MP Sorenson: New Year, New Beginning?

Economic outlook not so bright in coming months

By Kevin Sorenson, MP.

Battle River – Crowfoot

Happy 2019! New year, a new beginning? I don’t think so. We need real changes before we can have a new beginning. A complete transformation with such things as sound fiscal management, stemming the tide of illegal immigrants, the building of pipelines, getting our oil onto distance shores, and stopping the theatrics of Liberal Prime Minister Justin Trudeau. Our new year can only really begin if an Andrew Scheer led Conservative Party is fortunate to win the support of a majority of Canadians come this October.

For the next ten months, my Conservative colleagues and I will be working hard to earn the backing of Canadians by outlining our positive vision for this country and proposing policies that put the interests of Canadians first. It goes without saying that we will begin by promising to get back to balanced budgets out of respect for our children and grandchildren and because it is the fiscally responsible thing to do. The economy of this country and the financial security of Canadians will be at the heart of our campaign.

READ MORE: A new and potentially dangerous era is dawning: MP Sorenson

On Jan. 10, the Bank of Canada Governor, Stephen Poloz, held interest rates at 1.75 per cent due to concerns that our economic outlook will not be so bright in the coming months. The slow down is reportedly coming fast and is primarily the result of lower oil prices, weaker housing activity and the U.S.-China trade clash.

The price of crude is 25 per cent lower than the Bank predicted it would be back in October. This significant drop in oil prices is negatively affecting business investment and the value of Canadian exports. Governor Poloz predicts the recent oil-price slump will take 0.5 percent of the level of Gross Domestic Product (GDP) by the end of 2020 and result in a 12 per cent decrease in investment in Canada’s oil and gas sector. In 2014, investment in this sector accounted for 30 per cent of all business investment in Canada. Today, it is at 15 per cent.

Also, on January 10th, the Bank released its first 2019 quarterly forecast which showed a sharp decline in the predicted GDP growth. Originally forecasted to grow 2.1 per cent, the Bank of Canada now predicts economic growth of only 1.7 per cent this year which is below the 2018 pace of 2 per cent.

The Liberals have long defended running deficits of $18 billion over the last three years (remember in the 2015 Federal Election, they promised “modest” deficits of $10 billion) by repeatedly promising to keep our debt-to-GDP ratio on a downward track. This ratio, calculated by dividing the total federal debt by the size of the economy, is a determination of whether a country is taking on too much debt – a debt it will be unable to pay. An unexpected slowdown in the economy, such as the one we are now predicted to face, can result in a sharply higher debt-to-GDP ratio. As Conservatives have long argued, the best way to keep this ratio on a downward track and not be caught off guard is to continually limit Government spending and to balance the budget. Liberals obviously disagree.

READ MORE: Bailout or buy out? You decide, says MP Sorenson

Hopefully, this disagreement or significant difference in fiscal management will result in a new Federal Government in 2019; a government that respects taxpayers’ dollars and will get our finances back under control so we can weather the predictable storms that are always on the horizon.

If you have any questions or concerns regarding this or previous columns you may write me at 4945-50th Street, Camrose, Alberta, T4V 1P9, call 780-608-4600, toll-free 1-800-665-4358, fax 780-608-4603 or e-mail Kevin.Sorenson.c1@parl.gc.ca.

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