The federal debt has skyrocketed under the Trudeau government. Indeed, we are now talking about a 92.2% increase since his first mandate. In short, there is enough to be dizzy.
Worse still, if $25.6 billion were then allocated on an annual basis to repaying the federal debt, $50.3 billion is expected to be spent on interest payments in 2027-2028. This short-sighted management of our public finances emerged in 2015, when we were promised three years of modest deficits in order to invest in infrastructure. Of course, nothing happened and the deficits continued to grow, until they exploded completely during the pandemic. In the absence of a structured and ambitious plan to return to balanced budgets, we seem doomed to repeat the mistakes of the past.
Moreover, the Minister of Finance described Tuesday as “provincial” the idea that a return to a balanced budget would be desirable, and the budget does not offer any timetable for this. These are not the words of a soul-searching government.
We must also question ourselves very seriously about the benefits of these pharaonic expenditures. While the deficits, this money belonging to the taxpayers of tomorrow, should be used to breathe new life into innovation and economic growth, the Organization for Economic Co-operation and Development (OECD) considers that our economic growth from here to 2060 will be the hungriest among developed countries.
Faced with such an acknowledgment of failure, it is worrying to see the federal government continue to advocate measures that have been systematically failing for several years already.
For example, it is not by renaming a program whose mission is to stimulate innovation that the latter will magically begin to achieve its objectives.
Rather than playing sorcerer’s apprentice by trying to choose winners and losers with subsidy programs, the federal government would do well to put in place winning conditions for all of our businesses. This is also an observation similar to the diagnosis made recently by researchers from the Center for Productivity and Prosperity at HEC Montreal, who focused more on the Quebec economy.
Canada is facing a series of extremely serious challenges, including a decline in the purchasing power of the population boosted by inflation, an aging of this same population which cannot be fully met by immigration and a level of indebtedness caused in particular by poor management.
Let’s be clear: the indicators of our economic decline are alarming. The growth of the Canadian population, and therefore of its economy, hides a much more sinister reality: the decline in our per capita GDP now brings us back to the level of wealth from which we benefited in the last quarter of 2017. We will have to give a real boost bar in order to bring our economy out of its torpor.
Unfortunately, Tuesday’s budget contains nothing that could help turn the tide.
A responsible budget would have prioritized a return to sustainable budget balance by cutting back on inefficient spending and putting forward measures likely to restore our competitive edge against our neighbors to the south.
In recent years, Canadian companies have become more taxed on average than American companies, in addition to having to deal with a much less flexible regulatory framework, which essentially has the effect of an additional tax.
The government could also have signaled its intention to tackle interprovincial trade barriers. After all, barriers to trade between provinces represent an estimated drain of 4% of our annual GDP; they include measures that impede labor mobility, as well as measures that limit the movement of certain goods and services.
Tackling such an issue does not require exorbitant expenditures, but it does, however, require us to dent our political capital in order to seat the provinces around the same negotiating table.
Rather than fundamentally improving the business climate, the Trudeau government is once again proposing a fundamentally interventionist budget and spectacular new spending.
Looking at it all, the younger generations have no choice but to realize that they are the ones who will eventually foot the bill.