There was a time when federal budgets somewhat resembled the balance sheets families kept.
You know, you had so much money coming in, which meant you only had so much money to spend. Of course, over the years some governments lost the plot and spent far more than they had. Then other governments came in, cleaned up their mess and renewed a responsible relationship with debt.
But then Justin Trudeau became Prime Minister, and once again, long-held fiscal principles such as balancing budgets during economic good times became quaint notions. The latest mantra? It’s okay to operate in the red even when the economy is strong and prosperous. The new way of reducing government debt, you see, is by growing your way out of it. Which is something akin to telling people the way they should pay off their debts is by getting pay raises.
And then, of course, the pandemic struck, and money started going out the door faster than ever. And it gave an activist federal government all the excuse it needed to make its presence felt in almost every aspect of Canadian life.
The budget tabled Monday by the federal government isn’t so much a fiscal document as it is an old episode of Oprah, in which the queen of daytime TV gave everyone in her audience a car. There is so much money – $143-billion in new spending – going off in so many directions, it is mind-boggling. There isn’t a problem that the Liberals don’t seem intent on trying to fix.
Consequently, there is massive funding for a national child-care program and green energy investment. There is money to help small business, big business, the old, the young, the homeless. There are dollars to teach kids to code, dollars to boost the federal minimum wage, dollars to save the polar continental shelf and to encourage diverse voices in Canadian television and film.
There is money for exploring the creation of a new Canadian social bond, billed as an opportunity to “connect socially conscious investors with Government of Canada bonds that support social objectives such as reducing homelessness.” Why not! There’s money for Venezuelan migrants and the Rohingya people. There is money to recognize the contribution of atomic workers.
There is money … for everything.
There is a lot less in the budget about red ink and having fiscal anchors that give us some idea of what constitutes acceptable levels of debt and deficits in the future. “Anchors are what they are,” said a senior government official when asked where it all stops. He said he was more concerned about anchors becoming straitjackets.
And in 2021, there is nothing worse than being in a fiscal straitjacket.
It can be said that despite the record levels of spending that we are seeing, Canada is still in a relatively strong position vis-à-vis some of our wealthiest counterparts. We have the lowest net-debt-to-GDP ratio of any of the G7 nations. By 2025-26, total accumulated federal debt will total $1.4-trillion. In five years’ time, the charges on all that debt are expected to reach almost $40-billion – almost double what it is now.
Keep it up, and pretty soon we’ll be talking real money.
Of course, money is cheap right now. It also seems to have dawned on governments that they don’t have to pay off their debt; they just issue new bonds when old debt becomes due. It’s a spectacular sleight of hand that only gets exposed as a sham when interest rates start increasing or there is an economic calamity caused by something like, say, a pandemic.
Given the current environment, however, there are likely going to be few Canadians upset about all this spending. There are many still trying to recover from the economic tumult COVID-19 caused. People need help. The fact that this budget goes far beyond just extending a hand up to those in need and amounts to a far-reaching foray into all aspects of Canadian life will largely go unnoticed by the masses.
Much of what the budget purports to do will be appreciated in many sectors of the economy. And while all budgets are political documents to some extent, this one is especially so, given all that it promises, given all that it offers in cold, hard cash.
Near the end of her budget speech, Finance Minister Chrystia Freeland said that as the country neared the end of the pandemic, there were greater times ahead.
“Opportunity is coming,” she said. “Growth is coming. Jobs are coming.”
She could have said an election is likely coming too.
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