The government of Canada released its ‘Update of Long-Term Economic and Fiscal Projections 2018‘ yesterday – 4 days before Christmas and the last day which most working Canadians will attend to their computers for the next week or two… Perhaps we should commend the Liberal government on this timing, it certainly works better than releasing this information early in 2019 when everyone is paying attention – during an election year. Yes, yes – this is typical timing for these types of releases, that doesn’t make it right, especially in this case.
Of particular note: budgets do actually balance themselves, just not as quickly as we thought. (here’s a link to the classic JT sound bite – in case you haven’t had the pleasure). It turns out that despite the Primer Minister’s promise to balance the budget in 2019, the Trudeau government now predicts, according to yesterday’s release, that the budget ‘will balance itself’ in 2041. Here’s Bill Morneau on March 30, 2016 telling us why they are breaking their election promise to balance the budget by 2019: “We believe we will get to a balanced budget over time” ( a LOT of time).
Just so you don’t have to break out your calculator – that’s 22 years after originally promised, and at a point when Canada is nearly $1 Trillion (yes, “Tr”illion) in debt. This is unbelievable.
The government is justifying this on the grounds that the debt-to-GDP ratio will remain “on a downward track over the entire projection horizon”. That’s really good news, right? Our government’s message: Our spending will tighten up and our debt levels will come down dramatically… between 2041 and 2056.
JT: “how much did you say we can borrow before we get downgraded, Bill…”?
Here’s an article from one of the country’s top economists, Jack Mintz, describing the tactics that our governments are using to sell us this sh!t sandwich.
“Now the federal government no longer has a goal to balance the budget, promising instead to ensure that debt does not rise faster than GDP. The federal Liberals are joining their Ontario cousins in desperately crossing their fingers that no recession will show up and shred their revenue projections.
You can tell how much all of these plans are built on the fragile foundation of hope by how nearly every spending program is labeled as a supposedly wise “investment” in the future. But you won’t find a shred of actual evidence that such investments increase growth. Ontario says it’s “investing” over $12 billion more in health care, child care, seniors’ support and subsidies. Taxpayers should be able to sue politicians for misleading advertising.”
Also, remember – next year is an election year. The last time there was an election, the Liberals shined up their budget promises and only missed their mark by 22 years. But I’m sure they’ve got it right this time. So what the hell… may as well spend our grandkid’s futures now, while interest rates are low – it will all work itself out after we’re retired.
From where I’m sitting, Canada needs real leadership and a financial plan that makes sense. Today we have neither.