Observers on both the left and the right instantly pilloried the new partnership. Commentators on the right want market forces to do their work so that condo prices fall, while those on the left see justice in letting greedy developers eat dirt. Opposition leader Pierre Poilievre called for the House ethics committee to investigate this “condo bailout.” One wonders why the two governments didn’t wait until they had something more concrete to offer the public.

Subsequent remarks to the media clarified that this is primarily a BC government initiative to purchase condos that would go into a new rent-to-own program. Each of the BC and federal governments will put up $150 million in cash. Another $1.15 billion is notionally allocated for financing or loans though how this breaks down between BC and the feds is not clear. BC Premier David Eby wants to buy units below the cost of construction, while BC Housing minister Christine Boyle emphasized that the government intends to “negotiate a good price” by buying in bulk. That’s about all we know at this point. 

The Partnership on Condo Conversion is clearly a bailout—in the sense that it would help the balance sheets of distressed developers, put a floor on condo pricing and prevent losses in the banking system. On the other hand, Metro Vancouver is lacking genuinely affordable housing for ordinary working people and if there’s an opportunity to use the current moment to improve that situation, we should at least consider it. Obviously, paying $1 million for a vacant one-bedroom is a non-starter, but arguably, there is a price point where buying housing assets in bulk could make sense. The difficulty is the great divergence between home prices and incomes that has occurred over the past couple of decades. 

Let’s review the details on the inventory of unsold condos and crunch a few numbers based on what we know about incomes and affordability. While the BC government could thread the needle on this program, much depends on price, which units are acquired and for whom. A better option for the province would be to restore the similar amount of funding for non-profit housing that was abruptly cancelled in February’s BC budget.

Absorb this 

As of May 2026, CMHC reports that there were 5,849 “completed and unabsorbed apartments” (i.e. new empty condos) across BC, of which 4,376 units were in Metro Vancouver. Within Metro Vancouver the distribution of unsold condos is concentrated in four cities: Burnaby (1,179 units, 27 per cent of the total), Richmond (961 units, 22 per cent), Coquitlam (602 units, 14 per cent) and Vancouver (457 units, 10 per cent). Premier Eby also remarked that condos in the City of Vancouver were too expensive so the focus will be on the inner suburbs in Metro Vancouver. Politics may tempt the government to extend purchases to other parts of the province.

With a headline number of 2,200 units, the proposed BC-federal condo bailout thus represents about half of the unsold Metro Vancouver inventory. As the figure below shows, the number of unabsorbed units shot up dramatically over the past couple years to new all-time highs. In May 2024, there were only 1,262 “unabsorbed” units in Metro Vancouver. 

In light of the currently weak housing ownership market overall, this situation is going to continue. As developers complete new projects, their empty units add to the total number of unabsorbed. As of May, there were about 30,000 condo apartments under construction. The majority of these would have already been pre-sold but if 15 to 20 per cent remain unsold, then some 4,500 to 6,000 units could be added to the glut of new condos within a couple years. 

Thus far, developers with unsold units have been holding out from major price cuts, hoping for a housing market rebound that has yet to materialize. Interest rate cuts they anticipated in 2026, which would have boosted home sales, have been waylaid by the surge in inflation arising from the U.S. war on Iran. For developers, unsold inventory has the carrying costs of property taxes and interest on financing. At some point, they will have to lower prices so that empty units move. Policy makers are also concerned that new housing starts will plummet, affecting construction employment, although this has yet to happen as most new apartment projects are rental not condo projects.

According to the CMHC data, more than one-third (35 per cent) of the unabsorbed units across Metro Vancouver were listed above $1 million, rising to 58 per cent with asking prices above $800,000. Another third (34 per cent) are listed between $600,000 and $800,000, while only eight per cent are below $600,000. The data do not tell us the numbers of studios, one- and two or more bedroom units, their size, nor do we know the price per square foot. 

Afford this

The gap between current price points and anything remotely “affordable” is quite large. In 2024 Vancouver, median total income for individuals was $47,000. For economic families, median total income in 2024 was $135,400. Families, of course, necessarily need more space so smaller units are not going to be of interest.

A common threshold of affordability is for households to spend less than 30 per cent of gross (pre-tax) income on housing. The table shows some stylized scenarios of how different condo prices translate into associated monthly mortgage, strata fees and property taxes. Then it calculates the minimum income required, with housing costs set at 30 per cent of gross income. The bigger the discount the government can negotiate with developers, the further down the income ladder the program could reach.  

With a purported budget of $1.45 billion, buying 2,200 units would average almost $660,000 per unit. At that average price, the bailout smell of the program would be too hard to ignore. Much depends on how much a haircut developers are willing to take for a guaranteed price in the short term versus the costs and risks of holding out for a better price.

At heart, the proposed rent-to-own program is just another first-time homebuyer program. That is not necessarily a bad thing, but we have also seen many iterations of first time buyer programs from both the feds and BC governments. Over the past decade there have been a plethora of tax incentives and exemptions, savings accounts, shared equity mortgages, and most recently, a no GST for new builds, for first-time buyers. 

The core idea is the same: rather than cooling the housing market, these programs assist a narrow range of households to get into the home ownership market. In doing so, this inevitably props up real estate prices. 

To narrow down the field, the government would need to impose some criteria on who is eligible to buy these units, and terms about any future resale, so that these units themselves don’t become another speculative investment. The devil is in the details of any such program and careful design considerations would be needed.

Notably, two first-time buyer programs had similarly challenging financing and eligibility requirements as would the proposed rent-to-own program, and both have been shelved. The federal First-Time Home Buyer Incentive shared-equity mortgage, which began in 2019, offered to take on between five and 10 per cent of a mortgage, was ended in 2024. The 2017 BC HOME partnership program provided a provincial loan matching the buyer’s down payment up to a total of five per cent, and was wound down a couple years later. 

While the BC government could walk this knife edge, there’s good reason to be skeptical. Even if the government can step in as a middleman to buy supply in bulk, on the distribution side at best we have 2,200 lucky households that would be winners. All for a program that has enormous potential pitfalls structurally and politically. 

Just fund non-market housing 

The mess before us is largely the result of a failed investor-driven model of housing development, which relied on presales to investors and rising prices each year, juiced by a period of ultra low interest rates. In capitalist economies, euphoria often leads to over investment and a crash. This is BC’s turn for a correction. 

If anything, the BC government should lean into those market forces. Currently, unsold inventory is exempted from BC’s Speculation and VacancyTax, which was brought in seven years ago specifically to address a perceived problem of empty condos. Exemptions could expire after one year, for example, and the rate on domestic owners (0.5 per cent of assessed value) could be raised in line with the higher rate for foreign owners (two per cent). Others have noted that additional public resources for the legal system to accelerate foreclosures and court-ordered sales would also speed up price declines.

Some commentators have accused the left of shadenfreude in regards to the liquidity and solvency squeeze being felt by developers. In reality, housing advocates have been arguing for decades that federal and provincial governments need to get seriously back in the game of developing new non-market housing. This includes cooperatives and other non-profit rental housing, which was widely supported from the 1960s to early 1990s, and still comprises a lot of the existing affordable housing stock. 

The huge tragedy in all of this is that the newly announced condo bailout is the same size as the cut to non-profit housing made just a few months earlier in the BC Budget. BC had been slowly making progress in funding new non-market housing through its Community Housing Fund, which was created in 2018. Jill Atkey of the BC Non Profit Housing Association sums up the moment and comments: 

Last year, non-profit housing providers responded in good faith to calls for proposals under key provincial housing programs. 89 projects were submitted under the 2025 Community Housing Fund, totaling roughly 7,700 homes and at least $38 million in pre-development costs. Zero projects were awarded and the call was cancelled. The deferral of Indigenous Housing Fund projects that were awarded in 2024 adds significantly to that total. This is to mention nothing about years of lost momentum toward delivering desperately needed affordable homes.

The most sensible thing to do is to drop the condo bailout, and redirect those funds back into the non-market Community Housing Fund while letting the private condo market find its own equilibrium. If the BC government is to intervene in the condo mess, it should be refocused around increasing the supply of non-market housing rather than trying to midwife home ownership. Even clarifying who this intervention is intended to help would put some parameters on the price point, unit size and locations. 

Another possibility is expanding BC’s Rental Protection Fund, which was created a couple of years ago with $500 million for non-profits to acquire private market rentals. In this case, purchased condo units would go into a pool of non-market housing (whether managed by BC Housing or non-profits). This would make the most sense for buying entire buildings, where there’s integrated management and cleaning and so forth, rather than buying only the 20 to 30 per cent of units in a building that might be unsold. Again, much depends on what is available at what price, and purchased could be justified based on the future rental income.

Federal and BC officials should have known better than to drop this half-baked trial balloon. It was a rare political mis-step for Prime Minister Carney and I suspect it was just part of the bigger negotiation for BC to agree to a new bitumen pipeline from Alberta to the West Coast. At this point, it would probably be easiest politically to just walk away and drop the condo bailout, er, partnership. And come better prepared next time.

The post The Vancouver condo bailout props up a failed housing model  appeared first on CCPA.

Since the first modules were launched in 1998, the ISS has served as a permanently inhabited orbital laboratory, advancing scientific knowledge while demonstrating unprecedented international cooperation in space.

After nearly three decades of operation, however, structural aging, material degradation, escalating maintenance costs, and operational limitations have prompted the international partner agencies, including Canada, to plan its controlled deorbit during the early 2030s.

Current plans call for a controlled atmospheric re-entry that will direct the station’s remaining debris into the South Pacific Ocean near Point Nemo, the world’s largest designated spacecraft disposal area.

From an engineering perspective, this approach is understandable. It minimizes the risk of an uncontrolled re-entry over populated regions and is widely regarded as the safest available method for protecting human life and infrastructure. Consequently, discussions surrounding the ISS’s retirement have largely focused on orbital mechanics, engineering feasibility, and operational safety.

Yet this technical framing conceals a broader ethical question. Controlled deorbiting does not eliminate environmental risks; it redistributes them. Rather than removing the environmental consequences of disposing of a 400-tonne orbital structure, it transfers those consequences to one of Earth’s most remote marine environments.

Although Point Nemo is geographically isolated, it remains part of the global ocean—a shared ecological commons whose capacity to absorb repeated spacecraft disposal remains poorly understood. The ethical significance of the ISS deorbit therefore lies not simply in how the station is retired, but in what this decision reveals about humanity’s approach to managing technological waste across interconnected planetary environments.

This issue extends well beyond the fate of a single space station. The ISS is unlikely to be the last large orbital structure requiring retirement. Governments and private companies are already developing commercial space stations, orbital manufacturing facilities, data centres, and other long-term infrastructures in Earth orbit.

Decisions made today are likely to establish precedents for how future generations manage the end-of-life of increasingly large technological systems in space. What appears to be a single engineering decision may ultimately become the default model for disposing of orbital megastructures throughout the 21^st century.

The proposed disposal strategy exemplifies a process of moral distancing—the tendency to regard environmental harms as more acceptable when they occur in geographically remote locations that receive little political attention or public scrutiny.

Point Nemo has become the world’s spacecraft cemetery not because it lacks ecological value, but because its remoteness creates the perception that environmental consequences occurring there are ethically insignificant. Such reasoning reflects a broader pattern in environmental governance, whereby environmental burdens become politically acceptable once they are displaced beyond the immediate visibility of those who benefit from the activities producing them.

Viewed in this way, the retirement of the ISS is not merely an engineering challenge but a test of planetary governance. Geographic isolation should not be mistaken for ethical neutrality. The absence of nearby human populations neither diminishes the ecological significance of remote marine ecosystems nor relieves humanity of its responsibility to protect them.

Existing space governance frameworks emphasize operational safety and legal compliance but provide relatively little guidance regarding the environmentally responsible retirement of large orbital infrastructures. As a result, engineering efficiency and cost-effectiveness have often taken precedence over broader considerations of environmental stewardship, ecological justice, and intergenerational responsibility.

Rather than asking only whether controlled deorbiting complies with existing legal obligations or minimizes immediate risks, virtue ethics asks what this decision reveals about the character of a spacefaring civilization.

The virtue of prudence supports preventing an uncontrolled re-entry that could threaten human life. However, genuine prudence requires consideration of long-term ecological consequences, not merely the management of immediate operational hazards.

Likewise, the virtue of justice requires that environmental burdens be distributed fairly rather than shifted to remote ecosystems simply because they lack political visibility. A civilization committed to responsible stewardship should not equate remoteness with moral permissibility.

The ISS illustrates this expanding technological presence. Its final trajectory will link low Earth orbit, atmospheric re-entry, and the Pacific Ocean in a single technological process, demonstrating that modern environmental impacts increasingly transcend conventional ecological and political boundaries.

This interconnectedness exposes an important weakness in existing governance systems. International law generally regulates outer space, the atmosphere, and the oceans through separate legal regimes and institutions. Yet the retirement of the ISS shows that these domains are inseparable. A spacecraft constructed in orbit ultimately becomes an atmospheric and marine environmental issue. As technological systems become increasingly interconnected, governance must also evolve toward integrated models of planetary stewardship capable of evaluating cumulative impacts across multiple environmental domains.

Recognizing this ethical gap does not require rejecting controlled deorbiting outright. Rather, it requires acknowledging that alternatives deserve more serious consideration before ocean disposal becomes the default solution for future space infrastructure.

One possibility is on-orbit disassembly, in which astronauts or robotic systems dismantle large structures module by module. Individual components could then be safely deorbited, repurposed, or incorporated into future missions. Such an approach would reduce the concentration of debris entering the atmosphere while developing technologies that will be essential for servicing future commercial stations and deep-space habitats.

A second alternative is orbital recycling and manufacturing. Instead of treating the ISS as waste, its structural materials could become valuable feedstock for in-space construction, supporting an emerging circular space economy and reducing dependence on launches from Earth.

Other proposals include repurposing portions of the station for commercial research or education, preserving elements of the ISS as an orbital heritage site, or delaying deorbit until autonomous robotic servicing technologies become sufficiently advanced to enable safer dismantling and reuse. Although each option presents technical and economic challenges, collectively they demonstrate that ocean disposal is not the only conceivable end-of-life strategy.

Equally important are institutional alternatives. Before disposing of globally significant orbital infrastructure, the international community could require comprehensive environmental impact assessments, independent ethical review, transparent public consultation, and evaluation of multiple disposal scenarios.

The planned retirement of the ISS represents far more than the end of a remarkable engineering project. It is a defining moment in humanity’s evolving relationship with the environments it increasingly inhabits, transforms, and ultimately leaves behind.

The debate over Point Nemo is not simply about where the ISS should fall. It is about the kind of planetary governance humanity wishes to cultivate. If remote environments continue to serve as repositories for technological waste because they are politically invisible, moral distancing risks becoming institutionalized as a principle of environmental management. By contrast, adopting governance grounded in prudence, justice, stewardship, and intergenerational responsibility would establish a more sustainable ethical foundation for future space exploration. The retirement of the ISS should therefore be understood not as the conclusion of one historic mission, but as the beginning of a broader conversation about how a spacefaring civilization ought to manage its technological legacy across the shared environments of Earth and beyond.

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No need to worry, Minister Evan Solomon is telling Canadian workers. Canada’s AI for All policy assures us that the build-out of AI “will be powered by workers” and “over 250,000 new AI-relevant jobs will be created across the Canadian economy by 2031.” 

Almost no one believes that. In May, an Angus Reid survey of white collar, blue collar and retired Canadians, found that only three per cent believed that AI will significantly increase jobs. A 45 per cent plurality of those surveyed expected a significant loss of jobs. 

