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Kim G C Moody’s Musings – 1-1-1 Newsletter For April 30, 2025
One Comment About Taxation – What Do I Think About the Canadian Election Results?
Well, I think it’s fair to say most partisan Canadians – and their political parties – were not thrilled by the results of yesterday’s federal election.
The surging Liberals did not get their majority, even in light of presenting an agenda – with a new shiny face that was not Trudeau – that stoked fear amongst a supposed “national crisis”. As the number of seats are still being finalized, it’s obvious they will need to find dance partners.
The Conservatives’ fortunes turned quickly from being the front-runner to 2nd place despite massive improvements in the numbers of votes.
The NDP were devastated and lost official party status by running an incompetent and incoherent campaign. The Liberals cannibalized their vote. Notwithstanding, depending on the final seat count, they may end up being a dance partner for the Liberals.
The Bloc also lost votes to Liberal cannibalization. But they, like the NDP, could be a dance partner with the Liberals as well.
And the Green Party, well, their fortunes were cut in half losing one of their two previous seats.
Despite some loud partisan Liberals who are cheering that the victory sends a signal to the world that Mr. Carney has a strong mandate and will lead Canada out of its current mess, I think most reasonable Canadians don’t believe that. Canadians are obviously very divided. A simple look at the vote count reveals that: roughly 43.5% of Canadians voted for a Liberal candidate whereas 41.5% voted Conservative.
The Liberals’ playbook to stoke fear was obvious and proved to be a political winner. Call the Trump chaos a “national crisis” or the “biggest crisis of our lifetime” to get people motivated to vote for the saviour. There are a lot of historical examples around this simple playbook. Unfortunately, it continues to be a winner with shallow policies that surround that simplicity.
So, with the wounds still fresh, here are my early observations.
First, will Mr. Carney be able to make sweeping changes to Canada’s economic relationships so as to “decouple” our relationship with the United States? As Mr. Carney stated during the campaign: “Our old relationship with the United States, a relationship based on steadily increasing integration, is over. The system of open global trade anchored by the United States… is over.” Not a chance. Such a massive change would take a lengthy period of time accompanied by a great deal of pain that would be felt by all Canadians.
While a diversification of markets has long been necessary, it won’t happen overnight and if it’s even possible would take decades. The short-term plan and priority should be to ensure the Trump tariff chaos can be tempered.
Second, regardless of the Trump chaos, our country’s recent economic performance by virtually any measure has been stagnant. Should Mr. Carney carry out his “plan” that was presented during the campaign, it will lead to significant new government intervention and massive inflationary spending with little positive impact. And with the continued attacks on our precious and important energy industry, such a vital industry will not be able to contribute more to energy stability and important economic upticks. This is not a recipe for recovery—it’s a continuing eviction notice for Canada’s wealth creators. Expect more entrepreneurs and capital to flee.
Third, our country can expect shallow taxation policies to continue as the norm. Our income tax statute is filled with political tax gimmicks that need to disappear. A great example of that is the recently added prohibition of expense deductions if you happen to be an evil owner / operator of a short-term rental property that is operating in a jurisdiction where the municipality prohibits such operation. This prohibition is non-sensical and dangerous especially when you understand that drug dealers who wish to be tax compliant (which, of course, the vast majority are not) are able to deduct their expenses to earn such illegal income. This puts short-term rental owners in a worse-off position than criminals from a tax and public policy perspective. This is nonsensical.
From a personal perspective, the Liberal win hurts. Canada needs significant tax reform and “big bang” ideas to get our country back on track. The Conservatives had promised to convene a tax reform task force within 60 days of getting elected so as to carry out that necessary exercise. Unfortunately, the Liberals historically have shown zero interest in positive tax reform other than carrying on with their political tax objectives.
The election campaign provided further evidence of that since none of their tax policy promises displayed any “big ideas”. Most of their tax promises were copy-cat ideas from the Conservatives (personal tax cut for the bottom income bracket, elimination of GST on new homes, elimination of the capital gains proposals, removal of the consumer carbon tax) with zero new big ideas other than one very silly idea to resurrect a 1970s tax shelter in an attempt to incentivize housing construction. Good grief.
Given the above, tax reform will remain a fantasy until the Liberals discover a poll that its voter base suddenly cares about fiscal sanity and sound taxation policies. Wait, I think I just saw a unicorn cross the street…
Overall, Canada has significant work to do to unite. Is this Liberal government the one to do that? No. With fear stoking, no plan for economic sanity, and no plan for tax reform, it is likely the day for Canadians to unite is a ways off yet. The Liberal Party minority win is an example of incoherence bound together by temporary issues. When those temporary issues disappear or diminish, the lack of a plan to get our country back firing on all cylinders will be greatly exposed.
