The era of big government, I keep reading, is back. Not that it was ever far away: even before the pandemic, real per capita spending, by all levels of government combined, was at an all-time high, having climbed 24 per cent from the level at which it had briefly plateaued in the mid-1990s.
The pandemic, of course, pushed spending well beyond that. But what was advertised as a brief, one-time spike in spending to meet the immediate needs of the crisis seems more and more to be settling into a permanent expansion in the size of the state.
Federal program spending, for example, which was originally scheduled (as of the 2020 fiscal update) to fall from $637-billion in fiscal 2021 to a “mere” $386-billion in the fiscal year just begun, is now (as of last fall’s fiscal update) projected to come in at $424-billion.
But of course that was before a lot of things: before the war in Ukraine, before the NDP-Liberal pact, and before inflation really started to scare the wits out of central banks. Thursday’s budget will undoubtedly pencil in a much higher figure, for this year and the years to come. And, as we have learned, those estimates are in themselves likely to be underestimates, deliberate or otherwise.
So we are going to get a torrent of increased spending – for defence, yes, because we are, as we have at long last realized, at war, but also for all the things a rich country might like to spend on if there were no war on. And more besides: for public dental care, and public pharmacare, and public daycare, and for ever more ambitious schemes to combat global warming – that is, by subsidizing people to curb their consumption of fossil fuels, even as other federal programs are subsidizing their production.
Plus whatever else comes up – a new wave of the pandemic, a worsening of the war, a recession – in the months and years to come. There are always new reasons to increase spending, never any reason to rein it back in – for when times are good “we can afford to” and when times are bad “we can’t afford not to.”
The “fiscal guardrails” – a return to full employment and pre-pandemic levels of output – that we were told, less than 18 months ago, would trigger some measure of restraint in government spending, seem to have been forgotten. The “historically low interest rates,” thanks to low inflation, that were supposed to mean we could pay for it all with borrowed money seem destined, interest rates and inflation being no longer quite so historically low, to be consigned to a similar memory hole, to be replaced with some new story about higher inflation yielding higher revenues. And so on.
This headlong plunge into a new and expanded role for the state is the more curious for the absence of examples of its efficacy in its existing responsibilities. Public health, for example, is generally considered one of the core responsibilities of government. Yet the performance of government in the pandemic has been mostly disastrous, from the shutdown of the federal early-warning system to the failure to stockpile protective equipment to the omnishambles at the borders, to say nothing of the comedy of errors the provinces made of their own responsibilities.
It would be easier, likewise, to entertain an increase in spending on national defence – another core role of government – had we not made such a comprehensive mess of the spending in which we already indulge, of which the new-old F-35 contract is only the latest example. That we are doing so at the same time as we are embarking upon a multipronged expansion of the welfare state is more grounds for unease, quite apart from considerations of affordability. Can anyone, looking at the dilapidated state of public-health care in this country, say with confidence that these new public dental, drug and daycare programs will not meet the same fate?
What recent evidence have we been given of the state’s readiness to assume all these new responsibilities? The federal government can’t even pay its own employees without incurring a more than 100-fold increase in costs. The Infrastructure Bank is comatose. The Superclusters program is a costly mess. Plan after plan to contain the cost of housing have come and gone without leaving a trace.
What governments do seem to be able to do tolerably well is write cheques. Poverty is down to record-low levels, especially among the elderly and families with children, a truly monumental achievement. Why? Because rather than load them up with hideously expensive, poorly-run services they may or may not be able to use, government just sends them money. That’s plenty big enough.
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