Not even the proponents of big data centres are claiming that the AI build out will result in significant new direct employment. The Bell AI Fabric proposal for an AI data centre in Sherwood, Saskatchewan, claims it will be the largest AI facility in Canada. But it isn’t trying to promote the project based on its underwhelming employment projections: 800 temporary construction jobs and 80 ongoing operational jobs, plus several hundred unspecified indirect jobs in the community. The somewhat smaller Telus AI proposal for two data centres in Vancouver, and an expansion of an existing facility in Kamloops, likewise touts more than 1,000 construction jobs and “hundreds” of permanent operating jobs. 

Of course, there is a fundamental reason for the dissonance between Solomon’s optimistic projections and everyone else. The purpose of AI technology is to increase productivity by aggregating knowledge, performing unprecedented large-scale data tasks, and greatly increasing labour productivity. That can mean a larger economy in the long run, but also less workers when AI is deployed in a workplace or industry.

Impacts on the labour market so far

There have not yet been large-scale job losses in Canada resulting from AI. In 2024, six per cent of Canadian firms that have implemented AI reduced employment as a consequence. By mid 2025, the number of AI adopting firms that expect job losses had jumped to 12 per cent. These are still relatively small numbers, but so too is the take-up of AI systems by Canadian businesses—less than 15 per cent of all businesses in 2025.

However, a KPMG survey of Canada’s biggest corporations reports a whopping 93 percent have begun investing in and implementing AI. They are just getting started, though; only 31 percent of those companies have fully embedded generative AI into their operations, and 98 percent have not yet had net returns from their AI investments. That will change as business moves to “agentic AI” that operates independently and drives “operational efficiency.”

At least one outlier report predicts much larger consequences. The Signal 49 report (formerly the Conference Board of Canada) estimated in January 2026 that AI automation could leave employment as much as 555,000 jobs below what it otherwise would have been by 2030, with a sustained recovery taking almost a decade before the productivity gains of AI eventually exceed projections without the AI build-out. To put that in perspective, Canada lost about 425,000 jobs in 2008-2009 after the financial crisis. A BNN Bloomberg story on the government’s response to the Signal report was not reassuring: “In a technical briefing with reporters …, government officials said they don’t contest or agree with the Conference Board of Canada report but will monitor the impacts of potential displacements.”

Signal 49 also projected that the impact of AI will be felt across the economy. Although the services and sales sector is the least AI exposed, it is the largest employment sector still affecting large numbers of workers. Other employment sectors like applied sciences, manufacturing, trades, transport, equipment operators, and agriculture are more AI exposed. Health care, education, business and finance land in the middle. The result is that the broad sweep of the Canadian working class will have a common struggle for job security and just transitions.

Is the Signal report overstated? Maybe. In his new book, The Reverse Centaur’s Guide to Life After AI, Canadian writer and pro-labour technology analyst Cory Doctorow situates the fight over AI in the workplace and over who controls its use. He argues against inevitable consequences. Don’t fight AI, he advises, “fight the boss.” 

Doctorow contends that AI companies and corporations deliberately exaggerate AI’s ability to displace workers to attract the large investments needed to fuel the AI build-out. The gargantuan investments by AI companies require continuous waves of new investments, and that means convincing Wall Street investors that AI will “replace vast swathes of the wage-earning human workforce.”

A growing consensus is that the largest economic threat that AI poses is the popping of the investment bubble currently driving the U.S. economy. “When the AI bubble pops, it will cause a recession and major job losses in the U.S.. Overheated capital spending on data centres and power plants, and excessive luxury consumption by those who’ve been made rich (on paper) by the speculative flight of the market, will quickly shift into reverse. That downturn will spill over into Canada,” Centre for Future Work Director Jim Stanford warns. 

Legislation and collective agreements

Regardless of the actual extent of AI worker displacement and net employment effects, AI has opened a new frontier for worker rights. The 2026 Canadian Labour Congress convention resolution on AI revealed the breadth of issues facing workers and their unions, and the extent of work to be done. The composite resolution, combining seven separate resolutions, called for establishing a CLC committee to review bargaining and arbitrations on AI, developing an AI policy to protect jobs, and addressing a litany of concerns ranging from training and transparency to fair compensation, surveillance and algorithmic management, human rights protections, regulatory oversight, and liability for technology companies. 

Unions are already having to put AI on the bargaining table. In telecommunications, despite collective agreement language to prevent layoffs resulting from technological change, Telus has cut 11,000 Canadian jobs and Bell about 8,000 since 2023. The telecoms will not attribute the job losses to technological change and instead point to changing customer service models and operational efficiencies. The telco unions know exactly what is going on. In the latest clerical agreement with Bell, Unifor negotiated a Joint Committee on Artificial Intelligence to review the introduction of AI in the workplace, and stronger technological change provisions. 

However the only practical response to a possible AI bomb dropping on Canadian workers in the short to medium term will be legislative. Canada’s three telecom unions—Unifor, USW and CUPE—told a parliamentary committee on AI regulation in June that a “comprehensive social dialogue” and a permanent sectoral working group to regulate the use of AI is needed.

In the case of the Canada Labour Code, reform is long overdue. Sections 51-55 of the code on technological change were written in 1973 and have not been substantially amended since. You can drive a fleet of Uber Teslas through the gaps that have arisen. The technological change provisions in Canadian labour law do not capture the scope of AI, and in any event merely oblige the employer to give notice, detail expected consequences and provide a rationale for the introduction of the new technology.

Some forms of AI in Canadian workplaces will meet even the very limited legal and collective agreement definitions of technological change. However, AI is more than a robot on an assembly line, or a new machine or accounting system that needs half as many workers. AI can potentially displace entire functions that employers deem unnecessary. The employer may claim that the new AI system is a new function never before carried out by the displaced workers. Not only workers, but whole departments and the managers they formerly reported to could be replaced. Of course these are all issues of bargaining and adjudication, but the scales of justice weigh heavily towards employers, and the absence of AI regulation or modern labour laws add many thumbs to the scale. 

For the majority of the working class which has no collective agreement coverage, and hence is protected only by employment standards legislation, there are no laws on technological change and only the beginnings of recognizing a new world of AI-driven work. 

Recent employment law changes in BC recognize a new category of AI driven “platform work” to ensure minimum wages and workers’ compensation coverage for platform workers, as well as pay transparency provisions to address algorithm-based pay. Ontario has enacted employment standards requiring disclosure if AI is used to screen, assess or select workers in hiring and employment matters, and its new Digital Platform Workers’ Rights Act requires minimum wage and pay transparency for platform workers. But the Ontario gig worker wage provisions are not real minimum wages, and the Ontario Act does not recognize platform workers as employees like the BC Act.

All these nascent regulations are new, incomplete and far from becoming national standards. At the federal level there are no worker rights laws or standards on AI. The AI for All strategy proposes no constraints or even monitoring of employment consequences, or any intention by the government to require disclosure, consultation, or negotiation regarding AI in the workplace. 

Those omissions are glaring when, only weeks before, the government’s consultation on the Canada Labour Code included the need for AI regulations as a question among a lengthy list of major issues from the right to strike to sectoral bargaining. However, all of that was compressed into a 30-day consultation, widely panned as insincere and a cover for the government’s intention to restrict strikes at ports, airlines and railroads.

The battles ahead

The AI invasion should be an urgent catalyst for labour to assemble an army to march on Ottawa and claim the influential role it deserves in AI regulation and labour law. It will need to be more than a polite lobby and come armed with extensive briefs and demands on behalf of all Canadian workers who are about to feel the invisible hand of a new and unregulated economic force.

But barring a startling political shift to slow and alter the AI trajectory, worker outcomes on AI are more likely to be settled piecemeal in multiple workplace, industrial and sectoral battlegrounds.

The seminal labour battle to date over AI is undoubtedly the lengthy and hard-fought strikes across the U.S. by the Writers Guild of America and the Screen Actors Guild in 2023. The WGA agreement that resulted makes AI a tool controlled by the worker—not a mandatory management technology. The agreement affirms that AI is not a writer and cannot do the work of a writer, nor can they force a writer to use AI. The SAG agreement requires consent and compensation for digital replications of actors, and consent for being photographed or scanned for that purpose. All performers, including background actors, must consent and be compensated for any digital replication and any future use of their replication, including after their death. 

The writers’ and actors’ strike underscored the power of solidarity to confront generational challenges before larger political and legislative norms are established. The terms of those agreements also tell us that AI is not just a new kind of technological change. The nature of work and the human integrity of workers are at issue.

It will take decades of collective bargaining and pivotal labour campaigns and strikes to determine the terms and conditions of AI in the Canadian world of work. This work begins with tech companies and employers far ahead. To catch up, labour must first imbue workers with a deep understanding of how AI affects their work and then forge a class-based bargaining strategy and political program for AI regulation and labour law reform.

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In an interview before his death in January 2026, David raised that question while reflecting on what he witnessed during the Kanehsatà:ke Resistance, the 1990 events which, outside the community, are typically referred to as the Oka Crisis. 

“They would never have done that to any other town in Canada. But they did that in Kanehsatà:ke, because for them we were uppity Indians who wanted recognition,” he said.

What David spoke about was not a distant event from the early days of colonisation. It happened 36 years ago, when Quebec’s provincial police and the Canadian army surrounded and attacked his community of Kanehsatà:ke, a Mohawk territory just northwest of Montreal.

Like many other Indigenous writers and scholars, David stressed that little has changed for Indigenous Peoples in Canada since the 1990 siege. They continue to fight for control over their land and resources, while governments have broken treaties and responded harshly when Indigenous communities stand up for their rights.

Still, the Kanehsatà:ke Resistance stands out in Canada’s recent history for its intensity and impact.

On 11 July 1990, as Sûreté du Québec (SQ) officers and the Mohawks defending their territory engaged in a gunfight, David was in another Indigenous community, about a four-hour drive from Kanehsatà:ke. When news of the clash reached him, he immediately returned home and spent the 78 days of siege behind the barricades with his people.

Beginning on July 11 and lasting until September 26, 1990, Kanehsatà:ke was the centre of a brutal standoff between Indigenous land defenders and government forces. One provincial police officer was killed, several people on both sides were injured, and Canada found itself at the centre of international attention.

By mid-August, about 4,000 soldiers supported with artillery, armoured vehicles, navy vessels, and the air force were stationed around Kanehsatà:ke and Kahnawà:ke, another Mohawk community just to the Southeast of Montreal. To put that in perspective, about 5,100 Canadian troops served in the Persian Gulf War that year, with no more than 2,700 deployed at one time.

The operation was so massive it used up the army’s entire national stockpile of barbed wire, according to historian Timothy C. Winegard.

Over three decades after the incident, Canadian officials still refer to it as the Oka Crisis, describing it as a dispute over the expansion of a golf course in the neighboring town of Oka. But to the Mohawks, it is the Kanehsatà:ke Resistance, a struggle rooted in centuries of defending their ancestral lands.

“A lot of people in Canada see that as an isolated incident, tied to one moment in history,” David said. “But this started long ago, right when the King of France began granting land to settlers.”

Centuries of struggle

On a warm and humid summer day, Wanda Gabriel pulls a folding chair from the back of her car, sets it down by the Ottawa River in Oka, and looks back 36 years. Back then, she was 30 years old, a high school dropout with four children. Today, Gabriel is an Adjunct Professor at McGill University.

Oka is a small town of about 4,000 people on the north shore of the Ottawa River. In summer, its beaches draw crowds from Montreal; in winter, people gather to ice fish on the frozen river, a practice with deep Indigenous roots.

Just west of Oka lies Kanehsatà:ke. Unlike most Indigenous reserves, Kanehsatà:ke is not one connected piece of land. Instead, as Gabriel explains, it is “a checkerboard of Indigenous and settler lands,” the result of divisions imposed by the Canadian government.

A golf course still stands there today. Next to it is the pine forest and the Indigenous burial place that the mayor of Oka once planned to destroy to expand the course and build condominiums. 

Gabriel remembers how, after the police raid on 11 July, people in the community told her there were no barricades on another road at the north end of the community leading into Kanehsatà:ke. So, with her 13-year-old daughter, she drove there in a van and blocked it. 

The first barricades, she recalls, went up in March of that year as Oka’s threat to the forest and cemetery grew. But, as both she and David stress, the fight over this land did not begin in 1990.

“When the King of France came to settle this land, he said, ‘Okay, we recognise there are Mohawks here, and we want the Sulpician seminary to protect the land.’ But the Sulpicians slowly sold off parcels of land to incoming settlers,” Gabriel says.

That process started in the mid 18^th century. Over time, as control of the territory shifted between the French and the British, the colonial powers grabbed more land from the Mohawks and forced out more families.

Explaining how the colonial regimes pushed Indigenous peoples out of their territory, David said: “The whole goal was to sell the land as profitably as possible, to get rid of the Indians as quickly as possible, and to bring in settlers wherever they might be coming from. 

Only here, despite their best efforts to make life miserable and hard, there were holdouts, mostly Mohawks, who refused to leave.”

For nearly three centuries, the Mohawks fought to defend and reclaim their ancestral lands through legal channels. By the late 20th century, their frustration had turned to resistance.

That resistance reached its peak in 1990, when the Canadian army, equipped with armoured vehicles, planes, helicopters, and military boats, confronted a small group of Mohawks.

Although the centre of the confrontation was Kanehsatà:ke, Indigenous Peoples across Canada joined in solidarity. The Mohawks of the Kahnawà:ke reserve, south of Montreal, quickly blocked the Honoré-Mercier Bridge, one of the main routes connecting the island of Montreal to south shore suburbs (and an important trucking route to the U.S. border). In British Columbia, Indigenous activists stopped trains in protest.

Settler racism, Indigenous unity

The resistance at Kanehsatà:ke left a lasting mark on Canadian society, politics, and the government’s relationship with Indigenous Peoples. That summer, the military operation ended with the Mohawk land defenders surrendering. However, the consequences of the resistance extended beyond the standoff itself. 

One of those consequences was the exposure of anti-Indigenous racism in Canadian society.

Montrealer author and life-long activist Dimitrios Roussopoulos calls that event a “stark reminder of Canada’s ongoing racism” toward Indigenous Peoples.

He says that what shocked many observers was not only the use of police and military force against a small group of Mohawks, but also the behaviour of many residents in Montreal, Oka, and Châteauguay. One widely remembered incident was the burning of a Mohawk effigy hanging from a lamppost in Châteauguay.

Roussopoulos, who helped organise demonstrations in downtown Montreal in support of the Mohawks in 1990, recalls several violent reactions from local residents. One such moment came when about 150 demonstrators, after gathering in Parc Lafontaine, began marching along Saint-Denis Street.

“What struck me was the very negative reaction of people sitting in the open cafés,” he says. “They grew angry, and some threw beer bottles at us, shouting, ‘Who the hell are you to defend the Mohawks?’”

According to Roussopoulos, this hostility reflected a broader racist attitude againstIndigenous Peoples’ right to challenge their treatment. He argues that this prejudice influenced how both the federal and Quebec governments responded to the Mohawk resistance.

“Oka revealed a deep contradiction within Quebec nationalism,” Roussopoulos explains. “French Canadians were—and still are—raised to believe this is their land. But in 1990, they were suddenly confronted with Indigenous Peoples saying, ‘No, historically, we were here first, and you’re occupying our land.’”

As racist attitudes among some settlers became visible during the resistance, Indigenous communities across Canada also began to coordinate more closely in response. Activists say the standoff helped create a shared sense of purpose. 

