The Niagara Independent, March 31, 2023 – Federal finance minister Chrystia Freeland delivered the 2023 Federal Budget this week. Some refer to it as a NDP budget, introducing billions of dollars of new programs with no regard for the bottom line. The 2023 budget might prove to be the Trudeau government’s worst attempt at providing the country with a fiscal and economic plan. The government is increasing spending and promising more spending.
The news headlines captured the disappointed reaction from Canada’s business and financial leaders.
- Budget 2023: Canada Firmly in the Red
- Budget 2023: The Liberals’ reckless deficit of choice
- Canada Can’t Afford Ottawa’s 2023 Budget
- Freeland’s bloated, gratuitous plan that will make Canadians worse off
- If the government wanted to strangle economic growth, this is the budget it would produce
The Globe and Mail’s lead editorial had the most pointed headline: “The Trudeau Liberals build a budget on a cloud, and collective amnesia.” The editors summed up the Liberal’s effort in this way: “That is all a fiscal fantasy: the Liberal budget is built on a cloud of sleight-of-hand projections and the hope that Canadians are suffering from collective amnesia… Sustaining the fantasy of Liberal prudence depends on Canadians acting like memory-challenged goldfish, forever surprised by each turn of the fiscal cycle.”
“Canadians and businesses should be concerned about these projections for endless deficits,” states Craig Alexander, who served as chief economist at the Conference Board of Canada, Deloitte Canada and TD Bank. Alexander explains, “The accumulation of federal government debt matters. It poses economic risks and is a burden on future generations.”
Alexander’s opinion piece, published in the Globe and Mail, makes this important point when discussing Canadians’ debt load. Chrystia Freeland and the Liberals’ script in talking about federal debt is to tell Canadians that our country is comparatively better than all the other G7 Nations. But this is an inappropriate comparison as it is the aggregate federal-provincial government debt that is the truer measure, a number that now tops a staggering $2 trillion. The federal-provincial debt load has doubled since 2007 and its debt-to-GDP ratio is now around the 75 per cent mark (much higher than the 40 per cent “fiscal anchor” figure Freeland likes to cite).
Finance Minister Freeland has consistently expressed (even after she made her address on Tuesday) that with this budget effort the Liberals’ objective was to “exercise fiscal restraint.” In responding to that assertion, the Fraser Institute stated: “More government intervention, spending and debt are not the keys to success for Canada’s fiscal future. Layering new spending on top of old and expanding the size of government will not drive down inflation or grow the economy. This year’s budget simply continues a reckless approach to federal finances.”
The budget provided Canadians with updated numbers on the size of our fiscal deficit and national debt:
- The deficit will be $43 billion this fiscal year (ending today).
- In the 2023-24 fiscal year the deficit is projected to be $40.1 billion.
- In the next five years, the projected deficits are billions of dollars larger than previously estimated by this government.
- In the forecasted future, there is no projected balanced budget.
- This fiscal year Canadians are paying $43.9 billion in interest charges to carry the national debt.
Year over year deficits driven by unbridled government spending will add up. Servicing the national debt costs Canadians big money that could otherwise go to programs and services. On this point, Conservative Leader Pierre Poilievre factored, “We now spend more on interest for debt than we spend on our military, more than we spend on child-care benefits, more than we spend on transfers for education and social services to the provinces, almost as much as we spend on health care.”
Clearly the Trudeau Liberals do not know the meaning of fiscal restraint. This government has become synonymous with “spending” and “big government.” Consider that in 2020, the last pre-pandemic budget, the government spent a total of $373.5 billion. This fiscal year’s government is spending a third more, projected at $496.6 billion.
The Fraser Institute claims, “These deficits are not necessary: emergency COVID programs have wound down or expired, and revenues are much higher than what was anticipated a year ago. If the government had simply returned spending to 2019 per-capita levels, Ottawa would be in a surplus position next year!”
Yet, Freeland defends the new spending by arguing “If you are making investments that increase the economic capacity of the country, that is fiscally responsible.” In other words, her increased spending is responsible. (This sounds similar to the Liberals’ belief that “the budget will balance itself.”)
The finance minister’s rationale has been rejected by most business and financial leaders. Again, the Fraser Institute shot back, “Since persistent deficits increase the likelihood of future tax hikes to pay back debt or cover debt interest payments, the fiscal plan will create more uncertainty for entrepreneurs, investors and businesses. Such an unpredictable business environment will make it harder to attract investment to Canada.”
The president of the Canadian Chamber of Commerce Perrin Beatty stated, “Our country cannot borrow its way to prosperity.” Beatty also commented in a BNN Bloomberg interview that the Trudeau government was “writing cheques on a bank account that’s already overdrawn.”
Derek Holt, Scotiabank vice president and head of capital markets economics observed, “Governments did a fantastic job in the early days of the pandemic. The problem is that they are now addicted to high spending and delivering divisive jabs at certain interests. Nothing is being done about productivity and competitiveness pressures that are mounting year by year.”
“Big spending, big deficits, big debt, high taxes, high inflation and bond market challenges are not the path to prosperity,” Holt assessed.
The Conservatives have already indicated they will be voting against the 2023 Federal Budget with Poilievre calling the Liberal fiscal plan “a full-frontal attack” on Canadians. He stated: “It equals $4,200 per family in new government spending. That’s more inflation, more taxes, and more costs for everyday people… She (finance minister Freeland) rolls out a bonanza of $43 billion of new inflation, debt and taxes that will be on the backs of everyday, hardworking Canadians.”
In watching Chrystia Freeland explain away the Liberals‘ spending as “fiscal restraint,” the often quoted quip of Benjamin Franklin comes to mind: “In this world nothing can be said to be certain, except death and taxes.” Assuredly, the Liberals’ spending will result in greater taxes. More to the point, their fiscal plan suggests a great number of Canadians will not see another balanced budget in their lifetime. So, the debt will be passed along and become taxes paid by our children and grandchildren.
Chris George is an Ottawa-based government affairs advisor and wordsmith, president of CG&A COMMUNICATIONS. Contact: ChrisG.George@gmail.com