Politics

GOLDSTEIN: Trudeau’s reckless spending means decades of deficits

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Prime Minister Justin Trudeau could have balanced the federal budget in 2025/26, including all of the government’s COVID-19 spending, if he had spent taxpayers’ money responsibly upon coming into office in 2015, according to a new study by the Fraser Institute.

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Instead, the report by the fiscally conservative think tank said, Canadian taxpayers are now facing annual deficits for up to five decades.

“Governments lack incentives to spend prudently and balance their financial affairs as evidenced by the deficit spending and run up in federal debt before the COVID-19 pandemic struck,” said economist Livio Di Matteo, author of Tax and Expenditure Limitations for Canada’s Federal Government: A Primer.

He said if Trudeau had established a fiscal anchor in 2015 that limited spending increases to 2.9% annually (keeping pace with inflation and population growth) from 2015-19, instead of his actual increase of 5% annually, the government would have had a $4 billion surplus in 2025-26.

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That includes lifting the 2.9% fiscal anchor during the COVID-19 pandemic.

Instead, based on his election platform, Trudeau is now predicting a $32 billion deficit in 2025-26, with no end of deficits in sight.

Di Matteo noted parliament’s independent, non-partisan   budget officer, Yves Giroux, reported in June that unless current spending policies change, the federal government could run annual deficits up to 2070.

Giroux’s report described federal spending and debt levels as sustainable for now, but “from the perspective of the general government sector as a whole, that is federal and subnational governments and public pension plans combined, current fiscal policy in Canada is not sustainable over the long term.”

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Prior to the 2015 election which brought him to power, Trudeau repeatedly pledged he would balance the books during his first term of office from 2015-19 (before the pandemic hit in 2020.)

In April 2015, he said: “Our platform will be fully costed, fiscally responsible and a balanced budget.” 

In July 2015, he said: “I’ve committed to continuing to run balanced budgets … Liberals balance budgets. That’s what history has shown.”

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On Aug. 6, 2015 during the first televised leaders’ debate, Trudeau hammered then PM Stephen Harper for, he said, turning Jean Chretien/Paul Martin budget surpluses into Conservative deficits.

Even when on Aug. 27, 2015, Trudeau flip-flopped in mid-campaign and came out in favour of three years of “modest deficits,” he promised — not predicted — that his budget would be balanced in the fourth year of his government in 2019-20.

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Trudeau pledged deficits of $9.9 billion in 2016-17; $9.5 billion in 2017-18; $5.7 billion in 2018-19 and a $1 billion surplus in 2019-20.

(Hat tip to David Akin of Global News who kept track of all of Trudeau’s fiscal statements during the campaign.)

Post-election, in December 2015 Trudeau said his balanced budget commitment in 2019-20 was “very” cast in stone.

But Trudeau’s record, all before the pandemic hit, was a $19 billion deficit in 2016-17; another $19 billion deficit in 2017-18; $14 billion in 2018-19 and $26.6 billion in 2019-20. 

Di Matteo argues open, transparent and legally enforced fiscal rules known as Tax and Expenditure Limits (TELs), “have not only been beneficial for taxpayers and the nation’s well-being in the past, but also force governments to better prioritize the spending programs they want to pursue … policymakers and Canadians … should consider implementing spending rules at the federal and provincial levels.”

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