“The biggest achievement was unity, and that we found our voice across the country,” says Gabriel, who lived through the standoff. “People from different communities stood up in support of us. I think that was the first time there was such a unified resistance to what was happening to Indigenous Peoples.”

That sense of unity was not only political but also personal. For many who took part, including Gabriel, it became a moment of transformation and healing.

“That summer awakened me,” she explains. “Behind the barricades, spiritual leaders and faith keepers from other nations helped us maintain peace in our hearts. It was both resistance and renewal,” she recalls.

“It was very spiritual and transformative for me.” After that summer, Gabriel returned to school, completed her education, and later earned a master’s degree in social work. “I wanted to understand what happened to us and bring about transformation and healing in my community,” she stresses.

However, the awakening brought by the resistance did not take the same form for everyone. For some, it was spiritual and collective, while for others, it meant a painful loss of trust in Canada’s institutions.

For David, it changed his view of the Canadian government and its relationship with Indigenous Peoples. Before the 1990 resistance, he believed in what he called “Canada’s myth”.

“I believed that the government was making progress,” he said. “Like a lot of people, I believed in the myth. I half-believed it, because there was a little scepticism. But after that, I was disillusioned.”

Kenneth Atsenhaienton Deer, an Indigenous educator and rights advocate, said this sense of disappointment was not limited to Indigenous Peoples or Canadians. The resistance, he explains, made people around the world question Canada’s myth as a country that treats Indigenous Peoples fairly. 

Canada’s mythmaking

On the morning of July 11, 1990, Deer was asleep at his home in  Kahnawà:ke, just south of Montreal, when the phone rang around 5:45 a.m. “I got a call telling me that the police were moving into Oka,” he recalls, 36 years later.

“I knew something was going to happen,” he adds. “You didn’t need to be a psychic to know there was going to be a reaction.”

After the first violent clash between police and land defenders, Deer was among the Indigenous representatives the community chose to send to Kanehsatà:ke to negotiate with officials in hopes of ending the siege and addressing their demands.

When the early talks broke down, the resistors sent Deer to Geneva to bring international attention to what was happening in Canada; to expose, as he puts it, “the paternalism and the racism that were ingrained in Canadian legislation.”

At the United Nations Working Group on Indigenous Populations, he found an audience curious to listen. “There was already a buzz,” he says. “Everyone had questions about what was going on in Canada. I answered their questions from the Mohawk viewpoint. From that moment on, Canada was on the defensive.”

Canadian politicians have long promoted an international image of themselves as a non-colonial, multicultural democracy that respects Indigenous Peoples. In recent years, scholars such as Liam Midzain-Gobin and Heather A. Smith have questioned that narrative, describing it as “the myth of Canada.” 

The events at Kanehsatà:ke showed the gap between that image and the experiences of Indigenous communities.

Now, 36 years later, Deer says the core issues behind the 1990 resistance remain unresolved.

Despite years of public discussion and official reports, including the Royal Commission on Aboriginal Peoples (RCAP), the Truth and Reconciliation Commission (TRC), and the national inquiry into Missing and Murdered Indigenous Women and Girls (MMIWG), he says little has changed for Indigenous peoples.

“We still have a long way to go,” he says. “Recognizing the fundamental rights of self-determination over land, territory, and natural resources remains one of the main unresolved issues. Canada has made some efforts, but it certainly wasn’t enough.”

David agreed with Deer. Speaking at his home in Kanehsatà:ke during one of the last interviews he gave before his death, he argued that meaningful changes were still needed in settler–Indigenous relations.

“There are minor tweaks to the system,” he said. “But nothing really changes, not that fundamental change that we need to have if we’re going to move forward and develop this relationship.”

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CN management has largely framed the supposed “success” of privatization around two key metrics: the operating ratio (OR) and free cash flow (FCF). The operating ratio is a metric developed by the rail industry in the 19th century to measure railroads’ profitability by dividing operating revenues by operating expenses. For nearly two centuries, railroads have sought to lower their operating ratios, but with Wall Street’s heightened interest in railroad stocks in the past 20 years, that focus has turned into an obsession. Whereas an 80 per cent OR, or 80 cents spent per dollar of revenue, was standard for a long time, in recent years, railroads have sought to push the OR below 60 per cent. Free cash flow is a related metric, which is composed of operating cash flow (money that the railroad brings in from normal operations) minus capital expenditures.

These two accounting metrics have been closely tied to managerial pay for the past 30 years, and the drive to improve them has guided decision-making at the highest levels of the company. While CN’s performance has undoubtedly improved along these lines in the last 30 years, these two metrics are far from neutral. In order to deliver higher FCF to investors and achieve a lower OR, CN has hiked costs for Canadian shippers while suppressing wage increases for its unionized workforce. Because FCF includes capital expenditures, CN has also minimized its infrastructure investment and turned away from reinvesting in Canada, in favor of being more “comparable to U.S. railroads” by purchasing numerous U.S. railroads. All of this has led to real costs for Canadians. 

Prior to CN’s initial public offering in 1995, it published a prospectus laying out its goal of “creating a competitive market-oriented railroad with performance levels comparable to major U.S. railroads.” Since privatization, few have questioned whether the initial goal of creating a “market-oriented railroad” was in and of itself a desirable one. Now, with 30 years’ distance from the privatization fervor that swept neoliberal governments around the globe in the 1990s, CN’s privatization deserves a closer look. Beyond the profitability metrics that Wall Street fawns over, was privatization the right choice for Canada, or would a return to public ownership be in the national interest? At a time when renewed industrial policy is particularly urgent due to U.S. tariffs, a strong rail network is more important than ever, making it a ripe time to revisit the railways’ role in the economy.

Prioritizing shareholders over workers

Immediately following privatization, CN began prioritizing its new shareholders—within less than a year, CN initiated its first dividend payout in 1996, delivering $99 million to shareholders. Since then, dividend growth has been explosive, with increases of between 10 and 30 per cent year-over-year every year from 1997 to 2019, with the exception of a seven per cent increase in 2010. After 30 years of growth, in 2025, CN paid out over $2 billion in dividends. CN’s wage growth for its unionized employees—on whose backs the company’s industry-leading OR and FCF metrics were achieved—is less stunning. In addition to reducing its workforce size over this period, general wage increases averaged three to four per cent over this period, save for an eight per cent increase in 2015.

The compounded impact of this disparity is dramatic. As shown in Figure 1, for every $100 in wages that a union worker earned in 1996 at CN, they earned $242 in 2025. Meanwhile, shareholders’ returns are in the stratosphere. For every $100 in dividends that they received in 1996, the same shares yielded over $5,314 in 2025. After inflation, based on the Canadian consumer price index (CPI), CN workers earn 32 per cent more than they did in 1996, while shareholders’ annual payouts have increased 2,799 per cent—before considering the impact of aggressive share repurchases. This comparison puts CN’s priorities in plain figures. If not for several strike threats by CN’s unionized employees, the company may well have provided wage increases at-or-below inflation.

Raising costs for Canadian shippers

Over the past 30 years, CN has not only put pressure on its workers, but it has also taken advantage of shippers by raising rates. Relative to freight rates for trucking or air freight, rail rates tend to be ‘sticker,’ meaning that the railways rarely lower rates after they’ve raised them significantly, even during economic downturns. This trend can be seen in Figure 2, which compares line-haul rail freight rates to the overall producer price index (PPI), air freight rates, and long-distance trucking rates. Over time, this compounds to make rail less competitive with other modes, and prices out small shippers.

The Railway Association of Canada (RAC) likes to paint a different picture, claiming that privatization and deregulation have given Canada “some of the world’s… lowest rail freight rates.” However, the RAC’s analysis does not evaluate actual freight rates, rather it looks at revenue-ton-miles (RTMs). This misdirection was highlighted by a coalition of Canadian rail shippers in a lengthy report rebutting the RAC’s claims. The RTM figure is influenced just as much by distance (miles), and commodity mix (the ton part of ton-miles being shaped by the weight of the commodity being carried), as by the actual freight rate. Canada’s railways haul freight longer distances than just about any other country on Earth.  The RAC report compares Canadian, Russian, and U.S. rates to European, Indian, and Japanese rates, whose average distances are between a third and half the length. Consequently, the Canadian, Russian, and U.S. rates look significantly lower using RTMs. When looking at indexed rates alone, rather than RTMs, for the 2007-2021 period, Canadian rail rates rose by 36 per cent, 11 percentage points more than the 27 per cent for trucking or Canadian CPI.

Even under the RAC report’s own methodology, the RAC argument that Canadian freight rates are “11 per cent lower than the U.S.” is only the result of convenient happenstance in 2023. As seen in figure 8 in the RAC-commissioned report, between 2003 and 2014, Canadian rail freight rates were higher than those in the United States. This timing coincides with the period between 1998 and 2009, when E. Hunter Harrison’s tenure served as chief operating officer (COO) and later CEO of CN, pioneering the practice of precision scheduled railroading (PSR). PSR, despite what its name might suggest, has led to disinvestment, job losses, and shipper discontentment across the industry. 

Harrison later served as CEO of CP and CSX, and towards the beginning of the 2010s, PSR began to permeate management practices at U.S. railroads. During this period, U.S. railroads began hiking their own freight rates and focusing on higher-margin traffic at the expense of smaller shippers, causing U.S. rates to once more exceed those in Canada. While more research is needed to paint a clearer picture of recent rate increases, Canada’s shippers have been clear about the burdensome hikes in freight rates from Class I railroads. These price increases make Canada’s industrial and agricultural products less competitive and raise prices for Canadian consumers.

Disinvesting in infrastructure

While raking in record profits, CN has prioritized paying out historic sums to its shareholders rather than reinvesting in its infrastructure. This is hardly a problem unique to CN, but it demonstrates that CN’s primary allegiance is to Wall Street, rather than the Canadian public, whose interest it once served as a crown corporation. Because free cash flow is so heavily factored into managerial compensation, there is an inherent incentive for managers to reduce capital expenditures to pad their own bonuses.

In 2022, CN paid nearly three times more in dividends and buybacks to its shareholders than it spent on capital investment in Canada and the U.S. combined, as seen in Figure 3. This ratio is almost identical to that of Union Pacific, the second-largest U.S. Class I railroad, showing how significantly Wall Street’s pressure has reshaped the rail industry. If the goal of privatization was indeed to bring CN’s performance in line with U.S.-based railroads, it appears to have been achieved with flying colours.

Since its 1998 acquisition of the Illinois Central Railroad, CN’s shareholder remuneration (total cash payments to shareholders, representing buybacks and dividends combined) has soared. Shareholder payments surpassed capital investment for the first time in 2005, and the two stayed roughly equal until the pandemic. Since 2021, CN’s stock buybacks have soared, leading to shareholder remuneration at over double the total value of capital investment in 2022 and 2023.

The numbers in Figure 4 paint a stark picture of management’s priorities over the past 30 years. Under its current structure, CN is spending billions of dollars annually on shareholder compensation—money that could instead be reinvested in infrastructure improvements if the railroad were still a Crown Corporation. These surplus billions produced by CN are evidently a triumph for the “market-oriented” railroad, but they also represent billions of dollars being sucked away from Canadian critical infrastructure to pay CN shareholders, like Bill Gates, who owns over 10 per cent of the company.

Turning from Canada towards the United States

Over the past century, substantial trackage has been lost on both sides of the border, across nearly every operating railroad. However, looking at Figure 5, displaying CN and CP-owned track in Canada since 1986, there was an intensified loss of thousands of kilometers of track that CN abandoned or sold in the years immediately surrounding privatization. At the same time, CN was actively expanding in the United States, acquiring Illinois Central in 1998, followed by Wisconsin Central in 2001. 

CN has occasionally backtracked on its sale of Canadian routes, including the repurchase of 1,000 kilometers of track from the Mackenzie Northern Railway in 2006 that it had sold nine years prior. However, many of the routes that CN sold or abandoned were taken over by short lines or provincially-owned railroads like Ontario Northland.

Alongside track abandonments and sales, CN has contracted out or shuttered equipment maintenance capacity in Canadian shops. While this may produce short-term cost savings for CN, it undermines long-term service quality and equipment safety through the loss of in-house capacity and technical knowledge. In March 2026, Unifor won an arbitration decision ordering CN to reinvest in its own in-house maintenance capacity at the Transcona Wheel Shop. While one might think that keeping wheels trued and clear of flat spots would be in the company’s best interest, Class I railroads over the past few decades have shown that there are few corners they won’t cut for a better quarterly profit—even if it means destroying their own infrastructure.

Undermining passenger service

Closely related to CN’s underinvestment in track maintenance are its disastrous consequences for Canadian passenger service. Delays on VIA Rail, the majority of whose trains run on CN trackage, are widespread. The delays have worsened in the past few years after CN imposed restrictions on VIA’s new Venture trainsets due to loss of shunt issues—restrictions that VIA suspects are unnecessary. Similar issues have arisen for Amtrak on CN trackage in the United States.

Perhaps more embarrassingly, regarding Amtrak, CN has reduced its maintenance on the Rousses Point Subdivision in Quebec to such a minimal level that during hot summer months track speeds are restricted to 10 miles per hour. At such a low speed, it is impossible to run passenger service, causing Amtrak to cancel the Adirondack service between New York City and Montreal in 2023 and 2024. Because of CN’s obstinate refusal to maintain the trackage, which has little present freight volume, a foreign publicly owned railroad (Amtrak) paid CN to maintain its own trackage in order to restore service.

In addition to delays on the Toronto-Montreal-Quebec City Corridor, VIA’s flagship cross-country service, The Canadian, has been slowed over the past few decades due to CN-caused delays. The westbound train from Toronto to Vancouver had its runtime lengthened from an 80h55m scheduled journey in 1990, when The Canadian first switched from Canadian Pacific (CP) to CN tracks, to a 94h05m scheduled journey as of 2026. Despite this substantial schedule padding, trains are still routinely delayed by dozens of hours. These delays are almost entirely CN’s fault, resulting from a lack of capacity and a refusal to prioritize VIA’s passenger trains over their own freight. This problem is exacerbated in Canada because, unlike Amtrak in the U.S., VIA does not have a statutory right of preference over freight traffic—and even with that right, Amtrak has struggled with freight railroad trackage.

Restoring public ownership

While CN celebrates its 30th anniversary of privatization as a triumph of market-oriented railroading, it is at the same time cutting back on its already-limited capital investment due to tariff uncertainty. Now more than ever, Canada needs a strong domestic rail network, and CN is shying away from the job. They are cutting back on infrastructure investment so that they can maintain billions of dollars in stock buybacks. In the very same 2025 annual report announcing cuts to its capital program, CN also authorized the repurchase of up to 24 million shares— worth over $3 billion at current prices.

CN simultaneously gave shareholders a three per cent dividend raise, the lowest since privatization, but a raise nonetheless—and one that mirrors the wage increases in its current union contracts. The Railway Association of Canada claims that it is time for the Canadian Government to put “Canada’s public interest over self-interest.” The RAC blames interswitching for sending jobs to the U.S. and undermining capital investment in Canada. The truth is that both Canadian-based railroads are guilty themselves on both counts. Their pursuit of short-term profit and rosy operating metrics, whether OR or FCF have led them to disinvest in infrastructure and their workforces. 

Looking frankly at the record of CN over the past 30 years, it is clear that Canada’s pain has been Wall Street’s gain. Management has employed selective financial metrics—repeated in the press—to paint privatization as if it were an inevitable, and beneficial, decision for Canada rather than the product of a certain socio-political moment or neoliberal ideology. In fact, these figures are not neutral, but rarely does anyone choose to look beyond CN’s own narrative, except during the occasional high-profile derailment—as opposed to the daily derailments that are barely questioned.

