Borrow, spend, repeat
The Li beral s ’ first budget can be summed up in three s i mple words: borrow, spend, repeat. In fact, those three words apply to what we can expect from Prime Minister Justin Trudeau’s entire first term in office, which projects budget deficits as far as the eye can see — even farther, since there is no plan to bring the books back into balance. All told, over the next four years Ottawa will rack up an additional $ 120 billion in debt, representing a 25 per cent increase over current levels.
Prime Minister Trudeau and Finance Minister Bill Morneau tell us that this does not matter. They claim our debt- to- GDP ratio will remain the same, so who cares? But even with low interest rates, a larger debt costs more money to service, and thus takes a larger amount of tax revenue each year than a smaller one. Just ask Ontario, which has followed the same path for the past decade and now has the largest sub- national debt in the world, consuming $ 11 of every $ 100 of revenue on interest payments alone. That’s $11 that can’t be spent on education, health care or other priorities. (By no small coincidence, of course, Trudeau’s office is staffed with the same people who worked for and advised Ontario premiers Dalton McGuinty and Kathleen Wynne.)
In fairness, the previous Conservative government did its share of borrowing and spending. Over nine years, the Tories increased Canada’s debt by $ 150 billion, or 30 per cent. After inheriting a surplus ( as the Liberals also did this time around), they delivered balanced budgets for a scant three years, before Canada’s — and the world’s — economy fell off a cliff in the 2008 recession. The Conservatives then dove $ 70 billion into debt and didn’t succeed in balancing the books again until the last year of their mandate.
But there is a difference between spending to kickstart an economy with a 2.4 per cent negative growth rate, as in 2009, and one that projects a 1.4 per cent positive growth rate, as in 2016. During the election campaign, five short months ago, the Liberals said they would run modest deficits to stimulate the economy, offering up a figure of $10 billion. Since then, they claim the situation has become so dire that they need to triple that amount, not just this year, but the year after that, as well. At the same time, they paradoxically eschew private-sector plans that would generate economic growth, such as the Billy Bishop Toronto City Airport expansion or construction of the Energy East pipeline.
Granted, this budget will directly create many jobs — for the Liberals’ friends, who will be busy producing studies, engaging in consultations and staffing councils galore. Projects include $3.3 million over three years “to support an in depth assessment of VIA Rail’s high- frequency rail proposal,” $ 165 million for “a renewed youth employment strategy,” including a Prime Minister’s Youth Advisory Council and Expert Panel on Youth Employment, and $ 141 million for granting councils in the areas of science, health, social sciences and research support. You can practically hear consultants at their keyboards, drumming up proposals and updating their resumes.
But let’s not stop there. The Liberals will set up a National Housing Strategy, a national childcare framework and a cluster map for small businesses. They will make Canada greener with wind and solar farm incentives ( again, shades of Ontario) and fund Canadian talent to the tune of $ 1.1 billion, which will, in Morneau’s words, “allow our artists once again to shine on the international stage.” ( I guess the Weeknd, Drake, Justin Bieber and Céline Dion aren’t burning brightly enough for his tastes.)
In short, the Liberals want to plan Canada’s way to prosperity, on borrowed money, one agency at a time. They will intervene everywhere and often, and bribe taxpayers with funds they will have to pay back later. They will expand their circle of influence by fattening the bureaucracy and the wallets of their confidants. They call this the new way of doing things, but it’s actually an old way of doing things, lifted from the government of prime minister Pierre Elliott Trudeau in the 1970s and a myriad of other fans of Keynesian economics and cronyism. Borrow, spend, repeat.
THE LIBERALS WANT TO PLAN CANADA’S WAY TO PROSPERITY, ON BORROWED MONEY, ONE AGENCY AT A TIME.