t one cohesive column and I’m not going to pretend it is. The reality is I have half a column’s worth of takes on both of these topics so they’re getting mashed together instead of me writing two mediocre half baked columns.
GST Holiday A Mixed Bag
I don’t love the government’s temporary GST holiday. If there is a case for removing the GST on certain items, it makes sense to remove them permanently, and not just for two months. That said, the original reporting in the Globe implied/suggested that it would include energy bills, which would have me losing my fucking mind. (Who uses more fucking energy, a suburban McMansion or a shoebox apartment?)
The GST holiday is still slightly regressive, given that it is worth significantly more in raw dollars to your Bay Street lawyer than to the retail worker trying to make ends meet, but it’s not nearly as bad as it could have been. That beer is included, but not hard alcohol, is an offence, but whatever. It’s a waste of money and an opportunity cost, but the NDP want it and it’s not nearly as wasteful or regressive as it could have been. It’s whatever.
The real coup for the government here is the payment for low and middle income Canadians. Everybody who files their taxes who made under $150k in 2023 income will get $250 in the spring, a meaningful sum that will genuinely help alleviate some amount of pressure. The means test makes it significantly different - and significantly better - than Ford’s bribery scheme of cheques for everybody. Plainly, the original version of this column - written off the Globe story and without the knowledge of this part of the package - lamented in quite strong terms the lack of direct support for the poor and working class. I’m glad it’s here.
All in all, the affordability package looks okay. It’s entirely possible I’m judging this too lightly because of how bad the package was implied to be in the Globe versus how eminently mediocre it actually is, and it won’t save the polls, but it’s fine. It’s the kind of package where the fact it’s a minority Parliament does actually matter, because it needs to get passed and the stuff I like less is what the NDP wants. It’s fine.
Abacus: No Trump Bump
In more depressing news, it seems like the government has gotten precisely zero boost from the election of Donald Trump, at least per Abacus. Since Trump won, the government’s vote share is down 1, the NDP have tied them at 21%, and Pierre Poilievre’s Conservatives are up to 43%. It’s bad!
The favourables don’t paint a rosier picture - Poilievre’s favourables are back to 40/37, and it doesn’t seem like the attack lines on the Housing Fund and Conservative MPs have landed at all. Government approval is still brutal, with government approval, the PM’s favourables, and the country’s share of people thinking we’re on the Right Track all mired in the mid 20s. This is not good.
Now, there did appear to be some tightening in Leger (from a mid September 22% lead to a pre-US election 16% lead) and in EKOS, and in the previous Abacus poll the CPC vote was down 3%, so yes, I wrote the fact that there seemed to be some amount of minimal but real tightening. I’m not declaring that dead just because of one poll, but I would love a Mainstreet or a Leger or even an Ipsos soon to see whether Abacus is on an island showing no change to the race.
The main difference, just eyeballing the polling, is that Abacus is lower on the Liberals in Quebec. Leger and EKOS both have the Liberals at 24% there, which is both bad and somehow a meaningful difference from Abacus’ 20%. Given Quebec has about a quarter of the population, that’s worth about a point nationally. And, frankly, it’s likely if not certain that the election of Trump will help the Liberals less in Quebec, where they have their own media ecosystem and issues set.
The Liberal Party has taken Quebec for granted in a lot of senses. There is no real effort for the PM to do French language media, he’s not going back to Quebec nearly often enough, and in general the party isn’t talking to Quebec. One of the biggest problems the party has is its weakness in Quebec, and the party is choosing to believe that the strength of the Trudeau name is enough to make everything okay in the province. Quebec, for good or for ill, needs to be coddled more than the other provinces. It needs to be wined and dined sometimes, and the PM is skipping a good portion of that retail politics - while blatantly doing retail politics at the behest of the Atlantic provinces. (I am aware plenty of people use oil for home heating in Quebec, but none of them benefit from the carve out since they don’t pay the Federal Carbon Tax.)
In general, however, the Liberals need this GST Holiday to land, because if Abacus is correct - and this modifier does need to be placed here, as it is the first fully post-US election poll we have - then the GST Holiday is essentially the government’s last roll of the dice. In conversations I’ve had since the failed coup attempt on Trudeau last month, the sense I’ve gotten is that some of the caucus members who backed the PM did not do so fullthroatedly or without reservations. More bluntly, it’s my sense that some people who backed the PM in October will be looking for a change if things aren’t any better by the time Parliament rises in December.
I offer no prediction about whether the caucus rebels will be significant enough in that scenario. I offer no prediction that the worst case scenario will come and things will still be 20 points down in mid December, even. But Abacus is a bad first indicator that there is any purchase for the government in tying Poilievre to Trump. Some may come, in time. But right now, the election of Donald Trump didn’t seem to help. Maybe the GST holiday will.
I don’t understand why people are expecting a Trump bump for the Liberals. Mr. Trump is not in power yet and will not be for another 2 months. Nobody knows if he will follow through on his policy promises (if you can call them policies) and it remains to be seen if his nominees will turn into actual appointments (with the first casualty today).
On top of that, we tend to give people the benefit of the doubt when they come into a new role. Even when there is absolutely no basis to give them any benefit at all. A good example is Pete Hoekstra, nominated to become the ambassador to Canada. Comments in Canada are generally friendly and along the lines of it could be worse and we can work with him. However, Mr. Hoekstra was ambassador before and things did not go smoothly (at all).
Pete Hoekstra, born in the Netherlands and emigrated to the US when he was 2 years old, was appointed ambassador to the Netherlands during the first Trump term. Mr. Hoekstra had made several comments in the past about the Netherlands about no-go zones for non Muslims and politicians being burnt to death (none of this is true). At his first press conference Dutch journalists came prepared. Mr. Hoekstra did not. He made a complete fool of himself. He never recovered from this embarrassment and was mostly ignored by the Dutch during his tenure in the Netherlands.
It is not clear how an author of project 2025 would be a welcome appointment as ambassador and we will see if Canadian journalists will be as prepared as their Dutch colleagues to hold Hoekstra’s feet to the fire. Suffice to say, the second Trump presidency has not become reality yet and Canada is in its usual polite wait and see mode. It is not realistic to expect a bump yet when the conflicts with new administration have not started yet.
In reflecting upon the GST and $250, most groceries are already GST free, but I do agree with it being removed on child raising needs, like diapers, etc which should never have been subject to the tax anyway. This should be permanent as well as being removed from home heating and electrcity costs. The $250 cheque is interesting. Personally I would lower in the income max to received it at $80K and then double it to $500 and send to lower income qualifiers. Sadly with a total cost of near $6B, this could be mildly inflationary but more importantly increases the deficit and debt when we already have passed on over $1Tr in debt to future generations. Interest costs will consume a bigger bite in annual federal budgets. With no certainty as to the impact of president-elect DJT, it is best to wait and then act once policies are defined and implemented by the new government. DJT likes people and countries ot be afraid, which reduces their ratiionality in responding. Calm, clear thinking and waiting is first.