By Aaron Wudrick
It’s a budget about nothing.
That’s one way to sum up Finance Minister Bill Morneau’s third federal budget. Despite taking up a full 282 pages, there’s just not much substance to it. That’s both good and bad.
It’s good news because the Trudeau government mercifully resisted blowing the bank on a flurry of new deficit spending. In fact, total program spending increases for this fiscal year are actually 0.5% lower than originally planned, and increases over the next two years are limited to about 3% annually.
So, despite dozens of pages trumpeting all kinds of promises, taxpayers can breathe a sigh of relief that they didn’t translate into an excuse for a huge new spending spree.
The bad news is that even with spending increases under control, we’re still in a sizeable hole.
The 2015 Liberal election platform promised three “modest” deficits that would have added a total of $25 billion in debt before returning to balance in 2019. Instead, they’re currently on track to add at least $110 billion in new debt by 2022, more than quadrupling their platform figure, with no balance in sight.
And it all gets piled onto the backs of our children and grandchildren.
Even worse, the interest cost for that debt is rising. This year, it will be $26 billion. By 2022, it’s projected to be $33 billion. To put that into perspective, consider the federal government’s single biggest program expense, National Defence, clocks in at $25 billion.
Taxpayers are already spending more just paying the interest on the government’s credit card than we are on our own military. And it’s only going to get worse.
But, claiming this budget is about “nothing” may be a bit unfair to Morneau.
There’s more money for Indigenous Canadians, but no mention of enforcing financial transparency laws so that First Nations can know how their politicians spend the money.
There’s repackaged and rebranded corporate welfare and regional development funds, but no significant new tax relief.
And, there’s more money for the Canada Revenue Agency to go after tax cheats, but no plan to address the root problem, which is our ridiculously complex tax code.
Perhaps the most glaring omission was the lack of any response to the major tax cuts announced in the United States, which have all but wiped out Canada’s longstanding business tax rate advantage. Ignoring the dropping US tax rates will inevitably hurt our ability to attract and retain jobs and investment.
If anything, the government made things even worse by proceeding with their controversial small business tax changes. To be fair, though, they are much improved from the original proposals floated last summer. But, even the watered-down final version in the budget will squeeze small businesses for more than $1 billion annually by 2020. That’s not exactly hanging out a welcome sign for investors and entrepreneurs.
While the Liberals’ decision to not make things much worse this year may count as a minor victory for taxpayers, it may be short-lived. The real test of the Liberals’ resolve will come next year, as they prepare to face voters in a fall election.
Governments seeking re-election tend to spend more, not less, as they try to seduce voters heading to the ballot box. Add to this the fact that by late 2019, there will be recently elected, or re-elected, cash-strapped governments in Ontario, Quebec, and Alberta looking to Ottawa for more cash.
NAFTA could collapse.
And, the American tax cuts could put a dent in the government’s own tax revenue projections.
To get back to a balanced budget, Minister Morneau will need to do more than just stand still. He’ll actually need to make some tough choices. Here’s hoping that next year he finds the will to make them. Otherwise, Canadians will pay a heavy price.
Aaron Wudrick is the federal director of the Canadian Taxpayers Federation. The CTF is Canada’s leading non-partisan citizens’ advocacy group fighting for lower taxes, less waste, and accountable government. This column originally appeared on the Toronto Sun.