In the meantime, buckle up Canada. The ride is certainly not going to be turbulence-free.
One Comment About Leadership – Leaders, It’s a Lonely Journey
If you’ve been a leader for a while, you’ll know that it’s a very lonely journey. If you’re just starting your journey and haven’t figured this out yet, well, brace yourself. It’s definitely a lonely experience.
Why? Well, everyone looks to you for answers. Direction. Vision. Raises. It’s all on your shoulders. And even though you may have a great support team, the buck stops with you. If you’re dealing with an unusually hard issue, it may be challenging to find peers in your organization who have gone through something similar.
So what’s the solution? For me, it’s been being involved in peer-to-peer support groups. I’ve been a member of Strategic Coach for going on 28 years. My leadership journey changed completely when I joined that group. I “grew up” as a leader and entrepreneur but more importantly as a person (including being a better husband, father, brother and son). My learning grew tremendously and I became comfortable being vulnerable and asking my peers if they had experienced something similar. I crave my quarterly meetings.
Today, besides being a member of Strategic Coach, I also am a Chair of two groups for MacKay CEO Forums – a very worthy competitor of Strategic Coach. My first group is almost full and my second group has more spots available. If you’re keen to not be lonely anymore, feel free to reach out to me (if you’re in the Calgary, AB region) but more importantly, just find a peer group that works for you. Having said that, there is an important caveat: a peer group that “works for you” doesn’t mean a group that is full of people who simply agree with you. Instead, you need a group that will challenge your “status quo” (whatever that might be), your thinking, your vision, your goals and your plans. There is nothing worse than being in an echo chamber. Your learnings and progress will be almost non-existent.
So, leaders, there is no need to be lonely anymore. Go find a peer group that will challenge you and that you will crave to be around. The relationships and learnings will last a lifetime.
One Comment About Economics – A Reminder About Debt Charges
In order to fund its deficit-fueled spending, the government of Canada has been accumulating and adding debt. That means its public debt charges will inevitably increase as well. Especially during periods of increased interest rates.
For the 2023-2024 fiscal year, the government of Canada incurred $47.273 billion in public debt charges. That was an increase of roughly $12.3 billion from the previous fiscal year. The 2024 Federal Budget estimated the public debt charges would increase as follows for future years (all in billions of dollars):
2024–25 – $54.1
2025–26 – $54.9
2026–27 – $57.0
2027–28 – $60.9
2028–29 – $64.3
Such increases are dramatic. However, the Liberal Party costing platform is estimating further increases from the above estimates of another $5.6 billion over the next four years.
So, let’s put all of this in perspective. Is $60 billion of public debt charges a lot of money? Well, some economists will spend hours talking to you about comparative debt / charges with many countries around the world to make it sound like it’s not a lot of money. While such comparisons are certainly interesting, I don’t find that to be all that useful of a comparison. In particular, it doesn’t tell me what Canadians are foregoing as a result of the incurrence of such debt charges.
For example, for the 2023-24 fiscal year, the government of Canada collected about $459 billion in revenues from taxpayers. Almost half of that amount – $217.7 billion – was from personal taxation receipts. The GST accounted for $51.4 billion. Corporate tax was $82.5 billion. In other words, our country is spending almost 13% of its entire amount collected on public debt charges. Or almost 73% of the entire corporate tax collected. Or 117% of the entire GST collected!
Some more comparisons. For the fiscal year 2023-24, the federal government transferred $51.42 billion to the provinces for health care under the “Canada Health Transfer Payments” regime. Again, public debt charges exceed that amount.
The public debt charges are paid to a variety of domestic debt holders and some foreign investors. Do such debt charges have any direct benefit to Canada as a whole? Nope. Not at all.
So the next time you think about any of our governments – but especially the federal government – taking on more deficit-fueled spending, think about the public debt charges and how useful those monies might actually be if they were available to invest in better infrastructure, improved government services, pension enhancements, etc.
Instead, these out-of-control charges remain a threat to our country’s standard of living. Public debt charges are silent tax hikes — draining resources without delivering a single new hospital bed, bridge, or pension enhancement.
Bonus Comment – Quote From a Variety of Sources About the Importance of Leaders Learning From Their Peers
“If you’re the smartest person in the room, you’re in the wrong room. Good leaders surround themselves with peers who challenge, sharpen, and remind them they’re not alone. Isolation rots leadership; iron sharpens iron.”
Absolutely agree! Leaders, get in the right room!
Absolutely agree! Leaders, get healthy and stay healthy!
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