Part of this effort to paint a picture of privatization as a resounding success has been to restrict public access to information that might suggest otherwise. The railways have lobbied the government to avoid reporting or publishing key operating information. If you look at nearly any rail sector data from Statistics Canada, you will find that there is no company-level data since 2009 (for example: employee headcount). If we were to view railways as critical national infrastructure—or regulated utility companies—then we might expect more transparency and require more thorough data publication. Instituting such a requirement could be a prudent first step to reconsidering the railways’ place in Canada’s economy for the Carney Ministry’s broader reconsideration of industrial policy. At a bare minimum, it would allow the public to adequately assess CN’s performance for themselves.

Beyond fighting for better data access, we deserve to have a serious conversation about the role of critical rail infrastructure for the national economy. Should railroads exist to benefit a select group of shareholders or should their priority be quality service to customers, to the benefit of passengers and Canadian agriculture or industry? Renationalizing CN is not a silver bullet for the railroad’s problems, and the circumstances today are very different from 1919, when CN was first formed as a crown corporation, but it is clear that Wall Street’s influence has been harmful to Canada’s rail network. Short of renationalization, we should consider what sorts of regulations might be necessary to encourage CN to reinvest in Canada and treat its workforce with respect.

The post Is it time to renationalize the CN rail network in Canada? appeared first on CCPA.

This report examines the value of public services to households in Newfoundland and Labrador. Our economy is highly unequal relative to the rest of the country and public services play a key role in helping promote equality. They also are the “best deal” residents can get in terms of ensuring affordability. Access to public health care, public education and social services are vital to our community.

This report makes several key points:

• Tackling affordability requires that government prioritize investment in public services,
• Austerity has reduced the real household value of public programs, 
• Tax cuts are an ineffective way to ensure that public dollars are used to tackle affordability,
• Privatization, contracting out, and Public Private Partnerships (P3s) in service delivery are ineffective and cost more money in the long run,
• And, that the public believes that investments in good public services is good public policy.

In Budget 2026, the government of Newfoundland and Labrador were presented with a unique opportunity to address affordability challenges. Rapid growth in projected revenues means that the government had money it could invest. Budgets are choices. In this case the government chose to use much of its fiscal space to fund tax cuts that disproportionately benefit a small number of high income households. This report suggests that after years of austerity, that money would have been better spent supporting the increasingly underfunded programs.

Public Services are a “good deal” for the people of this province.

Findings summary

• Cost of living context: While overall prices are about 19 per cent higher than in 2018, key necessities are roughly 29-36 per cent higher, which is more likely to be felt directly in day-to-day budgets.
• Inequality is high, but redistribution dampens it: N.L. has the highest adjusted market-income inequality among the provinces. However, N.L. moves from being the most unequal province before redistribution to a much more equal position after transfers and taxes, but still a high level of inequality.
• Households in N.L. are provided with great public spending value, though it has been eroded by austerity: The value of the Social Transfers in Kind equals $30,028, which represents what households would pay if they paid directly for health care, education and select social services. However, the value of public services in Newfoundland and Labrador has stagnated over nearly 30 years, making up 33 per cent of disposable income in 1999 and 32 per cent in 2025. 
• Tax cuts benefit highest income earners: Despite government claims that tax cuts benefit everyone, families in the lowest income decile save only about $7 on average, while families in the highest income decile save about $922 on average.
  • The top 30 per cent of economic families with total incomes above $128,644, account for nearly 52 per cent of the total estimated provincial revenue loss. By contrast, the lowest three income deciles, economic families with total incomes below $48,239, account for just over six per cent. 
• Budgetary choices have serious implications: The tax cuts in budget 2026-27 represent $123 million of revenue that could have been invested elsewhere. Our analysis shows that even investing about $106 million in an expanded N.L. Child Benefit could have reduced child poverty by 63 per cent, lifting 5,700 children out of poverty. Alternatively, they could have created a groceries and essentials benefit, lifting 2,900 people out of poverty.
• Public services help fight inequality: When adequately funded, universal public services act as equalizers, by ensuring everyone has access to essential services, not based on their ability to pay, their socioeconomic status, or where they live. However, maintaining and expanding access to affordable, if not free, public services have not been a priority. 
• Public sector staff recruitment and retention concerns: There are no new hospital beds, long term care beds, child care spaces, classrooms, or otherwise, without the staff needed to provide the quality care and learning spaces needed. The lack of significant real wage growth in the public sector is concerning for recruitment and retention with only a three per cent gain between 2019 and 2025, while food and rent costs grew by just over 32 per cent.
• The public sector helps lower the gender pay gap: In the private sector, women earn much less than men. On average, men in the private sector earn $514 more per week than women, a 36 per cent gap; this means women earn about 64 cents for every dollar a man earns. The gap is much smaller in the public sector, where women earn 94 cents for every dollar a man earns. Men earn $98 more per week on average, a 6 per cent gap, and the median gap is only $53 or 3.7 per cent. 
• Public services save cost and are superior to for-profit contracts: The international estimate is that public provision can provide net savings—anywhere from four to 62 per cent as compared to contracted-our for-profit services. Examples in N.L. include (travel) nurses, ambulance services, municipal services, and P3 contracts, which when used, result in:
  • Higher costs; 
  • Less accountability and democratic control;
  • More risk (e.g. bankruptcy), and;
  • Lower quality, precarious jobs, and inequitable access to services.
• Residents of Newfoundland and Labrador are most concerned about affordability: Our commissioned survey of residents by Angus Reid found that the rising cost of living was their number one concern (61.7 per cent ranked it as their top government priority). When asked about solutions, there is very little support for cuts to public services (only 3.86 per cent see that as their top priority). Instead there is widespread support for more investment in direct public service provision, skepticism about the value of privatization, and considerable support for higher taxes on the wealthy.

Introduction

Budget 2026-2027: A booming economy, surging revenues and a cost of living crisis

One of the core themes of Newfoundland and Labrador’s 2026-27 budget was the idea of providing “opportunity for all of us” with a targeted suite of ‘affordability’ measures.¹ The new Wakeham government finds the province in the midst of an unexpected economic boom–provincial real GDP growth for 2026 has been forecast at 5.5 per cent.²

With much higher than expected provincial revenues, the government has a unique opportunity to tackle the cost of living and affordability challenges confronting residents. The problem is that the government’s ideas about affordability misunderstand where those dollars might be best spent and the crucial role of public services in helping households manage increasing costs of living. 

While there were important investments in benefits for seniors and families with children, the most significant ‘affordability’ measures from a cost perspective were the $200 million dollars committed to the across-the-board income tax cut and the gas tax cut, as well as subsidies to keep power costs low. In addition, the province introduced another cut to the corporate tax rate for small businesses. These tax decisions carry a high opportunity cost. The “opportunity for all of us” rhetoric masks the fact that some people start from very different places than others. These tax cut measures are often regressive as they disproportionately benefit households with higher incomes that are less likely to be facing the affordability challenges the government claims to be combating. What people can afford differs depending on their income, and debt. What is missing from the discussion is that the most expensive affordability measures (the tax cuts) do not consider those differences, and investment in public services is not considered by the government as the affordability measure that best serves to raise community living standards for everyone. 

At the most simple, tax cuts are not just ‘household savings for all’ when they come at the expense of collapsing public services from underfunding. Effectively, they transfer money from services that provide large social and economic benefits to most households in the province to a small minority of households that are least challenged by affordability concerns. 

Context matters. Newfoundland and Labrador has been in a decade-long process of government austerity. Funding for public services has been constrained. Wages in the public sector have been kept well below increases in the cost of living and there is mounting evidence that public services need funding to ensure the public can continue to access the public services that are the most effective defence against rising costs of living.

The value of public services

Building on the findings of MacKenzie and Shillington’s landmark study that concluded that investments in public services were the best deal Canadians were “ever going to get,”³ this study measures the economic benefits of public investments for the people of Newfoundland and Labrador. The study measures the size of those benefits, provides insight on how redistributive and effective public spending is in tackling cost of living challenges and argues that public dollars would be far more usefully directed at supporting the public services that truly benefit all. Indeed, as we outline in this report, Newfoundland and Labrador is one of the most unequal provinces in Canada, and it is thus critical that government decisions, including budgetary ones, take into account who benefits and who pays the costs of tax and spending decisions. 

Dominant mainstream ideas about public finance have torqued how we think about public services and the extent to which they help us manage the cost of living, promote equality and provide employment with fair working conditions and wages. Public spending is now often seen as simply a ‘loss,’ and that the less of it there is, the better off people will be.

These ideas have become cruder over time, with simplistic ideas that cutting public spending, starving public services of much needed funding, somehow puts money ‘back in people’s pockets’; that tax cuts, privatizing public services, using exotic public private partnerships (P3s) to do things government used to do more efficiently, somehow benefit everyone. Nothing could be further from the truth. 

All households in Newfoundland and Labrador benefit considerably from public spending and public services. Affordable (and free) education, public health care and a range of social services provided by governments, are key mechanisms protecting residents from the cost of living increases which are undermining household budgets. Attacks on those public services for boutique tax cuts heavily favouring high income households actually expose most residents to higher costs of living and much more difficult economic circumstances over the long term.

This report argues:

• Most Newfoundland and Labrador households receive large and vitally important support and services from public spending– particularly in health care and education.
• These services are both redistributive, tackling one of the province’s most pressing economic problems (high economic inequality), and they are efficient.
• Regressive tax cuts do little to address the cost of living in most households, and can actually make things worse.
• Public private partnerships (P3s) and other forms of privatization restrict public access and control over public services, while making them more expensive.

Most importantly, despite the government’s focus on the wrong solutions, there is considerable evidence that people of the province know better. Residents are concerned about the strain on their household budgets, but they value public services, fear cuts and mistrust privatization.

Inflation and cost of living in Newfoundland and Labrador 

We want to first provide context on the affordability crisis. This chapter analyses how prices have changed in Newfoundland and Labrador (N.L.) from 2018 to 2025 using the Consumer Price Index (CPI). The CPI measures changes in the prices of a typical basket of goods and services. Results are presented using 2018 as the starting point, and results are reported as percent changes since 2018, based on annual averages.

As shown in Figure 1, overall prices rose considerably between 2018 and 2025 (19%), but the cost of living for necessities like food and housing have grown even more rapidly.

This difference between overall inflation and essential costs matters for affordability. Households can sometimes delay purchases of non-essentials, but they have limited flexibility with groceries, housing, and basic utilities. As a result, many people can experience strong cost-of-living pressure even when overall inflation is rising more slowly.

In Table 1, we present this data as a year-over-year change in percentage terms (for example, 2022 compared with 2021), based on annual CPI averages. This is a helpful way to compare annual changes in the cost of living relative to annual wage gains agreed to in collective bargaining.

In 2019, overall inflation was low (on all items it was only 1.0%). Food increased by 1.9 per cent, while rent fell by 2.6 per cent. Water, fuel and electricity increased by 2.3 per cent.

In 2020, overall inflation was near zero (All items: 0.2%). However, food still increased by 1.7 per cent and rent increased by 5.2 per cent, while water, fuel and electricity fell by 1.6 per cent.

In 2021, inflation started to accelerate (on all items it increased by 3.7%). Food costs rose by 2.6 per cent and rent rose by 1.5 per cent. Water, fuel and electricity increased by 7.2 per cent, indicating rising pressure in energy-related costs before the larger shock in 2022.

2022 shows the largest single-year increase in this period. The all-items CPI rose by 6.4 per cent. Food climbed by 9.2 per cent, and water, fuel and electricity rose sharply by 17.6 per cent, indicating a large one-year jump in energy-related costs. Rent increased more modestly (2.3%). What 2022 likely meant for households: higher grocery bills and higher energy-related costs at the same time, even before rent became a major source of pressure in later years (especially in 2024).

In 2023, the all-items CPI increased by 3.3 per cent. Food rose further by 7.9 per cent, showing that grocery costs remained a strong source of pressure. Rent increased by 6.9 per cent, signalling that housing costs were becoming a larger part of the cost-of-living story. Water, fuel and electricity were broadly stable (-0.2%). What changed in 2023: food stayed high, and rent began to catch up.

In 2024, overall inflation slowed (All items: 1.8%), but essential costs continued to rise. Food increased by 3.3 per cent. Rent rose by 8.2 per cent, reinforcing that housing costs can keep affordability challenges high even when headline inflation is lower. Water, fuel and electricity increased slightly (1.0%).

In 2025,  the all-items CPI increased by 1.4 per cent. Food rose by 3.0 per cent and rent rose by 4.5 per cent. Water, fuel and electricity rose by 6.8 per cent, suggesting renewed upward pressure in this category compared with 2024.

Summary: Implications of inflation for Newfoundland and Labrador households

The main message in this data is that the cost-of-living squeeze is being driven disproportionately by essentials. While overall prices are about 19 per cent higher than in 2018, key necessities are roughly 29—36 per cent higher, which is more likely to be felt directly in day-to-day budgets.

These impacts are unlikely to be evenly shared. Renters and lower-income households typically spend a larger share of their income on necessities, making them more exposed to faster growth in food, rent, and utility costs. Households with higher exposure to heating and energy costs may also feel stronger pressure when utility-related prices rise–those with older, larger, less energy efficient homes. 

It is also important to be precise about language: when inflation ‘slows,’ as it has recently, prices are still rising, just at a slower rate. Large increases in 2022, followed by continued increases afterward, leave households facing a permanently higher cost level than before, despite claims that inflation is ‘going down.’ This is the context in which the government must carefully consider how to help people access what they need. Unfortunately, as the next chapter outlines, there has been a concerted effort to undermine the public sector and its ability to serve the public good, and address the high cost of living. 

Myths about public spending

For many decades, three stories around provincial budgets and fiscal policy have dominated media and ‘pocket-book’ politics at election time. First, there is the often-simplistic discussion that tax cuts result in ‘more money in your pocket,’ which was a key theme in this year’s budget speech. The second is that corporate tax cuts will result in more economic growth and will help everyone, without any discussion of who really benefits and what the revenue loss means for public services. Finally, there is the inevitable fear-mongering about government debt and deficits, as if a government’s budget were the same as a household’s. Even in ‘good news’ budgets (as 2026, unquestionably was for the province), budget debate is still focused on debt–ironically, while lauding tax cuts that do not address those concerns. Essentially, the discussion of public finance is often a game of ‘smoke and mirrors,’ where the need for ‘cuts’ and balanced budgets is used to actually support a shift in policy to benefit the interests of high income households.

In this province, these dominant stories mask the role of government in advancing the public interest by treating all government spending and investment as something ‘bad.’ But government decisions on spending can have a significant impact on household budgets, by reducing or increasing direct income support, or by retracting or expanding public services. Indeed, we often ignore governments’ spending power and ability to achieve a significant return on investment from public investment. Early investment in targeted programs can save everyone money in the long run. For example, one of the major themes in the province’s recently developed Health Accord is the social determinants of health – essentially, that failures by the government to tackle improved access to education, housing and food security in ways that address inequality actually produce costly long term health problems and economic side effects.⁴ With people struggling to pay for essentials, there is rarely a recognition of the role that taxes play when it comes to paying for public services that improve quality of life, and supporting households’ access to essentials at a cost they simply won’t be provided in the private sector. 

This is a pressing challenge for a province that has become reliant on oil and gas, as the fluctuations in growth and in revenue require careful decisions about how to insulate the population from the market shocks. Public service investments ensure everyone benefits from the petro economy and help protect the community from the boom-and-bust cycles of natural resource economics. 

