The government’s own finance department warned the Liberals late last year to change course. A department report spelled out that Prime Minister Justin Trudeau’s first budget had put Canada on the path to financial ruin.
Yet the budget finance minister Bill Morneau tabled Wednesday shows the Liberals did little to heed the warning. It offers no plan of escape from years of red ink.
The 2017 budget shows steep deficits for as far as the projections go and piles on $119.8 billion in debt over the next five years.
Let’s put this into perspective: Two days before Christmas last year the government quietly released a finance report that showed if we stay on the path the Liberals have set us on, we’d be facing $1 trillion in debt within 15 years and deficits until the 2050s.
The report warned that lower than expected growth combined with higher program spending “would be sufficient to put at risk the fiscal sustainability of the federal government.”
It should have been a wake-up call. But when you look at the latest long-term projections and compare them to the numbers in the last budget it shows these two perilous ingredients are sadly alive and well: Lower growth than we’d previously guessed and slightly higher program spending this year than last estimated.
This coming year the government is slated to spend $330.2 billion of taxpayer dollars, which is an increase of $15 billion from last year’s expenses. With revenues projected at only $304.7 billion, that leaves a $28.5 billion deficit.
This is still a major broken promise. Trudeau’s pledge to chalk up only “modest” deficits of no more than $10 billion per year was instrumental during the 2015 election in differentiating him from his opponents but also showing he’d govern with restraint.
He blew that promise out of the water with last year’s deficit that was initially expected to hit almost $30 billion. But don’t forget he’d pledged to maintain that $10-billion ceiling every year for three years and then return to black in the fourth year.
So not only does this year’s budget once again exceed the deficit ceiling pledge almost three times over, it also shows no sign of fulfilling the promise to return to black by the end of term. The most “modest” deficit on offer is the $18.8 billion projected for 2021/2022.
The other day Morneau told Bloomberg News to expect a “feelings” budget. “I focused on how people are feeling,” he said.
Yikes. Back when Morneau was appointed to his post there was widespread hope that his much-rumoured fiscally conservative outlook would rub off on Trudeau. Instead, it appears the opposite has happened. Trudeau’s “grow the economy from the heart outwards” philosophy has evidently influenced Morneau.
No doubt some Canadians, consumers and entrepreneurs alike, are going to feel good in the short term about the spending initiatives Trudeau and Morneau have in the works and invest accordingly. Fingers crossed – but don’t hold your breath – that this will result in an economic uptick.
But how are those Canadians going to feel when they, to say nothing of their children and grandchildren, have to pay for these feel-good times in the years to come?
WHAT ABOUT THE FUTURE?
The federal budget offers goodies for an aging population, but not so much for their kids and grandkids.
“Ottawa found an additional $720 for every Canadian age 65-plus in the 2017 budget, but only $88 per person under age 45,” notes Paul Kershaw, an associate professor at the University of British Columbia and the founder of Generation Squeezed, an advocacy group for Canadians in their 40s and younger.
Kershaw observes that while the budget provides new spending for things like parental leave, job-training and housing that benefit younger adult Canadians starting out on their careers and building families, these numbers are dwarfed by new spending on Old Age Security and health transfers, the bulk of which goes to those in the 50-plus category.
“We should protect medical care and retirement income security for our parents and grandparents,” Kershaw writes. “But we must also adapt as urgently to the time, money, service and environmental squeeze facing younger Canadians.”
Toronto Sun by Anthony Furey
March 23rd 2017