Standing Up to Uncontrolled Spending
This week, the Liberal government in Ottawa’s Finance Minister Bill Morneau confirmed that the Liberal’s will borrow more than $18-billion dollars to finance their spending promises in 2016. During the past election, the Liberals promised that they would not borrow more than $10-billion in 2016. We now know that the Liberals plan to break a significant election promise: they plan to borrow even more than ten billion dollars this coming year.
“The Liberals inherited a balanced budget because of good Conservative economic management. They blew their budget in less than 100 days solely because of their own new and uncontrolled spending. They can’t blame massive new borrowing and runaway spending on a slowing economy or a fiction that the budget wasn’t already balanced when they took office,” said Conservative Interim Leader Rona Ambrose.
The Liberals have no respect for taxpayer’s money. They are consciously ignoring the fact that no matter how much money they borrow, it has to be paid back. Canadians cannot ignore the reality that budgets don’t actually balance themselves. The Finance Minister’s announcement included his admission that there will be larger than expected deficits over the next two years. As well, the $18 billion deficit already forecast for this year does not include billions of dollars more that are promised to be listed in the budget, which will be tabled on March 22.
This is reckless, irresponsible, and entirely the result of the Finance Minister not being able to make the hard decisions. Hard decisions would have included a strong and competent Finance Minister insisting that the Liberals back-off on some of their election promises, given the sudden downturn in oil prices and accompanying deteriorating economic conditions.
The Conservative Party continues to be the voice of taxpayers in Parliament and we are holding them accountable for their runaway spending of billions of taxpayer dollars. The massive amounts of spending they are determined to make will lead to waste and mismanagement of these funds and risk built-in structural spending requirements. All that Canadians are going to get from this Liberal government is bigger government.
Over the next three years, these huge multi-billion annual budgetary deficits will be added to the accumulated national debt. This debt load will be left for Canadian taxpayers and future generations to pay off. The debt incurs massive interest payments until they are paid off.
When it comes time to pay all this borrowed money back, the only realistic way they will be able to do it is through higher taxes. We already see it, as they roll back Tax-Free Savings Accounts and look to hike job-killing payroll taxes. They have also promised a Carbon tax.
Toward the end of their mandate and just before the next election, the Liberals will be looking for sympathy from voters and asking for a second chance. That is when they will likely announce a rise in the Goods and Services Tax (GST).
As the Official Opposition in the House of Commons – the government inwaiting - we will continue to fight for jobs, lower taxes and for keeping federal spending under control.
Morneau said the government will post a smaller than projected deficit of $2.3 billion for 2015-16, down from the $3-billion deficit projected in November’s fall fiscal update.
But that deficit will balloon to $18.4 billion in 2016-17 and $15.5 billion in 2017-18 — and that is before any new spending Morneau outlines in the March budget. Those numbers are drastically different from the $3.9-billion and $2.4-billion shortfalls forecast just three months ago.
“A less ambitious government might see these conditions as a reason to hide, to make cuts or to be overly cautious. But our government might see that the economic downturn makes our plan to grow the economy even more relevant than it was a few short months ago,” Morneau said.
“We’re not considering any tax changes at this time,” the finance minister said when asked whether the government would consider raising general con- sumption taxes.
The revised two-year economic and fiscal outlook takes into account sharp declines in crude oil prices since the fall update and continued uncertainty in the global economy.
Morneau said private sector economists now expect crude oil prices (for West Texas Intermediate) to average $40 US per barrel in 2016, down from $54 per barrel expected in the fall update. He said the current price stands at $31.50 per barrel.
Economists have also revised real gross domestic product growth for Canada to 1.4 per cent in 2016, down from two per cent growth forecast in the fall update. The GDP growth for 2017 remains unchanged at 2.2 per cent.
Today’s fiscal update includes a $6 billion a year contingency — double the $3 billion Ottawa used in past projections.
‘No fiscal anchor,’ Ambrose says
The federal finance minister blamed the weak economy on the previous Conservative government.
“After 10 years of weak growth, Band-Aid solutions, and inaction from the previous government, Canada’s economy was simply too vulnerable when faced with a combination of the drop in oil prices and economic uncertainty around the world,” Morneau said in Ottawa Monday.
Interim Conservative Leader Rona Ambrose fired back calling into question the competence of the new Liberal government, blaming the soaring deficit on “uncontrolled, permanent, new spending.”
“I find this reckless, irresponsible and it’s entirely the result of the finance minister and the prime minister not being able to make the decisions that they need to make today to respect taxpayers’ money,” Ambrose said on Parliament Hill.
Morneau said the Liberals will focus on making investments in infrastructure, innovation, measures to help the middle class and the country’s most vulnerable.
“We were elected to a fundamentally new approach to growing our economy. We said to Canadians that a time of low-economic growth the right thing to do is make investments in the economy,” Morneau said in Ottawa Monday.
“The wrong thing to do would be to make cuts.”
But Ambrose was critical of the government’s plan, calling it “a recipe for waste and mismanagement.”
“There’s no fiscal anchor left in this government,” she said Monday afternoon.
BMO warns against fiscal boost
A new analysis by the Bank of Montreal cautions the federal government against “an overly aggressive fiscal boost.”
“Ottawa can clearly afford a moderate fiscal boost, without doing lasting damage to the long-term debt outlook,” BMO economists Douglas Porter and Robert Kavcic said in a special report published today.
“However, there are plenty of reasons why Ottawa does not have a free hand to spend on every priority, and must maintain discipline.”
Weaker than expected growth due to low commodity prices and provincial debt are some of the reasons the economists say, “Ottawa should proceed with prudence.”
Prime Minister Justin Trudeau has already said his government will not be able to keep an election promise to keep deficits under $10 billion for the next budget year, and has backed away from a promise to balance the budget by the end of his four-year mandate.
The Liberals now say they will keep Canada’s debt to GDP on a downward trajectory, though Monday’s numbers suggest they may only narrowly meet that promise in the next two years.
If you have any questions or concerns regarding this or previous columns you may write me at 4945-50th Street, Camrose, Alberta, T4V 1P9, call 780-6084600, toll-free 1-800-6654358, fax 780-608-4603 or e-mail Kevin.Sorenson.c1@ parl.gc.ca.