What if instead of a negative view of taxation and the role of public spending, we asked what level of taxation it would take to ensure everyone has meaningful access to the services they need to be healthy, safe, socially-included–to be supported to reach their full potential, and for community wellbeing in Newfoundland and Labrador? This is an important question to ask in a province where incomes and economic benefits are very unequally distributed. In other words, investments in public services are often the most cost effective way to ensure affordability and ensure a more equitable distribution of benefits from N.L.’s resource based economy.

The context: Inequality in Newfoundland and Labrador

As noted, Newfoundland and Labrador has a high dependency on the natural resource sector. It is therefore not surprising to note that the province has a highly unequal distribution of market incomes. People who work in the oil and gas sector and supporting trades– disproportionately men–can earn quite high incomes, while much of the rest of the economy, dominated by service and manufacturing sectors, produce much lower household incomes. This results in both large discrepancies in market incomes and a uniquely high gender wage gap.⁵

The Gini Coefficient is used to measure income inequality. This measure represents the relative distribution of income frequencies (where “0” is a highly equal distribution or minimum inequality and “1” is a highly unequal distribution). Using the Gini Coefficient, Newfoundland and Labrador has the most unequal adjusted market incomes among Canadian provinces. However, when the impact of taxation to support public services is included, these differences become less pronounced. Essentially spending on public services providing affordable access to health care, education and all the other broad supports governments offer residents, redistributes income, reducing inequality, and helping middle and low income households better manage cost of living pressures.

Figure 2 compares income inequality across provinces using the Gini Coefficient. A higher number means more inequality, and a lower number means less inequality. The income measures are adjusted, which means they are adjusted for household size, so households of different sizes can be compared more fairly.

Each province has three points. Adjusted market income shows income before government transfers and income taxes. It includes earnings from work, private pensions, investments, and other market sources. Adjusted total income adds government cash transfers, such as Employment Insurance, social assistance, public pensions, tax credits, and child benefits. Adjusted after-tax income then subtracts income tax.

The figure shows how inequality changes as transfers and taxes are included. The movement from adjusted market income to adjusted after-tax income shows how much the tax and transfer system reduces inequality. In Newfoundland and Labrador, the drop is large. Before transfers and taxes, N.L. has the highest adjusted market-income inequality among the provinces, with a Gini Coefficient of 0.452, above the Canadian average of 0.436.

The first major drop happens when government transfers are included. N.L.’s Gini falls to 0.370, although it remains above Canada’s 0.351. This means transfers reduce inequality, but N.L. still starts from a more unequal market-income structure than the country as a whole. After taxes are included, the change is even clearer. N.L.’s adjusted after-tax Gini falls to 0.288, below the Canadian average of 0.305. In other words, N.L. moves from being the most unequal province before redistribution to a much more equal position after transfers and taxes.

As we can see, income inequality in N.L. is not only a labour market issue. The province’s market economy produces large income gaps, but public redistribution plays a major role in narrowing those gaps and improving income security for middle and lower-income households.

Figure 2 / Gini coefficients of adjusted market, total and after-tax income
Canada, provinces and territories, 2024

Source: Own elaboration based on: Statistics Canada. (2026). Table 11-10-0134-01 Gini coefficients of adjusted market, total and after-tax income.

The Gini Coefficient gives us the overall picture, but income shares show more clearly how much income goes to the top compared with the bottom. Table 2 uses income deciles, which divides households into ten equal groups from lowest to highest adjusted household income. The bottom 40 per cent refers to the four lowest-income groups, while the top 40 per cent refers to the four highest-income groups.

Table 2 shows a very large income gap before transfers and taxes. Using adjusted market income, the top 40 per cent receives 81.6 per cent of income, while the bottom 40 per cent receives only 11.0 per cent. That means the income gap between the top 40 per cent and the bottom 40 per cent is 70.6 percentage points.

The gap becomes smaller once government cash transfers are included. The income share of the bottom 40 per cent rises from 11.0 per cent to 18.8 per cent, while the share going to the top 40 per cent falls from 81.6 per cent to 73.3 per cent. As a result, the income gap falls to 54.5 percentage points.

After income taxes are included, the gap becomes even smaller, falling to 48.6 percentage points. This shows that transfers and taxes play an important role in reducing income inequality in Newfoundland and Labrador–though the gap remains large. Even after taxes, the top 40 per cent still receives 70.0 per cent of adjusted after-tax income, compared with 21.4 per cent for the bottom 40 per cent. In other words, redistribution reduces the gap, but it does not erase it. Table 3 shows that the bottom half of households in N.L. received just under 30 per cent of adjusted after-tax income in 2024. By contrast, the top 20 per cent received 36.6 per cent of income in 2024, and the top 10 per cent alone received 21.6 per cent.

This matters for public policy. These tables show that public action can improve the position of lower- and middle-income households, but it also shows that more can be done. Stronger income supports, fairer taxation, better wages, and stronger public services can all help reduce the gap further and give lower-income households a larger share of the province’s income.

Measuring the benefit of public spending for households in Newfoundland and Labrador

Social transfers in kind (STiK) is a way to measure the benefit the public receives from government spending. Here, “social transfers” refer to the non-market production of services to households either directly by the government or through non-profit institutions. 

The value of the STiK represents what households would pay if they had to pay for these services directly. This is a way of measuring what the public health care system, public education and a handful of social services ( i.e. child care and supports for aging populations, recreation centres, libraries, etc.) are ‘worth’ to real households.

These transfers in kind do not go directly to households. They are not cheques that go into bank accounts–rather, they essentially spare households the cost of paying for these services themselves. For example, in education, the province provides universal free access to public education, and it also subsidizes students studying at colleges or universities. Without these investments, households would have to pay for education themselves, or pay even higher tuition for college or university. Similarly, if the province did not invest in public health care, households would have to pay for those health services. The STiK is a way of measuring these things, which are not discussed enough.

In Newfoundland and Labrador, residents receive a large benefit from public spending, even when it doesn’t come in the form of a direct transfer, like a pension cheque or an employment insurance payment. In 2025, the average STiK value per household was $30,028, as shown in Table 4.

Again, what that means is that if we add up what it would cost households to pay for the education, healthcare and social service systems currently in place, those households would have to come up with that additional $30,028. 

What makes this number all the more significant is that it doesn’t measure all the benefits people get from government spending, as it does not include direct income transfers received. It also doesn’t include the benefits of spending on things like roads, and transportation, or the justice system, or the cost of governance. As can be seen in Table 5, in this province, most households pay less than $30,028 in total federal and provincial taxes.

The STiK also does not measure the broader long term economic benefits of public programs. Investing in health care, education and things like accessible childcare are actually ‘investments.’ They help grow the economy. If people had to pay all of these costs out of pocket, many of them would not be able to afford them at all, and the result would be a less healthy and (in economic terms) less productive population.

To put it another way: what StiK illustrates is the core claim made by MacKenzie and Shillington in their comprehensive 2009 study: taxation and public spending are “the best deal the public is ever going to get.”⁶ Here, in Newfoundland and Labrador in 2026, broadly accessible public services are both more efficient and are the best mechanisms for ensuring households can afford vital services, and most households’ tax contributions are less than the value of those services. Thus, in some sense, everything else–all those other benefits they get from the government–are ‘free.’ 

Again, this is not universally the case. Public services and taxation are redistributive in Canada. Very high income households traditionally have paid significantly more to support those services. That was the intention of the system. We get efficient affordable services for all.

This is why the move to see tax cuts and public spending cuts in recent years as a solution to affordability problems is so misleading. Most households will be made worse off by such measures. Seeing public spending as nothing more than a ‘waste’–  a dollar that can be saved and put back into a pocket–deflects attention from just whose pocket it will be. For most people, it won’t be them.

Indeed, the era of austerity and an increased focus on tax relief to help ‘affordability’ has not been good for households in this province according to the STiK. Figure 3 shows the trend comparing social transfers to the average disposable income for households in Newfoundland and Labrador. While there has been real growth in the value of social transfers in kind per household in Newfoundland and Labrador, most of the growth happened before the early 2010s. After that, the real value of these public services has fallen–something that probably wouldn’t surprise members of the public waiting in line for health care or struggling with extra fees to access public services like education. We are putting less of our economic output into maintaining quality public services.

The period of austerity has not been good for public services. Public services are not built in one or two years. Long periods of lower real investment can affect staffing, capacity, maintenance, wait times, and service quality. The important point is that households in Newfoundland and Labrador depend on public services, but the real value of those services has not grown strongly or consistently over time. Even after small increases in 2025, we still are well below the levels we were at when services were better funded. 

In summary, what the STiK tells us is that the people in this province get a good deal when public services are properly funded and accessible. Public services provide most households with considerably more value in terms of services than what they cost and they are redistributive–they are the best mechanism for tackling unusually high levels of inequality in the province. But there is a problem–governments have not been investing enough in those services to maintain that value.

Income tax cuts: Opportunity cost

Given the level of inequality in employment income, and the critical role government expenditures play in ensuring a fair distribution of income, as well as access to essential goods and services, it is critical that the provincial government be much more transparent about the effect of their taxation decisions. 

Take for example, the 2026-27 provincial budget decision to increase the Basic Personal Amount to $15,000, as the cornerstone to making life more affordable for everyone. The provincial government claims this change is ”saving taxpayers hundreds of dollars per year.”⁷ While this tax change does reduce income taxes for families across all income levels, the largest benefits go to higher-income families, which is shown in Table 6. Annually, families in the lowest income decile save only about $7 on average, while families in the highest income decile save about $922 on average. This is because many low-income families cannot benefit much from a higher tax exemption. This also means that the loss of revenue from this tax change is concentrated among higher-income families. The three highest income deciles, economic families with total incomes above $128,644, account for nearly 52 per cent of the total estimated provincial revenue loss. By contrast, the lowest three income deciles (economic families with total incomes below $48,239) account for just over 6 per cent. 

This is not just an accounting issue–it is a budget choice. The estimated revenue loss from this tax cut is $123.1 million. That money could have been used to strengthen public services or expand targeted supports for families who need them most. This matters in a province where nearly 18,000 children lived in poverty in 2022, according to the 2024 Newfoundland and Labrador Child and Family Poverty Report Card.⁸ For example, Budget 2026-27 says the province will provide the Newfoundland and Labrador Child Benefit to 3,000 additional children and increase support to 3,000 children already receiving it. The cost of that measure is estimated at only $4.8 million.⁹ By comparison, the revenue lost through the Basic Personal Amount increase is more than 25 times larger. In other words, the province is giving up far more revenue through a broad tax cut than it would cost to actually provide targeted support for children and families facing poverty.

The budget also permanently reduces the provincial tax on gasoline, which the government says will save consumers $67 million each year. But this is also $67 million in revenue the province will no longer collect. That money could have been used for infrastructure, public transit, ferries, road maintenance, or other public services.

This measure also does not address the real drivers of high fuel prices. CCPA’s recent analysis¹⁰ shows that when oil prices rise, large oil companies can make major extra profits. These profits do not come from producing more or becoming more efficient–they come from people paying more for fuel. In that context, cutting the gas tax is a weak affordability measure. It reduces public revenue, and it does not deal with the real source of high fuel prices. A stronger approach would tax these extra profits and invest that money in public services and infrastructure that reduce people’s dependence on expensive fuel.

The unequal distribution of these tax cuts illustrates the point made above about employment income inequality in Newfoundland and Labrador. We know that taxes and transfers help redistribute that income, while tax cuts exacerbate existing inequalities by disproportionately benefiting higher income individuals. Crucially though, tax cuts also divert money from public investments, the household value of which we measured above.

What could the government have done differently?

To test what a more targeted use of public funds could achieve, we simulated a 2026 scenario using SPSD/M in which N.L. greatly expands the N.L. Child Benefit (see Table 7). In this scenario, the Child Benefit amounts are multiplied by four, while the rest of the tax and transfer system is kept unchanged. This would increase provincial spending on Family Programs from $19.1 million to $125.2 million, an additional investment of about $106.1 million. This is less than the estimated $123.1 million in revenue lost through the Basic Personal Amount increase. 

The results suggest that a more targeted investment could have a much larger impact on child poverty. The number of children under 18 living below the Market Basket Measure poverty line would fall from about 9,100 to 3,400. This means about 5,700 fewer children would be living below the poverty line, with no children newly falling below it. The child poverty rate would decline from 10.8 per cent to 4 per cent. This simulation suggests that investing about $106 million in an expanded Child Benefit could reduce child poverty in Newfoundland and Labrador by around 63 per cent in 2026.

Another example of how the province could have used a similar amount of public funds is a refundable groceries and essentials credit (see Table 8). To test this, we simulated a second 2026 scenario using SPSD/M. In this scenario, Newfoundland and Labrador would introduce a refundable credit through the provincial sales tax credit structure, with a maximum benefit of $450 for the head of the family, $450 for a spouse, and $450 per child. The credit would begin to phase out once family income reaches $40,000, at a rate of 1.4 per cent. This design is meant to work like a targeted affordability credit: broad enough to reach many low- and modest-income households, but reduced as income rises. The simulated credit costs about $115.9 million, which is close to the $123.1 million in revenue the province is giving up through the Basic Personal Amount increase. It would also reduce total poverty: the number of people living below the Market Basket Measure poverty line would fall from 47,700 to 44,900, meaning about 2,900 people would be lifted out of poverty. 

The distributional results show that the credit is strongly progressive. The lowest-income decile would receive $24.2 million, while the highest-income decile would receive $3.7 million. Most of the support would go to lower-income residents. The bottom three income deciles would receive about $64.5 million, or 56 per cent of the total credit, while the bottom half of the income distribution would receive about $89.5 million, or 77 per cent of the total. This suggests that a targeted refundable affordability credit could reduce poverty more directly than a broad tax cut.

Weighing the benefits of tax investment in public services

As noted above, it is popular at the moment to treat all government spending as if it is ‘bad’ and somehow a loss to our communities. Thus, the dominant view by governments is that cutting spending, reducing debt, and slashing taxes are all inherently somehow beneficial. On a basic level, we all know this is wrong. Government spending on health care provides us with affordable health services–if we did not fund our health care services this way, we would have to pay for those things out of pocket. Cutting the revenues necessary to provide an efficient and equitable set of public services does not save Canadian’s money. It has long been recognized that while the private for-profit health system in the United States may result in slightly lower tax rates, it unquestionably produces a more expensive health system.¹¹ Many public expenditures do likewise.

So while we know public spending is a key way to help keep the cost of living affordable for households and can be a powerful support for economic growth, the thing we don’t always know is what the value of those investments is for real households. 

This is the key lesson of the STiK analysis above. MacKenzie and Shillington’s analysis that “weighs the benefits of public services provided by federal, provincial, and municipal governments against the benefits of recent tax cuts”¹² reached a similar conclusion:

• Spending on public services improves the quality of life for most Canadians, making a more equal society.
• Lower-income Canadians benefit more from transfer payments to people, including from Employment Insurance, social assistance, child benefits, and public pensions.
• Provincial and local spending has a powerful impact on middle-income Canadians, thanks to public services such as education and health, roads, sewer and water services.

Their study found that Canadians received an average economic benefit from public services, which at that time was equal to the amount a Canadian working full-time, full-year at the minimum wage would earn. Crucially, they found that for more than two-thirds of Canadians, the benefits are equivalent to more than 50 per cent of that household’s total earned income, a finding that suggested redistribution and the efficiency of publicly provided services were providing most Canadians with a very good ‘deal.’ 

While we have illustrated above that government tax breaks could be used to more effectively tackle poverty and ‘affordability’ problems, which really are the result of poor policy decisions by provincial governments, it is broadly the case that investing that money in making sure people have accessible health care, education and child care is also money well spent.

