LIBERAL BUDGET REMINISCENT OF AN ‘ACTIVIST GOVERNMENT’

After nearly 10 years of Stephen Harper — whose signal achievement was to reduce the size of government to the level of the pre-medicare mid-1960s — last October, Canadians voted to elect a political leader and a party that promised to reverse the direction in which the country was heading.

The direction was that of a minimalist government that did little or nothing to bridge the gap — in living standards and quality of life, education and employment levels, crime and poverty rates — between native and nonnative Canadians, that did little or nothing to address the issue of climate change, that did little or nothing to reduce the growing disparity in incomes between rich and poor, that did little or nothing to make Canada more than just a middle power on the international stage.

The Harper government’s modus operandi was to slowly erode the fiscal capacity of the government — through endless program spending and tax cuts — by about $40 billion a year.

While they liked to boast about being good fiscal managers, the Conservatives’ fiscal results were pretty dismal. After nine years in office, the Harper government’s track record is six deficit budgets — averaging about $20 billion a year — and three surpluses, the first one inherited from the previous Martin Liberal government, which left the Tories a $14-billion surplus.

Within two years, Harper & Co., turned that surplus into a $5.8-billion deficit and they ran deficits every year — including a record $56-billion deficit in fiscal 2009 — until fiscal 2014 when they posted a small surplus.

So it was a bit hypocritical, if not laughable, for the interim leader of the Conservative Party of Canada to describe the 2016 budget of Finance Minister Bill Morneau as a “nightmare scenario’’ of out-of-control spending. What has Rona Ambrose so frightened? The budget’s projected deficit of $29.4 million for 2016-17 — three times more than the Liberals “promised’’ in the election campaign.

First of all, the $10-billion deficit was a projection — not a promise — made during the election campaign, based on the Conservatives’ projected surplus for 2015, which turned out to be a $2.3-billion deficit.

But the party did promise, if the fiscal situation deteriorated due to a further slowdown of the economy, “the Liberals will be honest with Canadians about the facts.’’

That’s what Morneau was doing in February when he told Canadians the 2016 deficit would likely be $18.4 billion — not including any spending commitments in the March 22 budget. Built into Morneau’s projection was $6 billion in contingency factors — in other words, a worst-case scenario.

Similarly, the 2016 budget’s projected deficit of $29.4 billion contains roughly $11 billion in promised spending, plus the $18.4 billion in lower revenues due to weaker-than-expected economic growth since the finance ministry’s fall update. In fact, the $6-billion contingency factor will be found in the Liberals’ first five budgets, ending with a projected deficit of $14.3 billion in 2020-21.

Of course, as Ambrose and other commentators have noted, there’s no plan to balance the budget. True, if the economy performs as poorly as Morneau is projecting from 2016 to 2020, namely $40 billion a year lower than average private sector forecast, including US$25-a-barrel oil versus US$40, the budget won’t return to balance in four or five years.

But Morneau is doing exactly what his Liberal predecessors, Ralph Goodale and Paul Martin, did when they were in his finance minister’s shoes: under-promise and over-deliver. In other words, keep your target low and overshoot the mark, rather than boast about being good fiscal managers, then run deficits two out of three years and run up the debt by $160 billion to boot.

So much for fiscal management. What are the Liberals spending our hard-earned tax dollars on?

Well, there’s $4 billion for new infrastructure spending in 2016, rising to $7.3 billion in 2017. There’s $8.4 billion over five years to improve socio-economic conditions for aboriginal people, replacing the $5 billion the Tories cut when they tore up the 2005 Kelowna Accord, then adding another $3 billion.

There’s the Canada Child Benefit program, which is nontaxable and delivers $5.3 billion more to Canadian families than the hodgepodge of Conservative programs it replaces.

There’s improved support for students, veterans, the unemployed, the homeless, not to mention public transit and green energy. You know, the sort of things activist governments used to do and presumably why 40 per cent of Canadians voted for the Liberals in the last election.