There are certain things that opposition parties are simply expected to do. So it wasn't surprising that the Liberals were on their feet in the House of Commons yesterday denouncing the spending cuts imposed this week by the Conservative government.
But it's all claptrap. The Tories are acting with commendable fiscal responsibility, in the best Liberal tradition. Jim Flaherty, it turns out, is a worthy successor to Paul Martin.
Let's take a little trip down memory lane, courtesy of the Fiscal Reference Tables, which were also released this week. Think back to 1971 (actually, the fiscal year 1970-71). Life seemed good in those days. The social safety net -- medicare, pensions, unemployment insurance -- was in place. The oil shocks were a few years away. Free love was in the air.
But, in fact, it was a dark year. Having see-sawed throughout the 1960s between surplus and deficit, the federal government began a program of deficit spending in 1971 that would last for decades.
The deficit that year topped a billion dollars, bringing the accumulated debt of the federal government to $20.3-billion, which was still only $5-billion more than annual revenues. Oh, to return to those days.
But we never will. A succession of deficits swelled the debt out of all proportion, and interest charges on that debt further fed the deficits.
By fiscal 1990-91, the deficit was $34-billion and the debt $378-billion, more than three times annual revenues.
How did this compare with other countries? Back in 1971, the federal government's net debt as a percentage of GDP was well below the Group of Seven average. The United States' debt was, as a percentage of GDP, three times as large as ours; Britain's was four times.
(Note to geeks: The G7 numbers are calculated on a national accounts basis, as opposed to the public accounts basis used elsewhere in the tables, and so are used only for comparative purposes.)
But, by 1991, Canada was a basket case, with net federal debt much higher than the G7 average.
Our debt-to-GDP ratio was more than three times as high as Japan's, more than twice as high as Britain's, and worse even than that of the United States, which under Ronald Reagan had racked up equally staggering deficits.
By 1995, the darkest fiscal year of all, the debt had reached 68 per cent of GDP, and Canada was headed for bankruptcy.
That's when the Liberal government of Jean Chrétien put on the brakes. Program spending was cut with ferocity. While tax revenues increased, expenditures (for once) decreased, reversing the cycle of spiralling deficits and bringing the books into balance by fiscal 1997-98. And we've never looked back.
A steady succession of budget surpluses, accompanied by responsible levels of debt repayment, have brought the federal debt down to 35 per cent of GDP. What does that mean in real terms? Ten years ago, the federal government spent $49-billion on interest charges. Last year, it spent $34-billion, despite a decade of inflation. That $15-billion difference is equal to the entire defence budget.
This country, in other words, is able to pay the full cost of its (greatly expanded) military through savings on interest payments. That is what debt reduction does for a country.
Today, adding all federal and provincial budgets together, Canada is in surplus -- the only G7 country that can make that claim. As long as the federal government continues to watch its spending and continues to devote a reasonable portion of budgetary surpluses to debt reduction, while the economy continues to grow and interest rates remain reasonable, more money will be available each year: for tax reductions, increased health care, municipal infrastructure, or whatever voters decide.
So the Liberals can protest all they want. The Conservatives are simply following in their steps. If politics weren't politics, each party would be congratulating the other.