The public sector helps fight inequality 

Measuring the value of the public sector based on benefits to households undervalues the role these public investments have on the broader community. When adequately funded, universal public services act as equalizers, whether that comes to ensuring everyone has access to essential services, which are not based on their ability to pay, their socioeconomic status, or where they live, governments provide citizens not only with good value for money as measured by the STiK, but a range of other benefits as well.

For example, public health care is a critical equalizer, given the aging population and higher chronic health conditions in the province. Without this investment, the out of pocket expenses would be prohibitive for many households. Indeed, the challenges of rural health care delivery would be far worse. 

Similarly, education (from kindergarten to post-secondary) and early learning and child care have high per-household value– households get high value services with limited out-of-pocket expenses, and both the community and economy benefit.

Child care investments are perhaps the best example of the broad benefits the province receives from funding affordable public services. The Canada-Wide child care agreement expanded available child care spaces and reduced fees, which has directly benefitted households with children who were able to access a $10 a day space. Newfoundland and Labrador claims to have met the $10 a day target for licensed child care (down from the set fees depending on the age of the child of $44/33/30 a day in 2019). This is a median monthly savings of $738 for parents in St. John’s who can access this care.¹³ N.L. also offers a child care subsidy program,¹⁴ which is vital because even $10 a day can be unaffordable for many families. However, only 38 per cent of non-school-aged children have access to full time licensed care.¹⁵

Access is much worse depending on where families live, with 31 per cent of children in N.L. living in “child care deserts” where there is no access, and another 61 per cent face inadequate coverage.¹⁶ Only eight per cent of communities have adequate coverage. It is worse for more rural communities with 54 per cent of rural children residing in child care deserts.¹⁷ There is a need for just over 3000 spaces to even reach enough spaces for 59 per cent of children, as was promised by March 2026 in the bilateral federal-provincial child care agreement. 

Analysis of Quebec’s universal child care program shows that for every dollar invested in early childhood education, the broader economy receives between $1.50 and $2.80 in return.¹⁸ The most recent study, released in 2026, finds that “the flow of fiscal benefits may recapture between 75 and 117 percent of the upfront costs of the program.”¹⁹ The evidence shows that the amount invested in it is more than returned to the government by increased revenue as parents are able to work, which is crucial in an economy experiencing problematic labour shortages.Even if it did not have these economic benefits, early learning and child care is essential social infrastructure and critical for children’s development. 

At present, many households don’t have access to affordable child care. More investment would decrease current costs for families and help reduce inequality, while also preventing worse and costly social problems down the road. The share of provincial funding for building the child care system in N.L. currently stands at 29 per cent, which is the lowest provincial share in Canada.²⁰ These public services also result in higher productivity, which then means increased revenue for the government, which in turn helps ensure adequate public funding is available.

Basically, properly funding child care helps families manage cost of living pressures, benefits the economy as a whole and may ‘pay for itself.’ These are the kind of measures governments should be directing public dollars towards. The same can be said about the K-12 education system and investments in post secondary education–maintaining access to affordable services that also grow the economy should be a priority.

Public sector as an employer

Importantly, the public sector isn’t just a provider of services–it is also an employer. Starving public services of funding has an impact on a large percentage of the workforce in Newfoundland and Labrador. Public sector employment in health care, education, social services and housing support not only provides affordable services in households, but it also provides jobs and a more equitable distribution of income. 

There are no new hospital beds, long term care beds, child care spaces, classrooms, or otherwise, without retaining and recruiting the staff needed to provide the quality care and learning spaces needed. 

Critical to retention and recruitment are wages, especially during an affordability crisis. It is concerning that the public sector has experienced a wage freeze and very little wage growth since 2019. Figure 4 shows that these workers have barely kept up with inflation, with only a 3.32 per cent increase above inflation over that time period, when you consider that the  inflation for all items in the province grew by 17.9 per cent. However, food, rent and utilities grew by over 32 per cent, showing a clear disconnect between what these workers need and the increased costs. A recent CCPA article shows that N.L. has seen the second lowest growth of wages for social assistance workers between 2018 and 2025, and the lowest in the region by far.²¹ Figure 5 shows that the private sector had more than double the real wage growth than the public sector (at 8.71 per cent).

The Public Sector helps narrow the gender pay gap²²

The public sector is also critical when it comes to fighting inequality, and specifically the gender pay gap. For Newfoundland and Labrador, the Labour Force Survey data from 2025 shows that public sector employment plays an important role in reducing gender-based income inequality (see Table 9). This is especially clear when we compare women’s wages in the public and private sectors.

• In the private sector, women earn much less than men; On average, men earn $512 more per week than women. At the median, the gap is $417 per week.
• In the public sector, the gap is much smaller. Men earn $95 more per week on average, and the median gap is only $19. This means that, for a typical worker, women and men in the public sector earn almost the same weekly wage. Public sector jobs do not fully solve gender inequality, but they help reduce it.

The same pattern appears when we look at broad occupation groups. In most occupations, the gender wage gap is smaller in the public sector than in the private sector. This is clear in management, business and finance, health, education and social services, manufacturing, and natural resources.

There are also some occupations where women earn more than men in the public sector, including health occupations, natural and applied sciences, and arts, culture, recreation and sport. This does not mean that gender inequality has disappeared. These are broad occupation groups, and wages can still vary by specific job, seniority, hours, and workplace. But, Table 10 shows that the public sector helps promote equal pay. What is clear is that public sector jobs matter for women’s economic security. Cuts, privatization, contracting out, or wage restraint could weaken one of the parts of the labour market where the gender wage gap is usually smaller.

Expanding public services, protecting against the risks of privatized services 

As noted above, one of the key arguments underpinning the idea that making cuts to public services to finance tax cuts is that the public spending is just a waste. Behind this idea that public spending is wasteful is the misconception that public services are inefficient. Over the last decade, Newfoundland and Labrador, operating under austerity, has made a sharp turn towards new kinds of privatized public service delivery–models that sound good to people who don’t like government investments, but models that do not tend to work well in practice.

Public Private Partnerships (P3s), contracting out, subcontracting and outsourcing, as forms of privatizing services, have been proven to cost more than non-profit or public services, and underdeliver when it comes to quality and efficiency.²³ The international estimate is that public provision can provide net savings. Indeed, there is mounting evidence that substantial money—anywhere from 4 per cent to 62 per cent—is saved when services return to being publicly managed. 

While Newfoundland and Labrador has ‘come late’ to these experiments in privatized service delivery, there is ample evidence of how these systems have failed in other jurisdictions. However, we have compiled some of the local failures, and how returning to the public sector has been to the benefit of communities:

• In June of 2025, the Newfoundland and Labrador Auditor General released a scathing report on the use of private nursing firms to cover over cracks in the provincial health care system.²⁴ The Auditor General concluded that private agency nurses were costing the province $400,000 per year on average. The Wakeham government has now announced plans to try to replace the use of contracted-out agency nursing with a public travel nursing team. 
• In March of 2024, N.L.’s Ministry of Health announced that it would have to “modernize” ground ambulance services, by bringing the fragmented private system into the public service.²⁵ The government’s reliance on 60 different private operators had generated serious problems with cost and reliability. While the move to direct public provision may be temporary, the current government has been negotiating with Medavie N.L. to privatize the system, early assessments suggested the new system “worked better.”²⁶
• The town of Paradise has decided to end contracting out of snow clearing and waste removal services, having estimated they could provide the services cheaper themselves—as much as half the cost of the current waste removal contract valued at $2 million annually.²⁷
• Conception Bay South has already stopped contracting for solid waste collection and they estimate a $230,000 cost savings annually.²⁸

There are even more examples of contracting-in across the region and the country:

• In 2013, when contractors provided snow removal for Port Hawkesbury, Nova Scotia, the budget was $350,000 and growing. In 2014, Port Hawkesbury dropped its primary contractor, reducing the cost to $216,000—a 62 per cent decrease. In 2015, the remaining private contracts were phased out,²⁹ and the municipality reported a surplus in the snow-clearing budget.³⁰ The municipality also brought road patching services back in-house, and reported plans to bring waste management and other services back in.³¹
• In 2017, the Halifax Regional Municipality of Nova Scotia returned parking enforcement to in-house delivery, projecting a $100,000 yearly savings, or about 8 per cent.³²
• The town of Taber, Alberta, decided to end a contract with a for-profit company to finance and upgrade the town’s wastewater and stormwater infrastructure and operate and maintain its water and wastewater systems. Renegotiating the loan alone saved them $1.4 million over 10 years, allowing them to complete the upgrades at a lower cost, avoid rate hikes for residents, and employ 10 per cent more unionized staff.³³

Many other examples can be found worldwide:

• Since 2011, London’s Islington Council has taken back contracts for cleaning, building and grounds maintenance, and waste management services worth £380 million, saving about £14 million, or 4 per cent;
• Seoul, South Korea, stopped contracting out cleaning services and saved 5 per cent despite the higher labour costs because of other fees associated with the private for-profit contract;³⁴ 
• Kragerø, Norway found that waste collection that was no longer contracted out was more effective and cost-efficient, resulting in a 14 per cent reduction in resident fees. Though they faced higher labour costs for wages and pensions, they saved money by “avoiding expensive tendering processes and benefited from having its own full-time employees in waste collection who could also carry out duties in other areas of responsibility for the municipality.”³⁵

While there is considerable research on this, essentially the core point is that privatization, which is often adopted to save money in increasingly austere environments for public finance, often ends up costing more for a variety of reasons:

• Corporations must generate profits and pay dividends to their shareholders and parent companies–this is a cost that doesn’t exist in the public service. 
• Public bodies typically pay lower interest rates than private entities, making their borrowing costs lower than private companies.
• Privatization generates extra complexity and costs, including substantial fees to consultants and lawyers who design the complex contracts and payment schemes. That is, rather than paying the local school bus driver, governments end up paying wealthy financial institutions instead.
• Public authorities lose control over service costs, as private operators tend to outsource some of the work to other companies, which often comes at a high price.
• Private operators lack a long-term vision regarding financial management.

Privatized services cost more than publicly provided services. While it may seem obvious that the profit margin alone adds cost to a contract, profits are only one significant way that expenses are higher. When the additional financing costs are added to the operating expenses maximized for profit, Nova Scotia’s experience with public-private partnership (P3) schools³⁶ and highways³⁷ resulted in hundreds of millions in overpayment. These partnerships involved private-for-profit consortiums, building, financing, owning and operating the infrastructure using lengthy, complex contracts. The additional P3 costs represented a significant amount of taxpayer money that could have been invested into more custodians, educators, and road service–but instead went into subsidizing the profits of for-profit companies, many of whom are not local.³⁸ The analysis of Newfoundland and Labrador’s experiments with P3s also underlines similarly, that these contracts have many red-flags.³⁹

Not just about cost: Public Services are superior to for-profit contracted services

There is mounting evidence that contracting out and privatization costs more and therefore stretches governments dollars for public services more thinly. Less often addressed is the simple fact that the public provision of social services is preferable. Public provision of core public services leads to:

• Improved quality of services;
• Equitable access for users and decent working conditions for providers;
• Accountability to community members;
• Ability to respond quickly to emergencies, and;
• Greater efficiency.⁴⁰

The movement to de-privatize Canada’s water, waste, transport, telecommunications and health care sectors generally,⁴¹ and in local government specifically (including housing, parking, security, police station construction, and recreation services)⁴² highlight the value of public services.⁴³ Reasons for undertaking de-privatization initiatives to ensure more services are under public control include “increasing costs and declining quality for service users, worsening conditions for workers and virtually non-existent accountability, transparency and democratic control.”⁴⁴ In Winnipeg, for example, serious concerns were raised about outsourced waste collection jobs that were insecure, paid less than when collection remained in-house, and for which the occupational safety and health standards were insufficient and non-adherence to regulations.⁴⁵ Some decisions to stop contracting out some services in other countries have been driven by “fiscally conscious municipal managers who decide to bring services back in-house because it is cheaper to do so (by removing the costs of monitoring and tendering as well as eliminating profit-taking by private firms).”⁴⁶ An older study of reasons for bringing work back in-house in Canada included “local control, cost, problems with contractors, increased local capacity.”⁴⁷

Public services: Better quality and responsiveness of services

Publicly managed services are best trusted to uphold the public interest, improving quality and responsiveness. There are lessons to be learned from the COVID-19 pandemic, Hurricane Lee, Post-Tropical Storm Fiona, and the recent floods and wildfires in the region. These events have demonstrated how critical public services—and the workers who provide them—are to a healthy, functioning society. These services will likely be increasingly needed as we face mounting climate and public health emergencies. For these services to be most effective and responsive, they must be sufficiently funded and under public control. Publicly managed services are better able to comply with regulation changes, with a view of upholding the public interest in mitigating the emergencies in the first place. 

One study of how P3s affect a service provider’s ability to provide services in the public interest finds this model “often works at cross purposes with the people trying to ensure the day-to-day functioning of these public institutions.”⁴⁸ The turnover of workers in contracted companies also often results from a lack of institutional knowledge and training.⁴⁹ A central concern raised by workers was the “pervasive sense of uncertainty and confusion over who was ultimately responsible for a certain task or job duty” when certain services of municipality workers are done by contractors, often in the same building or area of the community for the same tasks such as snow removal. The result is inefficiency, with the public sector often back-stopping because the contracts can never predict all that is needed nor accommodate the necessary flexibility to respond to unexpected challenges. 

Privatization also poses risks to the public interest, including bankruptcy. There are many examples of this worldwide. In Norway, in 2017, one of the largest companies providing waste collection services went bankrupt, surprising most municipalities. However, the outcome was ultimately positive—though initially left scrambling, this resulted in 100 municipalities bringing the service back in-house, lowering user fees and providing better pay and working conditions for workers.⁵⁰

Privatization has also been found to exacerbate racial injustice. A recent report found that privatization came “at the direct expense of Black, Indigenous and racialized workers who work in contracted-out services, or who depend on these services.”⁵¹ Once services were privatized, these workers experienced worsening working conditions, including lower pay and benefits, and racial discrimination and harassment, all of which also negatively affected the quality of the services they were able to provide.

Conversely, bringing work back in-house could help advance racial justice and improve working conditions. Port Hawkesbury’s mayor said the following about their de-privatized services: “It was trial and error, but it wound up that the people are proud of them, the streets are done much better, and it’s transparency at its highest. They’re dedicated and happy with their work.”⁵²

Similarly, Halifax’s impetus for bringing its parking compliance enforcement service back in-house was the company’s poor performance and complaints about it.⁵³ Notably, this company had been brought in to replace another in which three employees were charged after submitting thousands of forged parking tickets.⁵⁴ After terminating the contracts, Halifax planned to hire nine compliance officers to enforce parking bylaws, and they would also enforce other minor offences as required by the municipalities’ needs. 

Promoting democratic, equitable, and sustainable public services

Publicly provided services are more democratic, allowing for more explicit promotion of socially and economically just and environmentally sustainable services. It is easier for community members to hold publicly managed services to account for meeting environmental or other social or economic objectives overseen by elected officials, and to provide more meaningful input into these services. Where is the incentive for a private, for-profit company to reduce waste in locked-in 25-year contracts? What the province may need in the year 2049 will likely be very different from what it needs today, as all levels of government will be focused on preventing the further warming of the planet and decreasing greenhouse emissions. Publicly managed services are better positioned to prioritize “long-term ecological concerns over short-term financial considerations.”⁵⁵ As the Transnational Institute’s study on municipal examples of bringing services back in-house shows, “procurement, employment and investment decisions can bring ecological and equitable economic development.”⁵⁶

All levels of government should consider de-privatizing services and commit to protecting essential public services from being captured by private for-profit interests in the first place. 

