Canadians should refocus their attention on Ottawa’s ballooning budgetary deficit, writes Sean Speer.
By Sean Speer, April 4, 2017
A week has passed since the federal government tabled its annual budget and attention has already turned to other topics such as marijuana, missing gold, and Parliamentary shenanigans.
As attention-grabbing as these issues are, it would be a mistake to neglect Ottawa’s ongoing budgetary deficit and its total lack of a plan to do anything about it.
The government will continue to dismiss calls to get its fiscal house in order as long as it assumes that people don’t care or aren’t paying attention.
Something needs to change and it must be the result of bottom-up demands for less red ink and more fiscal discipline.
Last week’s budget was the second in a row that failed to set out a plan and timeline for restoring budgetary balance.
One is beginning to get the sense Prime Minister Justin Trudeau’s quip about “budgets balancing themselves” was not a case of misspeak but rather a true reflection of his government’s fiscal policy.
Something needs to change and it must be the result of bottom-up demands for less red ink and more fiscal discipline.
The government is now set to accumulate deficits totalling $142 billion between now and 2021-22, and according to the budget, there’s more to follow.
The truth is we have no idea if or when the deficit will be eliminated. The Department of Finance has placed it somewhere between 2050 and 2055.
The government’s plan seems to rely on wishful thinking.
It’s the equivalent of trying to jump a chasm in two bounds, as veteran columnist George Will famously said. It never works.
Canada’s own history exemplifies the inherent risks of such an unrooted fiscal policy.
No politician or government purposefully chose to run 27 consecutive budgetary deficits beginning in 1970.
But that’s what happened until market forces caught up to us.
It was the aggregation of individual choices and decisions over many years under Liberals and Conservatives that caused the eventual problem.
There are always plenty of justifications for putting off fiscal choices.
The latest one is that deficit spending – or “investment” as the government calls it – is the key to “kick-starting” the economy.
We were told this massive hike in spending – nearly 20% in three years – would produce an uptick in economic growth.
In fact, last year’s budget estimated that Ottawa’s new spending would increase economic growth by 0.5% in the first year and 1% in the second year.
What have we gotten for the spending hikes and large deficits?
Not much except a growing federal debt.
The government’s “fiscal multiplier” has failed to materialize.
Its own projections for economic growth have gone down rather than up.
It’s a powerful indictment of the government’s fiscal plan and it’s embedded in its own budget.
This isn’t spin or a matter of interpretation. It’s arithmetic.
It’s up to Canadians to refocus our attention on the federal deficit and insist on a better, more disciplined plan.
No wonder the Trudeau government is keen to talk about any other topic.
The government was clear about its intention to run deficits for up to three years and there’s usually a bit of wiggle room afforded to such promises.
But 40 years seems a bit too generous, especially since the clear evidence is that Ottawa’s deficit spending isn’t helping the economy.
It’s therefore up to Canadians to refocus our attention on the federal deficit and insist on a better, more disciplined plan.
Wishful thinking is simply not enough.
Sean Speer is a Munk senior fellow at the Macdonald-Laurier Institute
