Three things Canadians should know about Carney’s new GST credit

Prime Minister Mark Carney’s new multibillion-dollar top-up to the GST credit to help low-income Canadians afford food and essentials is definitely progress.

By using the existing system to target the sector of the population that needs the most help in making ends meet, the measure is more efficient and fairer than other tax measures that tend to show upon the menu.

But let’s get a few things clear.

Second, the credit is not going to do anything to drive food prices down. Conservative Leader Pierre Poilievre is right about that. Food prices are high in most developed countries these days, but especially high in Canada — for many reasons, including weather, currency and supply chain glitches.

Rather, there’s a separate collection of new funds for the “root causes” — money to address supply chain disruptions, encourage the construction of new greenhouses, produce food close to home and help the Competition Bureau ensure there’s less bad behaviour.

And third, it’s dripping with politics, as you’d expect in a minority government. While the new benefit can be spent on anything at all, the Conservatives and the NDP alike have hammered the Liberals non-stop on food prices. And so that’s the framing — putting the opposition on the spot.

But it is progress all the same, mainly because it’s a concrete acknowledgment of the bread-and-butter hardships that a growing percentage of the Canadian population is feeling — a policy-oriented recognition that was scarce in the federal budget and what has been hard to hear in Carney’s response to the chaos that is U.S. President Donald Trump.

To be clear, there’s no expectation that Carney be warm and fuzzy. The closest he got to public emoting was the hug he gave to the Bonhomme Carnaval last week in Quebec City. He is a charts-and-graphs fan who writes his own literary references into his speeches.

(Indeed, at his news conference on Monday, he spontaneously used his hands to make a graph to explain that the total cost of the tax rebate measure was the delta between the change in overall inflation and the change in food inflation since the end of the pandemic.)

But the charts and graphs from pollsters have continually shown that Canadians are just as concerned about job security, economic stability and making ends meet as they are about Trump.

They’re related, of course. But Carney has not really connected the dots very well until now. His focus has been institutional investors, big business, and foreign leaders.

Central in the Carney government’s first budget in November was a plan to use federal tools and its balance sheet to drive $1 trillion in capital investment in Canadian infrastructure over the course of five years.

He has been aggressive on committing to defence spending, and aggressive on diversifying Canadian trade away from the United States.

And as we all know, he has won praise around the world for vowing to build networks of middle powers — a “third way” to navigate through the antagonism that the United States and China bring to international relations.

With the enhanced GST credit, now branded the Canada Groceries and Essentials Benefit, the Carney government signals it knows it can’t get from here to there without ensuring Canadians at all levels of wealth and income are in solid shape.

“The world is knocking at our door, and momentum is building. But as the Minister of Finance just said, the biggest payoffs will take time,” Carney said on Monday with Finance Minister Francois-Philippe Champagne at his side. “And many Canadians are feeling the pressures right now of everyday expenses. Canadians need a boost today and a bridge to tomorrow.”

Yes, they do. Statistics Canada reports that poverty has been creeping up, the ability to make ends meet has declined and wealth inequality was on the rise last year. Those are not the ingredients Canada needs to attract growth and investment, let alone maintain a decent quality of life.

To lock in the benefits of the new measures, Canadians and government both need to build on the progressive measure taken this week.

Canadians need to make sure they file their taxes — even if they haven’t done so in the past, and even if they aren’t paying any tax on a regular basis. This will ensure they’re in the system to receive the federal payouts.

And governments need to figure out the next step in taking on poverty, inequality and paycheques that don’t cover the bills.

As Carney well knows, the tax equivalent of a warm, fuzzy hug with Bonhomme only goes so far.