This week, the government presented the 2023 federal budget.
Before I continue, let's recap last year's budget. The government called it the "return to fiscal responsibility" budget. Why? Although it had a deficit of $53 billion, the Liberals said it was "affordable." They based that on their claim the government would restrain spending to less than GDP growth.
As I pointed out last year, Prime Minister Justin Trudeau always spends more than planned, increasing our federal deficit. The 2023 budget follows that pattern of excess spending.
Last fall, the government predicted a fiscal plan that would balance in 2027. However, the new budget has a revised $14 billion deficit in 2027. The budget also promises five more years of deficits, all larger than it promised last fall.
This year, the deficit will hit $43 billion. Over the next three years, Canada's debt-to-GDP ratio is expected to increase.
The budget proposes about $43 billion in net new spending over the next six years, which includes a one-time grocery rebate, a 40% increase in Canada student grants, a $13-billion plan to expand dental care to families earning less than $90,000 a year, a new 15% refundable tax credit for clean electricity investments, and a refundable 30% tax credit for investments in clean tech manufacturing.
The NDP’s finance critic took credit for many of those new spending measures, saying they stemmed from an agreement between the government and the NDP to support the government on confidence matters.
The government also said it would cut discretionary spending. Still, it's unclear if this will make a big enough difference to its finances. Things will be even more tricky if it doesn't get enough money from cutting discretionary spending or if revenues drop.
The problem with ongoing deficit spending is Canada's interest charges on the debt will hit $43.9 billion this year, an 80% increase from pre-pandemic 2020 levels.
Debt servicing is now higher than our annual budget for the military. By fiscal 2027/2028, interest charges on our debt will exceed $50 billion annually.
Considering these interest costs, the federal Canada Health Transfer to the provinces will be $49.4 billion this year.
From my perspective, there is a pattern emerging.
In 2015, the government promised three years of "modest" deficit spending before a "cast in stone" promise to return to a balanced budget in 2019. It didn't deliver on that promise.
Last year, the government submitted a "return to fiscal responsibility" budget with a balanced budget promised. One year later, it abandoned this promise.
My question for you this week:
Do you think the Liberal government, supported by the NDP, is doing a good job with the country's finances?
Contact me at [email protected] or call toll-free 1-800-665-8711.
Dan Albas is the Conservative MP for Central Okanagan-Similkameen-Nicola.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.