Fiscal prudence among first casualties of Canada’s pandemic politics

The death of fiscal prudence

The federal throne speech declared: “This is not a time for austerity.”

And: “Canadians should not have to take on debt that their government can better shoulder.”

Easily declared, of course, when there are no limits on spending the money government is given by us to spend on us.

When the embattled governor general ceremonially read the speech for the serene prime minister – quite the emotional role reversal – she pronounced that “like a reed in high winds, we might sway but we will not break.”

Well, give us time. You’re working on it.

The “ambitious plan for an unprecedented reality” Julie Payette conveyed on behalf of Justin Trudeau is the magical thinking phase of the pandemic that has lately afflicted anyone with a large agenda and little accountability – which is to say, most every political figure.

On the basis of what might flow from that speech in Ottawa and what might flow from a new NDP mandate in British Columbia, it is time to worry about the post-pandemic period. Where does the overreaching ambition end? How will this proposed reality be financed?

One million jobs. A net-zero-emission economy. World-class excellence in building electric vehicles. All majestically dependent on the revenue from fossil fuels.

No tax on the rich or on the digital giants will offset a fraction of the frightening debt being amassed in this gigantic pivot that fortifies the public sector. No, it will come from all of us, likely in heaps through our capital gains, our compensation and our consumption.

The C.D. Howe Institute, with former Liberal finance minister John Manley and former Saskatchewan finance minister Janice McKinnon fronting the think tank’s latest research, warned last week that not the wealthy, but the “average taxpayer” will be ensnared in “broad-based tax increases” if the country does not wish to be vulnerable following the spree to inevitable, eventual economic shocks.

The muted responses of big and small businesses alike last week to the throne speech suggested gratitude for the extension of short-term support but apprehension about long-term competitiveness. There does not appear to be any end in sight to spending or any hint of how it might be underwritten, nor anything in what we have heard so far but only notional nods toward economic growth or innovation that rises above a vanity play.

This magical thinking phase requires that we rule out the basic concept of paying back with some sacrifice for what we borrowed in need. The money just manifests, and there are no seeming consequences.

Few disputed the compassionate moves to mitigate individual hardship and business failure, and few can doubt there will be more required on those two specific frontiers, but is the most extensive health crisis in our history also the time to pursue the most extensive remake of our economy? How much of this is needed and not just wanted? Do we even know the duration of this crisis, much less what might follow it?

The items on the agenda in Ottawa, and quite clearly on the docket in B.C., far transcend economic recovery plans; they are economic reform plans, their valid growth initiatives (child care, for example) obscured by opportunistic, ideological and selfish gestures to sustain power by writing cheques. They place bets on or against sectors using house money. Electoral mandates to the federal and provincial governments will perpetuate, even accentuate this.

A worried friend sent along a quote last week from the esteemed Scottish lawyer, writer and historian Alexander Fraser Tytler, Lord Woodhouselee, circa 18th century, a crony of Robbie Burns. “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.”

Trudeau and John Horgan are borrowing on this concept, buying us off and paying lip service to the traditions of prudence in Canadian fiscal policy, doing so at a most dangerous time mainly because there is nothing stopping them. Not themselves, and not others, at least not yet. •

Kirk LaPointe is publisher and editor-in-chief of BIV and vice-president, editorial, of Glacier Media.

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