Good
economic
and
taxation policies
work much the same way
’s influence did in Ireland and worldwide: they develop slowly over decades of perseverance, patience and long-term thinking. Meaningful results rarely appear quickly, but the consequences of good or bad decisions eventually become impossible to ignore.
I was recently speaking with a young professional about the challenges of starting a career in Canada today and whether things were easier when I began. It wasn’t. I started articling in the late 1980s and early 1990s when Canada was in the midst of a recession. The job market was tight and opportunities were slim. I was fortunate enough to finish my articles at a great local firm in Calgary, but the threat of layoffs always loomed.
Accordingly, I focused on working hard and learning as much as possible, trusting that
the economy
would eventually improve.
Economic cycles come and go — that’s nothing new. However, I’m concerned that today’s labour market may be evidence of something more structural taking hold. Employment declined by 84,000 in February while the unemployment rate ticked up to 6.7 per cent, according to
.
Some observers might shrug off the numbers by pointing out employment has not changed much over the past year, but that misses an important point: Canada’s population has rapidly grown over the past several years.
Canada’s population remained significantly larger in 2025 than it was just a few years ago, Statistics Canada estimated, even as
growth sharply slowed
and briefly reversed in the third quarter. The employment rate inevitably declines when the population grows, but employment fails to keep pace.
That is exactly what the latest data reveals. The employment rate has fallen by 0.4 percentage points over the past year, so a smaller share of Canadians are working despite the country having significantly more people. With our country already grappling with
and sluggish economic performance, that should not be dismissed lightly.
Even more concerning is that the unemployment rate for youth aged 15 to 24 climbed to 14.1 per cent in February, with employment falling by 47,000 in a single month. Outside the pandemic years, youth unemployment is approaching the highest levels seen in more than a decade. I’m seeing this firsthand with numerous friends’ and family members’ youngsters who are struggling to find employment.
Young workers represent the
next generation of taxpayers
, entrepreneurs and job creators. Entry-level jobs enable young people to gain experience, build skills and eventually become productive contributors to Canada. A scarcity of those jobs is simply not good. Today’s youth employment challenges can easily become tomorrow’s fiscal challenges, compounding the ones Canada already faces.
Young people face an additional challenge: artificial intelligence (AI). Many entry-level jobs — the very roles that traditionally helped young people gain experience — are increasingly susceptible to automation. But it also presents enormous opportunities for those willing to adapt and develop new skills. Countries that foster innovation, investment and entrepreneurship will likely see these technologies translate into higher productivity and increased growth.
Unfortunately, economic growth and improved productivity in Canada have taken a back seat to simple politics. Under the current government, federal spending has surged to record levels, deficits have become a structural feature of the fiscal landscape and productivity continues to deteriorate. The latest labour market data only add to those concerns.
An example of simple politics driving policy is the government’s attempt to
present its fiscal framework
by
separating the federal budget
into so-called operating and capital components. That may sound innovative, but it is simply deceptive window dressing wrapped around a cutesy, but vacuous marketing phrase of “spend less to invest more.”
It’s an accounting trick that any first-year accounting student can quickly see through. Debt incurred for capital spending (with a ridiculously generous
) does not magically become less real than debt incurred for operating spending. Our youth and their offspring will ultimately be charged with repaying that debt and cleaning up the mess.
Our country’s poor fiscal situation should encourage Canadians to improve their financial literacy. Democracies function best when voters understand the long-term consequences of policy choices rather than focusing solely on short-term politics or fear stoking. Better choices at the ballot box would be an inevitable result.
We need politicians who understand that setting the environment for opportunity is critically important. By
planting good policy acorns today
, we can grow the kind of economic oak trees that provide opportunity for generations.
What can greatly assist with that required fostering? Well, as I’ve advocated about for years,
comprehensive tax reform
is the answer. The growing chorus calling for reform continues to expand, including
,
and, most recently, economist Jack Mintz and his colleagues at the
. Their report proposed a robust package of reforms designed to reduce complexity, improve competitiveness and encourage investment, entrepreneurship and job creation.
For young Canadians entering a workforce that will increasingly be shaped by AI and other rapid technological changes, opportunity will heavily depend on the policies we choose today. Governments cannot legislate prosperity into existence, but they can certainly discourage it.
As I finished my conversation with that young professional, I couldn’t help but reflect again on the lesson behind St. Patrick’s legacy. Meaningful change rarely happens overnight. It takes patience, perseverance and thoughtful decisions that may only bear fruit years later.
As an old Irish proverb wisely puts it, “A society grows great when old men plant trees whose shade they know they shall never sit in.”
If Canada wants the next generation to thrive in an economy shaped by AI and rapid change, we need to start planting better policy acorns today.
Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.
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