Federal spending is up

Re: Patrick MacDonald’s letter What would Poilievre cut (Castanet, Dec 5)

Patrick MacDonald states, “Before one casts a vote, remember (Prime Minister Justin) Trudeau and the Liberals were the only ones to cut taxes for the middle-wage earners and increase taxes for the wealthy. If you think the Conservatives could have handled Covid (pandemic) finances better than the Liberals, think again. History shows otherwise.”

Budget 2016 planned for $1,218.9 billion in cumulative program spending over four years. The Liberals actually spent $1,268.9 billion – $50 billion more. By 2019-20, annual program spending was $349.1 billion, which was $34.9 billion or 11% above what they originally planned and $46.5 billion or 15 % above the Conservatives’ 2015 fiscal plan.

Putting it all together, even before the pandemic began, the Liberals spent an extra $126.7 billion over 4.5 years and inflated annual spending by 15% above the fiscal plan they inherited.

But that was just the prelude. What has happened since should shock everyone. From $349.1 billion in 2019-20, federal spending skyrocketed to $623.8 billion in 2020-21 and $479.0 billion in 2021-22. Even the lower of these two figures is close to double the spending of the Conservatives’ last year in office.

A full assessment of spending during the pandemic is beyond the scope of this letter, but Fraser Institute economists Jake Fuss and Tegan Hill concluded in a recent analysis that, “Canadian COVID programs such as CEWS and CERB were ripe with problems including overpayments, funds provided to individuals and businesses not in genuine need, and excessive amounts of support that went above what was required to stabilize incomes.”

As to what proportion of pandemic-specific spending should be considered waste, they put it at a minimum of 25%.

While any such estimates are debatable, what is not up for debate is that the Liberals took advantage of the pandemic to permanently and dramatically increase the size, scope and cost of government. In Budget 2019, they planned for spending of $358.4 billion in 2022-23 and $369.1 billion in 2023-24. With the pandemic firmly in the rearview mirror, the latest figures show spending of $445.7 billion in 2022-23 and $453.0 billion budgeted in 2023-24. The Liberals, in other words, abused the pandemic to ram $80 billion to $90 billion more into the annual federal budget on a permanent basis.

A main result of this spending explosion is an increase in federal debt. Even pre-pandemic, the Liberals increased the national debt by $100 billion over the fiscal plan they inherited from the Conservatives. Being generous, we will leave aside the two pandemic years and accept the claim these spending increases were crisis-driven exceptions (of course, the debt added in those years is real and will have to be repaid one day).

But, just as post-pandemic Budget 2023 permanently elevated spending over the pre-pandemic budgets, so too did it significantly increase the growth in debt. In Budget 2019, the Liberals projected they would increase net federal debt by $25 billion in the two fiscal years ended 2023-24.

The latest estimate is that it will increase by $95 billion. Increasing federal debt itself puts upward pressure on government spending, since it increases the government’s annual interest costs even if interest rates remain low and stable.

Michael Laurin

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