As publicly provided services, they are more democratic, and governments can better ensure the best quality of public services and the broadest access. These services must, however, ensure community members can contribute their input and control not just at elections every four years but rather in meaningful opportunities for inclusive, bottom-up, transparent decision-making. 

It is also critical to consider the service user experience and working conditions of those providing current public services and improving both in efforts to contract services back-in. As the cases of those who have brought services back in house have shown, “workers achieved more protection and better conditions than in the private sector – especially the most vulnerable.”⁵⁷

Research on the thousands of (re)municipalization examples show that when essential services are publicly owned and democratically organized, they can effectively “strengthen community wealth, localize the economy and fulfill people’s collective needs.”⁵⁸ Public ownership can also take different forms, such as the collaboration with grassroots citizens’ and workers’ cooperatives⁵⁹ or co-ownership shared between a public authority and a not-for-profit association.

In summary, we must move away from an approach that uses public money to guarantee the profits of private entities that promise to absorb risks when, in reality, they too often introduce different ones, like bankruptcy. In contrast, public finances are more effectively, efficiently, and equitably used for publicly-managed and -provided services. This results in:

• Lower costs: The government does not have to pay for contract tendering and monitoring or the companies’ higher expenses, including financing at higher interest rates and profits, which might support lowering fees for service users;
• More accountability and democratic control: The public has more input into how the service is provided, allowing more swift and less costly changes as needed without being locked into contracts with no flexibility;
• Less risk: Services provided by a private company that can declare bankruptcy or engage in practices that compromise the services;
• Better quality, decent jobs, and equitable access to services: Public services are of higher quality and can be designed to support decent work and well-being and ensure universal access. Alternatively, the lowest bidders seeking to maximize profits can result in a patchwork of poorer-quality services and working conditions.

Context: What Newfoundlanders and Labradorians think

As argued above, Newfoundland and Labrador has a unique opportunity to correct a decade-long program of austerity that has resulted in significant reduction in the funding and quality of public services. Investing in and rebuilding public services are the most effective way to help households struggling with higher costs of living. They provide affordable, and necessary, public services to residents. They promote equality and they help the economy. Investment in direct public provision of services–rather than privatization and contracting out–is the more efficient method of delivering services, and provides a host of other benefits to the province.

Given governments’ increasing reticence to make these investments, and their preference for simplistic and regressive tax cuts as a way to use their fiscal space, we also sought direct public feedback on their assessment of the value of public services.

This section includes a summary of findings from a survey conducted by Angus Reid for the Canadian Centre for Policy Alternatives – Nova Scotia from September 23rd to October 2nd 2025, among a representative sample of 501 Newfoundland and Labrador residents who are members of the Angus Reid Forum. The survey was conducted in English. For comparison purposes only, a probability sample of this size would carry a margin of error of +/-4.37 percentage points, 19 times out of 20. The survey results here are weighted by population.⁶⁰

Key findings 

Crucially, the number one issue of concern to residents of the province is the rising cost of living–61.7 per cent of our respondents rank it as the top government priority (see Table 11). This is not surprising, given evidence from other polls and the government’s own emphasis on an ‘affordability’ crisis. People are feeling the pinch, and over 70 per cent of our respondents believe that their income is not keeping pace with the cost of living. 

It is important to note that members of the public see a variety of solutions to these problems (see Table 12). While some seem to want reduced government spending, others want larger investments in public services (this is the second highest priority ranking–second only to a concern about cost of living). Indeed there is very little support for cuts to public services (only 3.86 per cent see that as their key priority). Instead, there is widespread support for more investment in direct public service provision–particularly in the area of housing and considerable support for a more redistributive tax system. There is also considerably more support for taxing high income households than there is for reducing public services.

At a more granular level, Table 13 shows that there is a surprisingly high level of skepticism about the turn towards privatization in public service delivery. Respondents are twice as likely to think privatization will cost more, reduce services, and reduce accountability as believe that it is a good way for governments to “save money.”

Unsurprisingly, given the context of a decade of cuts to public services, there is also evidence of frustration over the impact of those cuts. While respondents show a high level of trust for public servants providing services, and a general level of satisfaction with those services, frustrations over wait times in health care and additional fees and costs in the education system stand out as sore points.

To put it most simply, the public is concerned about the cost of living, and the public sees a redistributive tax system and investments in public services as key solutions to those problems. The people of Newfoundland and Labrador value their public services–they just want better access to them.

Recommendations

Newfoundland and Labrador has a problem with inequality. Recent inflationary pressures on the cost of living –for housing and food in particular–are often framed as an ‘affordability crisis,’ and there is no doubt that this is a central concern for the province’s residents. However, the best way to understand the “affordability crisis” is through a lens that evaluates government decisions from a focus on inequality. Cutting taxes puts more money in some people’s pockets, but if it reduces the investment necessary to ensure access to affordable public services for all, erodes wages of public sector workers in the province, and encourages the government to experiment with expensive privatization schemes, then most people will end up worse off. 

Cutting taxes puts more money in some people’s pockets, but it reduces the revenue the government needs to fund necessary investments that benefit everyone, including income transfers and public services. Worse, the resulting lack of revenue and deficits also give the government cover to justify cutting public services. 

Invest in public services 

Governments need to ‘keep their eye on the ball.’ The most effective responses to constrained household budgets are accessible and efficient public services. Investment in health care, education, childcare and affordable housing are the best value for money that residents get. These measures reduce inequality and give back more than they cost. The erosion of these systems–most notably in the health care system–is a key political concern in our data.

Focus on ensuring accessibility 

While hopelessly long wait times at emergency rooms highlight that accessibility of public services are under threat in the province, the concerns are much broader. Focusing on tax cuts that put a few more dollars in your pocket, while user fees skyrocket, distracts from real household budgets. In Newfoundland and Labrador over the last decade, residents have seen:

• Steep Increases in the cost of sending youth to school, most notably in the area of post secondary education tuition.
• Increases in user fees for public facilities like recreation centres.
• A proliferation of fees for accessing the health care system and the emergence of for-fee health care options that undermine the public sector.

Residents shouldn’t be facing fees for blood work, medical tests and things that were once provided by the public service. Transferring the load for funding public services onto user fees is regressive, and ultimately undermines the effectiveness of those systems.

Avoid panacea solutions like privatization 

After a decade of constrained investment in public services, it is easy to see why governments might like the way privatization sounds, but the public knows better. These schemes end up costing more than simply having properly funded the system in the first place. You don’t need to be an expert to know that the ongoing scandal surrounding the province’s reliance on private travel nursing to paper over cracks in the underfunded system has not been efficient or good value for money. 

Address wage gaps and cost of living pressures 

The lack of investment in public services in the province has not simply reduced the effectiveness of public services and people’s access–it has also resulted in sustained government efforts to reduce the pay of people working in those areas. Over the last decade, public sector workers in the health and education sector, as well as workers providing public services in the private sector (like early childhood educators and those working in elder care) have not received wage increases that have kept pace with inflation. Public services need workers, and, as noted above, paying public workers not only ensures access to affordable services, but also provides decent living wage employment for people in the province.

Trying to solve the province’s financial problems, and pay for tax cuts on high income households by freezing public sector salaries puts money in some people’s pockets, but comes at the expense of others.

Improve the progressiveness of taxation

Progressive income taxes have been at the centre of the Canadian system of public finance for decades and it has served our communities well–helping to provide valuable public services. Capitalizing on fears about affordability to cut taxes on high income individuals is an attack on that system. If governments are concerned about equality and real affordability, they should consider adding tax brackets and better targeting tax credits. Both measures are designed to ensure tax fairness and reduce inequality.

Integrate STiK and intersectional analysis into budget analysis 

This report argues that publicly funded services provide huge social and economic benefits to the households they serve in this province. Assessing the value of Social Transfer in Kind is a useful tool to help governments focus on how they might use the resources they have more effectively to help people with ‘affordability’ challenges. Fiscal policy isn’t just about taxation, it is also about investment and investments in public services help households keep costs under control.

Conclusion

Public services improve the lives of the residents of Newfoundland and Labrador and contribute to a more equal society. The tax cuts that were tabled in the recent budget result in significant revenue loss that could have been used to bolster public sector investment.

As Mackenzie and Shillington say, “public policy debate over taxes without reference to the public services impact of tax cuts is like shopping without looking at the price tags. Just as some Canadians can afford to shop without looking at price tags, some Canadians’ incomes are high enough that they can buy into tax cuts and remain confident that their private gains will be greater than their public services losses.”

Acknowledgments

The Newfoundland and Labrador Association of Public and Private Employees provided funding for research related to this report, which was part of a larger provincial project. 

The CCPA-NS office is located in Kijipuktuk in Mi’kma’ki, the unceded, un-surrendered ancestral land of the Mi’kmaq people. Newfoundland is on the unceded and ancestral territory of the Beothuk, and Labrador is on the ancestral homelands of the Innu of Nitassinan, Inuit of Nunatsiavut, and the Inuit of NunatuKavut across Labrador. We recognize that we are all treaty people and have responsibilities to each other and this land.

Cover photo: Ritche Perez, @firmalino on Pexels. St. John’s, Newfoundland and Labrador.

Graphics

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The two contests are in most ways poles apart. One is a transparent test of skill and wits, based on rules known in advance and arbitrated by a fair-minded referee, at least in principle. The other will take place behind closed doors, twisting and turning imperceptibly on demands from the Trump administration and concessions from Canada and Mexico. 

However, the “beautiful game” and North American trade share a fundamental similarity our leaders often paper over. They are both competitive, not cooperative, activities that put participants—players or workers—at risk from unfair and often illegal practices. In trade, like at the World Cup, a good yellow card system can help curb wrongdoing.

Yellow and red cards

Soccer is a battle of opposing sides where one team’s victory comes at the other’s defeat. The competition is so fierce that players may be tempted to cheat or play rough to gain an edge. The referee plays an important role in moderating these impulses by issuing yellow and red cards.

Yellow cards are for first or minor infractions, like a kick to the shin. They are less a punishment for one particular player than a warning to all. A yellow card tells both teams to cool it and play fair. If that’s not possible, or a player makes an especially grievous foul, out comes the red card to remove them from the game entirely.

Capitalism is also a battle of opposing sides: company against company, company against workers, sometimes company against government. The cutthroat competition for profits can drive firms to do bad things like ignore or suppress worker rights, steal a competitor’s technology, smuggle controlled goods into their supply chains, or fudge the results of environmental testing, to list only a few examples.

Worker protections in trade deals

About 10 per cent of a contemporary trade deal like CUSMA is about lowering tariffs on imports. The other 90 per cent sets rules for how governments are expected to treat companies, foreign investors and private property. Free trade deals strongly protect intellectual property rights and the free movement of capital, for example, and strongly curtail economic development policies favouring domestic jobs or priorities. 

CUSMA and other Canadian deals also contain baseline protections for workers that can be upheld, at least on paper, through state-to-state dispute settlement. These protections include a requirement on governments to respect internationally guaranteed rights to freedom of association and collective bargaining, eliminate forced and child labour, and end discrimination in the workplace. CUSMA obligates governments to extend to migrant workers the same rights in law as everyone else.

To keep our soccer metaphor going, workers should be able to rely on their governments to referee bad corporate behaviour such as union busting, which can range from disinformation campaigns to companies dragging their heels on signing a collective agreement to firing employees for their efforts to organize new workplaces. They should expect governments to investigate worker violations at home and abroad, though trade-based dispute settlement if needed.

Unfortunately, governments almost never raise labour disputes with their trading partner countries. Indeed, most trade agreements bog down labour complaints in endless consultations that frequently do not include the workers or companies involved in the dispute. 

Governments, including the current one in Ottawa, also frequently take the side of companies in their competition with workers for the profits resulting from their labour. They do so by implementing right-to-work legislation (e.g., in the southern United States) or banning strikes in so-called strategic sectors (as Canada is considering for federally regulated rail workers) or relaxing workplace health and safety measures, and so on. 

CUSMA sets a new standard

As a result of this imbalance in Canadian trade deals—and the tendency of governments to side with companies over workers—there was nothing like a fair yellow-card system for protecting worker interests in the cross-border capitalism governed by the rules of free trade. Companies could violate basic labour rights like the right to organize with no repercussions to how their goods will be treated or where they could sell them. 

Until recently, that is. 

At the insistence of U.S. Democrats, with backing from labour unions in all three countries, CUSMA introduced a rapid response labour mechanism (RRM) that for the first time gives some workers direct access to an effective system for remedying labour rights violations. It’s not perfect and applies only to a limited number of industries in Mexico, but it’s the closest we have come to a yellow and red card system for policing foul behaviour by corporations in North America.

Under the RRM, workers in covered Mexican facilities (e.g., auto parts plants and other factories, mines) can request an investigation of alleged labour rights violations at their workplace. They must present evidence to labour officials in either the United States or Canada, who are obligated to investigate within 45 days and move complaints forward where a labour violation seems clear. 

The RRM was designed to help Mexican workers uphold their stronger rights in labour reforms introduced by the Mexican government in 2017 and 2019. Of the several dozen complaints so far, only two (at an auto parts plant and Canadian-owned mine) were filed through the Canadian government’s RRM process with help from Unifor and United Steelworkers. The rest were launched via the United States. 

If an investigation finds in favour of the complaining worker(s), the covered facility gets a yellow card warning and must address the grievance. Many of the dozens of complaints filed to date have resulted in workers being reinstated and receiving back pay, or undemocratic collective agreements being overturned. If the company fails to redress the situation, they can receive a red card suspending trade benefits or face other penalties on the goods and services offered by the facility. 

Moving the goalposts on worker-friendly trade

Worker interests barely feature in news and political statements about the CUSMA review. The conversation begins and ends with fears about investment certainty and the competitiveness of North American business. Canadians are told again and again that losing the deal would be catastrophic, and therefore the best possible outcome of the review would be a rapid agreement with as few concessions to the United States as possible. 

While that outcome may provide some psychic relief, it would be a missed opportunity to move the trade goalposts in support of workers in North America. Workers everywhere deserve a yellow and red card system for challenging labour violations. Until that happens, deals like CUSMA and Canada’s other free trade deals will continue to skew the game in favour of corporations.

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One place where that is particularly visible is in refugee policy, where the federal government has cut more than $2 billion from the Department of Immigration, Refugees and Citizenship Canada (IRCC) through its adopted budget. These reductions included significant cuts to the Interim Federal Health Program (IFHP), the federal health insurance program that provides healthcare coverage to refugee claimants, victims of human trafficking and family violence, protected persons in Canada and certain other vulnerable individuals who are not eligible for provincial health insurance.

Since May 1, 2026, the federal government has introduced a co-payment model to the IFHP, which requires beneficiaries to pay $4 for each prescription medication and 30 per cent of any supplemental services. For many, these new measures will mean having to choose between accessing essential health services, such as home oxygen devices that allow them to breathe, or having enough money to afford food. 

The government has “rationalised programming” as a means of achieving economic objectives. Yet when applied to healthcare, “rationalising” does not simply reorganize spending. It determines who can access care and who cannot. The reality is that when policymakers deprioritize healthcare for some, they compromise the health of the entire country. 

