Making ends meet difficult in Alberta
We Albertans have seen more than our fair share of struggles in recent years. We’ve fought through a simultaneous recession and pandemic, featuring some of the worst and most heavyhanded government mismanagement in a generation.
Unfortunately with high inflation, rising interests rates and another looming recession, it seems the hits just keep on coming.
As Great Depression-era U.S. President Herbert Hoover put it, “About the time we think we can make ends meet, somebody moves the ends.”
There is no question that inflation is the most important issue facing our families and communities. Everything costs more these days, even Thanksgiving dinner. A recent analysis showed that a turkey, mashed potatoes, gravy, green beans, pumpkin pie and beverages for a family of four now costs $203.95, up 12 per cent from last year. In August, food inflation hit 10.8 per cent, the fastest increase in grocery prices since 1981. The situation is so bad that Canada’s largest grocery chain is now freezing prices on all its store-brand products for the next three months.
High gasoline, diesel and natural gas prices are making matters much worse. This is bad news for all Canadians, particularly Albertans. About 60 per cent of Canadians rely on natural gas for heat, but here in Alberta most of our electricity and virtually all of our home heating is provided by natural gas. Energy analysts are currently predicting a spike of 50 to 100 per cent in heating and electric bills this winter, possibly higher in Alberta.
All of these higher prices leave families with less money in their pockets for discretionary spending, and will certainly force some into choosing between food and heat. In fact, a recent poll shows that 66 per cent of respondents reported being personally impacted by recent inflation, with a similar number actively reducing spending.
Unfortunately, there is another basic need that is about to get more expensive in the coming months: Shelter. The Bank of Canada recently raised interest rates to 3.25 per cent (up from 0.25 per cent in January), with some experts expecting rates of 4 per cent by the end of 2022. For most families, this means rapidly rising mortgage payments. For those looking to purchase a home, high rates means it is less likely they will be approved for mortgage, and if they are approved it will only be for a smaller amount.
Canada’s biggest banks are now predicting a collapse in housing prices of 20-25 per cent. The damage should be less in Alberta and Saskatchewan, but could be worse in Ontario and British Columbia. The largest investment most families make is in their home. Any significant collapse in housing prices is bad news for our economy, which is increasingly driven by consumer spending. It’s also terrible news for municipalities, which are reliant on property taxes for revenue, as well as our food banks and other charities, which are already stretched to the limit.
There is no question in my mind that finding solutions to these challenges will be the defining issue of the next federal election, as well as the provincial election in 2023.
As I have written previously, this is no time for massive new government spending programs. Dumping money on inflation is like dumping gasoline on a fire.
It is also a bad time for what former Prime Minister Stephen Harper called, “risky economic experiments.” Governments should be focussed on proven alternatives for reducing costs for families, not on carbon tax hikes, corporate welfare schemes, or ideologically driven meddling in the economy.
The fact is folks are stretching to make ends meet. That’s hard enough. In times like these we don’t need governments moving the ends.