The Conservatives’ inflation argument is flawed — but it still might work

Given the hassle of going to a grocery store with a full security team and motorcade (and the fact that prime ministers generally aren’t responsible for home repairs at official residences), it’s easy for a prime minister to get tripped up on such questions. Which means the Prime Minister’s Office might have to start preparing a daily brief on how much a carton of milk costs on Rideau Street.

Eventually, the Conservatives sent up their finance critic, Pierre Poilievre, to bring their arguments full circle — to claim that, in fact, Justin Trudeau is the approximate reason inflation is happening.

“The cost of government is driving up the cost of living,” Poilievre said. “Almost a half a trillion dollars of inflationist Liberal deficits mean more dollars chasing fewer goods, driving higher prices.”

Poilievre punctuated his point with a play on words, describing the current situation as “Justin… flation.”

Trudeau seemed unimpressed by the clever wordplay. “While the Conservatives play silly partisan games,” he said, “we are focused on Canadians. We know that what Canadians are facing is a serious situation.”

So here is the first real question of the new Parliament: to what degree is the Liberal government to blame for the inflation Canadians are experiencing?

Global causes, local effects

Frances Donald, the global chief economist for Manulife Investment Management, was asked recently about inflation during an appearance on former Liberal strategist David Herle’s podcast. She pointed to a number of factors that have nothing to do with the Trudeau government’s fiscal policy: global supply chain disruptions, COVID-19 policies in China, global droughts, pent-up consumer demand.

Informed explanations from the United States also point to an array of international factors, many of which are linked to the pandemic. The New York Times’ Paul Krugman has written that this bout of inflation seems more like what happened after the Second World War than the chronic inflation of the 1970s.

“I am impressed to see the high esteem in which the member for Carleton seems to hold me, that I was able to create a global inflation crisis with our initiatives to support Canadians throughout this pandemic,” Trudeau said in reply to Poilievre.

In an interview with CBC’s Power & Politics on Tuesday, former parliamentary budget officer Kevin Page also pointed to a number of factors driving inflation — but did suggest that government support was boosting consumer demand. He also said that inflation could be short-lived but that it should factor into the government’s decisions about future stimulus spending.

Watch: What’s driving the rising cost of living in Canada?

What is driving the rising cost of living in Canada?

Kevin Page, president and CEO at the Institute of Fiscal Studies and Democracy, joined Power & Politics Tuesday to break down what is behind the rising cost of living in Canada and what can be done about it. 7:18

While Poilievre likes to point to the amount of money the federal government dispersed during the pandemic — the big number at the bottom of the balance sheet — Conservatives might not want to get into a debate about exactly what the money was used for.

The Canadian Emergency Response Benefit accounted for $81.6 billion. The Canadian Emergency Wage Subsidy has so far provided $97.5 billion. The federal government says an additional $19.9 billion has been sent to the provinces and territories.

Maybe the Conservatives could find examples of excess to point to. But in what ways would they have spent significantly less?

Inflation wasn’t an issue during the election campaign

While Liberals might be broadly vulnerable to the charge that they are too loose with federal funds, Conservatives also have to contend with the fiscal plan their party ran on in the election campaign that ended two months ago.

According to that plan, Conservatives would have run a slightly larger deficit in the current fiscal year before following a track broadly similar to the Liberal plan. And Page’s Institute of Fiscal Studies and Democracy found that the Conservative plan lacked credibility.

The Liberal response is that their plan includes substantial federal spending to lower child care fees and create more child care spaces — something that would help to lower the cost of living for many families. The Liberals also don’t mind pointing out that the Conservatives campaigned on cancelling that spending.

But the Liberals presumably also know that if day-to-day items continue to get more expensive, day-to-day politics will get harder for the government — because it might be blamed for rising prices and because that could make it harder to pursue policies in areas like climate change.

Inflation is a Liberal point of vulnerability

The cost of living is something immediately tangible to everyone. And if Canadians are already grumpy about the price of bacon, they might be less willing to accept any new policy that carries a cost.

So while the Liberals can point to spending on child care and affordable housing, they’re not immune to questions about what they could be doing to help Canadians deal with the impacts of inflation.

The Conservatives are no doubt happy to keep talking about it. They have a stronger hand to play on inflation than they would if they were fighting the government on climate policy or Indigenous reconciliation or vaccine mandates.

But however inflated the rhetoric in question period, the biggest question is how long this period of inflation might last.

If it persists, the Liberals might have real problems — even if they’re only about responding to external forces beyond their control.

If inflation fades in 2022, the Conservatives will have to find something else with which to attack the government.

But that’s the blessing of question period: every day offers another opportunity to yell about something new.