The federal government is presenting the IFHP cuts as a cost-saving measure, but is implementing them in the context of a broader political narrative that portrays refugee claimants as taking advantage of the system by receiving benefits funded by Canadian taxpayers. These claims are both wrong and harmful, and transform a public health issue into a debate about who deserves care. Refugee claimants are taxpayers who purchase goods and services, work jobs, rent homes, pay international tuition fees and contribute to the Canadian economy. They do not receive better healthcare than citizens do and their coverage is not comparable to that of the average Canadian. It more closely resembles the level of care available to citizens on welfare. Refugee claimants awaiting a decision on their claim also do not have access to provincial health cards and cannot access primary care physicians. A national survey of over 2,500 Canadian physicians showed that only about 26 per cent of Canadian healthcare providers were even registered to provide care under the IFHP program, further limiting refugees’ access to healthcare. 

Although the government describes these co-payments as “modest,” the real consequences on program beneficiaries are not “modest” at all. The $4 prescription cost will quickly add up when patients require more than a single medication. Many will simply be unable to afford these added fees and skip necessary care. For supplemental services, paying 30 per cent of the fees will have the same effect. Ultimately, restrictions on access to preventive healthcare services will shift the demand to emergency rooms and more expensive healthcare costs in the long term. 

Untreated physical and mental health conditions almost always escalate. We’ve seen this before. In 2012, when the federal government introduced similar IFHP cuts, a senior woman with diabetes and chronic kidney disease lost access to medication, leading to emergency hospital visits. Similarly, a teenager with PTSD lost his psychiatric support, resulting in long-term mental health needs. Two young children with asthma were repeatedly hospitalized because inhalers were no longer covered. Pregnant women skipped essential prenatal care, resulting in an influx of high-risk, emergency-room deliveries. Children with manageable infections developed severe complications, requiring prolonged ICU stays. Now a month since the cuts, community organizations, social workers, clinics and hospitals are already seeing the impacts.

In 2024-25, there were more than 16.1 million unscheduled emergency department visits reported in Canada compared to 15.5 million the year before, according to the most recent data from the Canadian Institute of Health Information. IFHP cuts will simply push that trend even further as it’ll be the only option for those unable to afford the co-payments. Withholding basic, preventive care from tax-paying residents does not save public money. It simply postpones the financial burden and forces the provincial government to pay exponentially as the issues inevitably escalate.

These changes are part of the federal government’s much larger goal of changing the Canadian immigration system.Federal legislators are also introducing and implementing other immigration crackdown bills—including Bill C-12, which increases enforcement, grants border agents additional powers, increases surveillance, and changes how refugee claims are deemed eligible and processed. 

The implementation and communication surrounding these changes have already created uncertainty and distress among many refugee claimants, all while no longer having access to mental health services. Together, these changes create the impression of a government that is making refugee claimants suffer more while taking away the support systems that could help them.

Changes to the IFHP system are an early sign of a government quietly redrawing the boundaries of who gets to belong in Canada and who is to blame for the systemic failures. It is easy to scapegoat migrants and refugees as the reason for problems in Canada’s healthcare system. This type of scapegoating signals a very dangerous decline in Canadian values. 

Canadians should actively oppose these cuts, not just for humanitarian reasons, but also because they have very real implications for all residents and citizens. When people are unable to access timely physical or mental healthcare, their needs do not disappear. They often worsen until they require costly emergency intervention, which  places additional pressure on already overburdened emergency rooms and healthcare systems. For refugee claimants whose cases are accepted, untreated health and mental health concerns become a provincial responsibility. By choosing to invest less in care, we are accepting a lower standard of health for everyone.

Canada is at a crossroads. One path treats healthcare as a universal commitment and immigration as a shared responsibility shaped by law, evidence, and dignity. The other path treats care as a cost and a tool for exclusion. 

The proposed cuts to the IFHP may appear limited, but their implications are not. They normalize a politics of exclusion, fear and division rather than one of inclusion, growth and care. Canada has already reversed this mistake once. The question now is whether it will recognize it again before the costs become irreversible. The health of our Canadian society is interconnected, and policies that deny care to some ultimately have consequences that affect us all.

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Thirteen years ago today, on July 6, 2013, a runaway train carrying 72 tank cars of volatile shale oil derailed and exploded in the middle of the night, spilling six million litres of oil, obliterating the centre of the historic town of Lac-Mégantic in southern Quebec. That night, 47 people died, and 27 children lost their parents. It was the worst catastrophe on Canadian soil since the 1917 Halifax explosion.

The Lac-Mégantic disaster was the consequence of a decades-long trajectory of mutually reinforcing policies—deregulation, fiscal austerity, privatization—which enhanced corporate self-regulation, and systematically eroded safety protections.

Today the federal government is moving at warp speed to “remove red tape” (i.e. implement deregulation) which it sees as obstructing its economic objectives and private sector priorities. Its planned cuts to the public service workforce will undoubtedly include cuts to regulatory agency staff.

The power relationship between the government regulator and the regulated industry—regulatory capture—was a central contributing factor to the tragedy, repeatedly subverting public safety to profit.

Recent developments in the saga

The Supreme Court decision: another slap in the face

Industry executives and owners blamed the Montreal, Maine & Atlantic (MMA) company’s locomotive engineer and two other frontline staff. However, the deck was stacked so heavily against these employees that calamity was a foregone conclusion. Investigators laid criminal charges against the front-line employees, but they were subsequently acquitted. 

No corporate executives or owners were charged. No senior government officials or politicians have been held to account. Successive governments have refused demands by the community to hold an independent commission of inquiry.

The victims’ families filed a class-action lawsuit shortly after the disaster. In 2015, they reached a combined settlement with 25 defendants contributing to a $460 million victims’ compensation fund. CP Rail (now CPKC) was the sole defendant connected to the disaster that refused to pay into the fund, stating it bore no responsibility for the tragedy.

In May 2025, the Supreme Court of Canada ended efforts by litigants to sue CPKC over its responsibility regarding the disaster, declining to hear an appeal of two lower-court rulings (the Superior Court and the Court of Appeal) that found CP did not have any liability. The lower courts assigned responsibility solely to the engineer, failing to set enough handbrakes. 

A Lac-Mégantic Rail Safety advocate fined by CP police

Major railways in Canada, alone among private corporations, have their own police forces with full investigative and jurisdictional powers over accidents on, or near, their property. They are able to police themselves without being held accountable for their actions which may violate Canadian laws. They have authority to enforce all federal and provincial laws within 500 metres of railway property.

In early June 2025, Robert Bellefleur, rail safety activist and spokesperson for the Lac-Mégantic Coalition for Rail Safety responding to worries from neighbours about a culvert under the railway tracks that was collapsing, took photos of the culvert and sent them to the company. Three days later, a CPKC maintenance crew repaired it. 

Shortly thereafter, CPKC sent two private police officers (armed with bullet vests, pistols, clubs and handcuffs) to Bellefleur’s home accusing him of illegal entry on their property. Following CPKC’s police complaint that he was illegally on their property, Quebec’s Director of Criminal and Penal Prosecutions (DPCP) issued a fine of $700 including legal fees against Bellefleur. He decided to pay the fine since fighting it in court would have been costly. 

Nevertheless, it has not stopped him from speaking out at public events and in the media highlighting the arbitrary policing powers of railway corporations.

The Transportation Safety Board watchlist

The federal Transportation Safety Board (TSB) created a watchlist to highlight “those issues posing the greatest risk to Canada’s transportation system” and that need to be rectified by Transport Canada.

Its most recent 2025 watchlist highlighted a number of long-time systemic safety issues involving failure by Transport Canada to detect noncompliance with regulations and ensure corrective action. They included fatigue management, companies’ safety management systems, and crews failing to recognize and follow signal indications, all of which, according to the TSB chair, “still present a high risk to the transportation system, which is why they need to stay on the watchlist.” Drug and alcohol impairment issues were added to the latest watchlist.

The railway bypass circumventing the town still on hold

Currently, four to six CPKC trains, each consisting of 225 freight cars and tankers carrying hazardous goods, pass through Lac-Mégantic daily, often during peak hours. These trains, often measuring over 3.8 kilometres long, indiscriminately block the eight level crossings that intersect the town’s main traffic arteries.

In 2018, the federal and provincial government committed to funding a 12.5 km bypass around the town centre. Upon completion, Canadian Pacific Kansas City (CPKC), will own and manage the bypass. 

In September 2025, the Canadian Transportation Agency (CTA) received the CPKC’s formal application to construct the bypass. Once consultations are completed, the CTA will move forward if it determines the proposed route is suitable, and construction will hopefully begin although there could be further delays. The CTA has not yet made a decision.

An open window

The government, the railway corporations, and the justice system have all failed the people of Lac-Mégantic. They have also continued to fail to learn the lessons of Lac-Mégantic terms of protecting the public against future disasters. Time and again, the corporate game plan in the wake of major disasters is dispute, deny, and delay. 

The government continues to delay implementing safety measures necessary to diminish the probability of a recurrence. As the Environmental Commissioner in the Auditor General’s Office  warned, “The window for a recurrence of a Lac-Mégantic-type disaster is still open.” 

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In early May, over 50,000 nurses participated in a province-wide strike vote, voting 98 per cent in favour of job action. Strike votes send a powerful message to health care employers and the government that workers are willing to withdraw labour in order to reach a settlement that addresses their concerns, including compensation and working conditions.

In May, the multi-union Nurses’ Bargaining Association, led by the B.C. Nurses’ Union, reached a tentative agreement with the Health Employers Associations of B.C. Then, in June, 67 of voting nurses rejected the tentative agreement, which set the stage for job action. 

Under the B.C. Labour Relations Code, health care is designated as an “essential service,” which requires that minimum staffing levels are instituted during job action. This prevents a full withdrawal of nursing care, but if job action escalates, it will most certainly impact health care services for patients.

With this context, it is important to examine some of the underlying system-level issues that have led B.C. nurses to reject the tentative agreement and begin job action.

B.C. hospital capacity has been shrinking

The majority of B.C. nurses work in public hospitals. An aging population with increasing medical complexity, coupled with shrinking hospital capacity, translates into heavier workloads and more challenging working conditions for frontline nurses. 

As Table 1 shows, the number of staffed hospital beds dropped from 293 to 234 per 100,000 people between 2014-15 and 2023-24—a decline of 20 per cent. Over this period, B.C. experienced the largest decline in staffed hospital beds among the three most-populous provinces (Ontario, Quebec, and B.C.). 

Although Ontario and Quebec had much lower hospital bed rates in 2014-15 compared to B.C., B.C. nurses are experiencing a precipitous decline in the ability of public hospitals to meet the needs of the population. 

Fewer hospital beds relative to the growing and aging population contributes to congestion in emergency departments where patients may wait longer to be admitted into hospital because there are no available beds. Surgical patients wait longer for surgeries if there are no recovery beds available. Occupancy rates climb.

This creates challenging working conditions and moral distress—as the gap widens between the level of care nurses want to provide and the institutional constraints they face on a daily basis. Burnout follows and nurses leave the profession.

Emergency department wait times are a canary in the coal mine for health care system performance. B.C. hospital capacity appears insufficient to meet the needs of the population. This is evident when we look at the time it takes to be admitted to an inpatient bed from the emergency department. 

In 2020-21, 90 per cent of patients waited 32.8 hours for an inpatient bed, which increased to 64.7 hours in 2024-25—a wait time that has nearly doubled (Figure 1). This is a significant increase in wait times for patients who require inpatient care, but must wait due to a lack of available inpatient beds.

Declining access to public seniors’ care is making problems worse

Increasing hospital capacity alone will not solve acute care capacity challenges. Too often, patients remain in hospital because there are no community alternatives with an appropriate intensity of clinical care and support. The lack of access to appropriate seniors’ home and community care is widely recognized as one of the main barriers to reducing hospital strain and wait times. 

But on this front, B.C. has been losing ground. In a recent report, the B.C. Seniors Advocate found that B.C. has a shortage of 2,000 long-term care beds today, which increases to 16,000 beds over the next decade.

Instead of fast-tracking new long-term care beds, the provincial government, in its February budget, put the brakes on previously planned public long-term care expansion. The consequence is that more seniors, especially with lower incomes, do not have access to seniors’ long-term care and may end up in a hospital bed because there are no alternatives. 

Previous CCPA analysis found that increasing private, out-of-pocket spending on seniors’ care is also a reflection that the publicly funded system is not meeting the needs of British Columbians. Our analysis found that per capita private long-term care spending increased by 112 per cent while public spending increased by 50 per cent from 2014 to 2023. Private spending comes in the form of out-of-pocket household and private insurance payments. 

Targeting health care investments where it’s needed

Hospitals and regional health authority services make up about 70 per cent of the health budget, followed by physician services and B.C. Pharmacare. Although the health care budget has received decent annual increases over the last decade, the 2026-27 provincial budget fails to maintain existing health care service levels, and this fiscal context contributes to what nurses are experiencing on the frontlines.

According to the most recent data available, B.C. funded its hospitals at the second-lowest rate, per capita, at $2,111, only ahead of Ontario at $1,967 in 2023. B.C. public hospital funding, on a per-person basis, was below the Canadian average of $2,132.

Renewed investment does not appear forthcoming. Regional services, including hospitals and community services, are forecast to only see a teeny 0.7 per cent increase in the fiscal year ending March 2026. The budget for 2026-27 only offers a 2.5 per cent funding lift to regional services—far below what is needed to maintain service levels and account for inflation and population growth and aging. An increase of five to six per cent is required to maintain existing service levels, when accounting for inflation, population growth, and aging.

But at the same time that the B.C.budget brings real spending cuts to health care, which will make it virtually impossible to address severe capacity challenges, the government has not always targeted public funding where it is most needed—and most effective.

The rapid growth of provincial spending on physicians risks crowding out other health care spending priorities. According to data from the Canadian Institute for Health Information, provincial spending growth on physicians of 17 per cent in 2023 (the most recent year available) outpaced spending growth in long-term care (nine per cent), hospitals (15 per cent), and home and community care (16 per cent). This comes as B.C. reports more family physicians per capita between 2020 and 2024—increasing from 133 to 138 per 100,000 people—and yet access to a family doctor has been on the decline since 2015.

From the standpoint of public finances, it is not fiscally prudent for the provincial government to continue such large spending increases on physician services while receiving less access to primary care in return. A recent CCPA report offered evidence-based approaches, such as an expansion of community health centres, with their focus on taking pressure off hospitals by ensuring access to low-income and equity-seeking groups who struggle accessing primary care.

Another frustration for nurses is the misallocation of public dollars to for-profit staffing agencies when those dollars should support recruitment and retention of the long-term nursing workforce. 

For-profit staffing agencies were intended to provide temporary staffing relief, but have become widespread in B.C.’s health system in order to address vacancies and staffing shortages. Health authorities contract these for-profit corporations to supply nurses, medical lab technologists, care aides, and other professions to fill staffing gaps. 

The use of private, for-profit staffing agencies is a financial drain on publicly funded health care organizations. The cost to health authorities can be more than two to three times the cost of hiring regular employed staff. It is also highly corrosive to morale within the health system because regular employees are working alongside agency staff, making upwards of 50 per cent more.

According to government data obtained by CTV News, public spending on for-profit staffing has totalled more than $800 million between 2018-19 and 2024-25—an astonishing 31-fold increase over seven years.

As B.C. Nurses Union president Adrian Gear puts it, “Nurses want to know why the health authorities continue to spend millions of dollars on costly short-term staffing solutions, while the nurses who are here for the long-term struggling with workload pressures, unsafe working conditions, and staffing shortages are being told the cupboards are empty.”

All of this comes at a time of growing economic inequality and cost of living challenges facing nurses just like others in society. As these frustrations and system-level pressures build for B.C.’s frontline nurses, it is not surprising that they want conditions to change. A strike is one of the most visible and powerful tools available to health care workers to demand public health care improvements.

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