No need to delay the release of the 2022 budget because of war in Ukraine, says Parliamentary Budget Officer

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The Parliamentary Budget Officer is urging MPs to legislate a fixed deadline for the government to table an annual budget and says it is not necessary to delay this year’s spending plan because of the war in Ukraine.

Yves Giroux’s office released a report Thursday saying that the yearly uncertainty over the timing of the budget undermines the ability of the House of Commons to properly scrutinize government spending, as a later budget creates ripple effects on the various spending reports that are presented to Parliament.

One of these reports – called the main estimates – is required to be tabled by March 1. The estimates outline departmental spending plans for the fiscal year that starts April 1. Because these reports are released without including new measures that will be announced in this year’s budget, Mr. Giroux said MPs are forced to vote on “incomplete” projections of the government’s spending plans.

Budgets are commonly released in February or March. Last year’s budget was tabled on April 19. The Liberal government delayed the 2020 budget at the onset of the COVID-19 pandemic and ultimately decided not to table one that year at all.

Prime Minister Justin Trudeau recently suggested the release of the 2022 budget is not imminent as the government weighs international requests for Canada to increase its defence spending after Russia’s invasion of Ukraine.

In a statement to The Globe and Mail, Mr. Giroux said the government should table a budget and then update its spending plans later in the year through what are called supplementary estimates.

“While there is uncertainty right now due to the situation in Ukraine, it does not prevent the government from tabling a budget now with provisions for potential new measures, with adjustments made as the situation evolves,” he said. “I don’t think the fiscal implications will be significantly clearer in April.”

Former senior finance official Don Drummond, an economist who co-authored a separate “shadow budget” report Thursday for the C.D. Howe Institute, agrees there is no need to delay the release of the budget.

In an interview, he said the far more important question is what the budget should feature as a core philosophical focus.

After a massive 2020-21 deficit of $327.7-billion led the federal debt-to-GDP ratio to increase to 47.6 per cent from 31.2 per cent in a single year, Mr. Drummond said Ottawa – and ultimately Canadians – must decide whether that cost will be incurred by current or future generations.

Mr. Drummond said the generation that benefited from the various emergency government supports should be the ones who pay. The institute’s shadow budget proposes several options, such as increasing the federal sales tax by two percentage points, increasing the sales tax on transportation fuels and freezing the operational budgets of federal departments.

He acknowledges such decisions would be politically challenging. But he says politicians should be upfront with Canadians about the true costs of promises such as pharmacare, which he argues should be scaled back and not paid for with further borrowing.

“We kind of collectively as a nation have got our head stuck in the sand,” he said. “We always have this attitude of ‘if we can just get by this one crisis, everything will be fine.’ But don’t we have a long track record? There’s always something. And you have to be prepared for that.

“And I think we should be having a raging debate in this country about intergenerational unfairness.”

The 2022 budget will be Finance Minister Chrystia Freeland’s first budget since the September federal election, which saw voters return the Liberals to Ottawa with another minority mandate.

NDP Leader Jagmeet Singh, whose party frequently votes with the government on confidence matters such as the budget, would be unlikely to support many of the C.D. Howe’s cost-cutting proposals, as they run counter to core NDP positions.

On Thursday, Mr. Singh called for increased federal spending on health care.

“As household budgets are stretched to capacity with the rising cost of living, investments in expanded health care services like pharmacare and dental care would reduce families’ costs and protect their health,” he said in a statement.

“We need to start addressing some of the gaps that have grown from years of underfunding by Liberal and Conservative governments.”

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