Canada first Liberal-NDP budget

by Maj (ret'd) CORNELIU E. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East Canadians had every reason to fear this April's federal budget, especially in light of the NDP prop up of the Liberals that may keep them in power until 2025, in exchange for new spending promises. Finance Minister Chrystia Freeland did not disappoint with $60 billion in new spending, without meaningfully addressing economic growth by lowering taxes or reducing suffocating regulations. A spate of initiatives including child care, dental care and possibly pharmacare in 2023 represent the biggest social program expansion in the past two decades. They are accompanied by a federal debt projected to reach $1.25 trillion this fiscal year. This includes a debt to GDP ratio of 47.6 per cent, a $52.8-billion deficit, a record high personal indebtedness to disposable income ratio of over 186 per cent, inflation at 5.7 per cent and signals that the Bank of Canada will raise interest rates aggressively. Canada is currently confronting supply chain constraints caused by the world pandemic, compounded by the war in Ukraine, labour shortages, unaffordable housing for many first-time urban buyers, urgent military needs and a struggling and increasingly expensive health-care system burdened by an aging population. Furthermore, poor productivity and insipid long-term economic growth prospects (2020-2060) mean per capita GDP will decline relative to other OECD countries, a terrible condemnation of government policy. We need to look at the spending record of the Liberal government, now exacerbated by the support of the spend all galore NDP, out of reasonable concern about the future they are creating for us. The government's pre-pandemic fiscal policy is the best indicator of its policy preferences in relatively normal circumstances, while holding a majority government. It may therefore be the clearest and most unconstrained expression of what Prime Minister Trudeau and his inner circle fundamentally think when it comes to the magnitude and scope of government spending. During its first five years in office, the Trudeau government increased program spending by an average of 6.4 percent per year. This resulted in a rise from $248.7 billion in 2014-15 (which was the last full year of the Harper government) to $338.5 billion in 2019-20. Had program spending matched the government's current proposed rate of 2.2 percent annually over this same period, it would have reached $277.2 billion in 2019-20, or $61.2 billion lower than it actually was. It's important to emphasize that this is just the difference in that single fiscal year. Over the full five-year period, it would obviously have made a significant difference in managing the deficit In other words, had the Trudeau government introduced its purported better fiscal management several years earlier, the federal government would not only have entered the pandemic with a budgetary surplus, but it would have accumulated far less debt along the way. To accomplish this, however, you need professionalism and a clear vision of the country's affairs which are missing badly in the actual government configuration. Then the pandemic hit and the federal budget spiked to unprecedented levels due in large part to a massive increase in government spending. Program spending hit $608.5 billion in 2020-21-a near 100-percent year-over-year increase. Yet the basic idea was that most of this spending was supposed to be temporary. It would help to sustain businesses and households in the face of government-imposed restrictions on economic activity and would then be withdrawn as those public health mandates were lifted. However, this April's budget, tells a different story. While spending increased by a whopping 99.8 percent in 2020-21, it's only projected to fall by 22.3 percent in 2021-22 and 10.1 percent in 2022-23 before it resumes rising in 2023-24. The upshot is that federal program spending will henceforth remain elevated relative to its normal more prudent trajectory. Temporary pandemic spending, in other words, has now become permanent. This isn't a sign of fiscal prudence. It's the starting point for a structural deficit. In the budget the 2030 Emissions Reduction Plan gave fair warning with an initially uncosted program that has little chance of achieving its stated objectives. The plan will undermine national unity, drive inflation higher, increase unemployment, reduce energy security and independence and perpetuate a shameful lost opportunity to help our allies and reduce net global GHG emissions. However, it will provide bragging rights, appeal to environmental alarmists and feed the psychological need of progressives for self-congratulation. For radical activist turned minister of environment and climate change, Steven Guilbeault, it's the least we could do. The military is finally getting some attention, but expenses will only grow to 1.5 per cent of GDP, below the two per cent targeted by NATO. Otherwise, Justin Trudeau seems oblivious to the geopolitical energy crisis and how it is causing European and other countries to reassess renewable energy due to their negative impact on cost, reliability, energy independence and national security. The longer he remains in denial, the costlier it will be for Canadians, although by then Trudeau may have moved on to another globalist enterprise. A centrepiece of the budget is a plan to address the housing crisis, another big problem. It seems this plan is somewhat conflicted in preventing foreign purchases for two years but helping first-time buyers, which will more than likely drive up prices. On the revenue side, a special 15 per cent tax on banks and insurance companies will likely harm investment and economic growth. A minimum tax hike on the upper middle class is also promised. Never mind that our children and grandchildren will be paying for our current social programs when they will be supporting a larger cohort of seniors. Basically, we are using our kids' credit cards to buy stuff for ourselves today. It is impossible to call that either wise or virtuous. These Liberal NDP policies go beyond economic harm to an ongoing socialist intrusion into people's lives since Trudeau liberals took power in 2015. Now the concern is that the NDP malefic influence will accelerate the more or less Kafkian consequences. So this is the beginning of worse news to come with the next budgets. Get ready to tighten your belts. What do you think?