Since my report last week the Trudeau Liberal government introduced the 2022 federal budget document.
As is often the case with government budgets, various media organizations, political pundits, as well political parties will often characterize a budget in various ways and this one was no different.
From the perspective of the Finance Minister, she has labelled the budget as a “return to fiscal responsibility”.
Largely on account of her budget proposing to spend less money than the previous pandemic related budgets.
In other words, this is intended to be more of a “back to normal” budget.
This raises an important question.
What is ‘normal’ in terms of the federal budget going forward, post COVID?
For some context, in 2015, the final year of the Harper government. total federal spending was just over $248 billion.
In the 2019-2020 fiscal year, with the Trudeau Liberal majority government, spending was just over $338 billion.
That's a significant increase of $90 billion.
Leaving out the COVID pandemic period, where total federal spending in the 2020-2021 fiscal period hit a record high of $608 billion, we are now facing this new “back to fiscal reality” Liberal budget that proposes a total of $434.3 billion in spending.
To recap, pre-COVID spending was $338 billion and the Liberals “new normal” is now $434 billion.
An increase of $96 billion over pre-COVID spending.
What this means is that some of the “temporary” spending measures are now becoming permanent.
It is also worth pointing out that in the Liberals previous 2019 budget, they included forecasts of future spending in the amount of $358 billion for this current fiscal year.
This amount, as it turns out, is short by $76 billion from the today's budget.
While this 2022 budget includes yet another deficit, this time in the amount of close to $53 billion, the Liberals argue this is all affordable.
The Liberal “affordability” argument is based on the principal that as Canada’s economy grows– the added GDP growth will increase government revenues at a faster pace than the increases in government programing spending, and by extension, lower the debt to GDP ratio.
While this is true and applies to all governments when it comes to budgeting, it also depends upon some constants such as the rate of growth and spending being sustained at proportional levels.
In the case of this Liberal government, as is well documented, even when excluding COVID related spending, this Prime Minister will always increase spending well beyond what was forecast, and further increase our deficit in the process.
Even in this current, “back to fiscal reality” budget, many of the Liberals campaign promises are missing from it.
Likewise, the recent backroom deal with the NDP calls for, among other programs, national pharmacare, which is completely un-funded.
According to the Parliamentary Budget Officer, a national pharmacare program could cost close to $20 billion a year.
So as these various Liberal/NDP promises are eventually announced, this will increase our deficit spending.
Let us all hope that Canada's economic growth does not also decline.
My question this week.
Are you satisfied with the “new normal” of Liberal budgetary spending?
I can be reached at Dan.Albas@parl.gc.ca or call toll free 1-800-665-8711.
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Dan Albas is the Member of Parliament for the riding of Central Okanagan-Similkameen-Nicola.