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Justin Trudeau has said his government has inherited a $18-billion baseline deficit in his first year. (Chris Wattie/Reuters)
Justin Trudeau has said his government has inherited a $18-billion baseline deficit in his first year. (Chris Wattie/Reuters)

LAMMAM AND EISEN

Trudeau must stop playing the blame game on deficits Add to ...

On the campaign trail in 2015, Justin Trudeau’s Liberals promised to hold federal deficits to $10-billion or less during their first few years in office before returning to a balanced budget in 2019-20. It was a major campaign promise. Unfortunately, that’s not how things turned out. This year’s deficit is an expected $28.5-billion. And the government will not commit to a specific timeline to balance the books.

In a recent news conference, the Prime Minister blamed the deteriorating condition of federal finances on the previous government, claiming he inherited an $18-billion “baseline deficit” in his first year in government. This is a remarkable and unjustified exercise in blame shifting. In reality, the Trudeau government’s spendthrift ways are a key reason for the larger-than-promised budget deficits.

Let’s look at the numbers. Back in the 2015-16 fiscal year, when the Liberals were elected, federal program spending totalled $270.9-billion – a significant 6.7-per-cent increase over the previous year. This increase was a function of both the Conservatives in the first half of the year and the newly elected Liberals in the second half.

Notably, however, that year, the Conservatives, led by Stephen Harper, planned to spend $263.2-billion in their 2015 budget. The Trudeau Liberals assumed power in October, 2015, and program spending ultimately increased by $7.7-billion to $270.9-billion. Since revenues ended up $5.2-billion higher than planned in the 2015 budget, the government recorded a small deficit of $987-million, equivalent to 0.3 per cent of total federal spending.

The very next year, with the Trudeau government fully in charge of federal finances, spending increased by a whopping 7.4 per cent. Except for the postrecession spending in 2009-10, that’s the highest year-over-year spending increase by Ottawa since 2006-07. In addition, the 7.4-per-cent increase dwarfed the average annual increase in federal spending over the preceding six years (1.5 per cent).

Fast-forward to the current fiscal year. The Trudeau government is planning yet another significant boost in federal program spending – 5 per cent. All told, the Liberals will add $34.6-billion in new program spending over the past two years (not counting any extra spending from 2015-16), which represents a remarkable 12.8-per-cent jump.

While it’s true the economy has slowed since the Trudeau government assumed power, dampening revenue growth, these marked spending increases have no doubt contributed to the larger-than-promised deficits we see today.

Despite a weaker economy, the Trudeau government could have kept the deficit to $10-billion this year (2017-18) by exercising some spending restraint and limiting the total increase in program spending over the past two years to $19.1-billion (or 7 per cent). This level of spending growth, incidentally, would have more than offset cost pressures from rising overall prices (inflation) and a growing population.

In short, if the Trudeau government increased spending more modestly, it would have kept its promise of a $10-billion deficit this year and been on track to achieve a balanced budget on schedule.

To govern is to choose, as the old saying goes, and it was the Trudeau Liberals who cut the rope on several short-lived “fiscal anchors” in order to facilitate a spendthrift approach to governance. They should accept responsibility for the consequences rather than shifting blame to a defeated government that has been out of office for more than a year and a half.

The decision-makers of the day are responsible for their choices, and clearly Mr. Trudeau and his government bear responsibility for the larger-than-promised deficits facing the country today.

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