Excessive Spending Will Not Lead To Sunny Ways

CHCH Job Cuts May Hit Mute On Mental Illness
December 15, 2015
Daniel Therrien, Canada's Privacy Czar, Says Warrantless Access To Internet Data Sometimes OK
December 15, 2015

There has been much talk in the election and the time since then about Prime Minister Trudeau’s desire to emulate the “sunny ways” approach of Prime Minister Wilfred Laurier. Laurier’s sunny ways philosophy is often attributed to his approach to the challenges of linguistic and religious differences facing a young Canada. The most famous quote is from a minority religious schools issue in the 1890s when Laurier said: “Do you not believe that there is more to be gained by appealing to the heart and soul of men rather than by trying to compel them to do a thing?”

Laurier strove to convince those on the other side of the debate of the moral or noble nature of a decision of government rather than forcing a position upon the public. I agree with this. I think it is better to explain policies and show why they are in the long-term interest of Canadians even when others disagree. One lesson I take from the last election is that we should have done more to explain the need for certain policy choices we made in the long term interest of the country, from security and criminal justice reform to trade, taxes and balanced budgets.

Spending is already wildly out of control.

Sunny ways leadership is about setting priorities and convincing citizens about the need for these priorities to ensure we have a bright future. It is about being honest with people and at times making difficult choices and explaining why you have to make them. Being all things to all people is not sunny ways leadership, nor is simply doubling or adding a zero to the investments of your predecessor. That appears to be the central hallmark of the new government. Spending is already wildly out of control.

The cost of their Syrian refugee resettlement pledge in the campaign was pegged at $200 Million, but will likely come in at three or four times that amount due to the unrealistic timelines and move away from private sponsorship to government sponsorship. On his first foreign trip, the prime minister decided to double Canada’s fast-start climate financing program for developing nations to $2.65 billion. The new government has also pledged to implement all 94 recommendations from the Truth and Reconciliation Commission on First Nation Residential Schools without even knowing a full costing of these recommendations or analyzing whether every single one is appropriate.

My greatest concern with the new government is not that the prime minister is addressing some of these issues. I am glad he is. My concern stems from the fact that he seems to believe that simply spending more will lead to better outcomes. This is short sighted and shows a profound lack of concern for the finances of the nation. Before the 2015 election, Trudeau stated that it was important to run a balanced budget for the long term prosperity of Canada. Midway through the election he changed his position and promised that he would run a deficit for his first three years in government, but stressed that it would not exceed $10 billion per year.

In his second month as prime minister he has now jettisoned this $10 billion ceiling saying only he will try and keep the debt to Gross Domestic Product (GDP) ratio static or decreasing. The spending I outlined above in the first few weeks of the government alongside their broken promise of the revenue neutral nature of their tax changes explains why the deficit is already skyrocketing. This is poor planning and trying to demonstrate change by outspending the predecessor. Trudeau cannot blame any of this on the previous government as new governments often try to do. Just last week the Parliamentary Budget Officer confirmed that the Conservative government left the country in a modest surplus position.

Canadians are also facing changes from the new government that will impact Canadians of all income levels from coast to coast to coast. The government has already announced that it is cutting the popular Tax-Free Savings Account (TFSA) level in half, which will leave many seniors having to make some changes in or around retirement. TFSAs were created by our government to allow for savings free from tax and not simply deferred until later like under the RRSP program. It was a popular measure used by millions of seniors and middle class families in Canada.

It is already clear that the next few years will see higher deficits and higher taxes.

The new government is also planning to eliminate the Universal Child Care Benefit (UCCB), which our government brought in to help all families raising children. While the UCCB was a new benefit, it was really a modern-day version of the “baby bonus,” which was created after World War II to help families raising children. Since Canada has long had a progressive tax system these universal benefits worked well. Families making more would pay more and the UCCB was taxed against the lower income parent whether they worked full time, part time or not at all.

The Liberals are now deviating from this tradition and will be removing the universality of their new child benefit program. While the final details will be tabled in the new year, it is clear that some families with two incomes will not receive any benefit. For dual income families in areas like the Greater Toronto or Vancouver areas with expensive housing and costs of living, this will mean many middle class families will not receive the child benefit.

It is already clear that the next few years will see higher deficits and higher taxes. This will rightly concern people in Ontario because we have seen this movie before. Ontario allowed large deficits to accumulate under Liberal governments and there is a large structural deficit that has led to credit ratings being lowered for the province and the costs of borrowing increased. Despite raising taxes countless times in Ontario, the government still cannot wrestle the deficit under control. It is very easy to spend and hope to make it up in the future, but that rarely happens. Sunny ways should mean that the government set priorities and spends prudently so that the future will indeed be sunny for Canadians. Equating spending with sunshine is poor leadership and will only mean that Canadians get a nasty burn.


Source: HP

Comments are closed.