From the Fraser Institute

By Jake Fuss and Grady Munro

Last week, Yves Giroux, the Parliamentary Budgetary Officer, raised a rarely-talked-about issue with the federal government—that is, the release of important fiscal documents is being delayed further and further each year. While at first glance this may not seem like a big deal, it’s a sign of declining transparency—an issue all Canadians should care about.

According to Giroux, the Trudeau government’s failure to yet release this year’s federal public accounts—which will report the final numbers for the 2023-24 fiscal year—“goes against fiscal transparency and accountability” that Canadians should expect.

While budgets outline the government’s plan for spending and revenue each year, the public accounts tell us whether or not the government actually stuck to this plan. Typically, the federal government releases the public accounts in October. Yet we’re entering December and last year’s federal finances remain in question.

Provinces also release public accounts, and though they have in the past displayed a similar tardiness, this year every provincial government has released their public accounts well before the federal government.

Why is this important?

Parliamentarians are expected to make important decisions that affect revenues and spending, yet many of them currently do not have the necessary information to make decisions on behalf of their constituents. Moreover, the federal government makes important commitments—referred to as “fiscal anchors”—to help ensure the sustainability of Canada’s finances. The public accounts are a critical tool for both elected officials and the public to hold government accountable to those commitments. Simply put, these fiscal documents are how we determine whether or not the government is actually staying true to its promises.

Some observers claim the Trudeau government may be intentionally delaying the release of this year’s public accounts to avoid this scrutiny. In its 2023 fall update, and again in the 2024 budget, the government promised to hold the 2023-24 deficit to $40.0 billion. Yet a recent report from the PBO suggests the deficit will instead be $46.8 billion. Since the government might be forced to deliver bad news, Giroux suggested it could be delaying the release “to find a more appropriate time where it gathers less attention.” Those are not the actions of a transparent and accountable government.

The issue of delayed fiscal releases is not limited to the public accounts. The Trudeau government has also released federal budgets later than usual. For example, this year it released the 2024 federal budget on April 16. The budget presents the fiscal plan for the upcoming fiscal year that begins April 1, meaning the federal government didn’t release its plan until more than two weeks after the fiscal year had started. In fact, three of the last four budgets from the Trudeau government have been released after the fiscal year started.

Similarly, the Trudeau government has also heretofore failed to release this year’s fall economic statement, which provides a mid-year update on the government’s budget plan. Again, the government has pushed this release later into the year compared to the past. From 2000 to 2014, no fiscal update was released later than November 22. Yet the Trudeau government has delayed the release of this update into December twice so far (in 2019 and 2021).

Canadians should expect their federal government to release important fiscal information in a timely and transparent manner. Unfortunately, transparency and accountability don’t appear high on this government’s list of priorities.

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  Jake Fuss

  Director, Fiscal Studies, Fraser Institute

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  Grady Munro

  Policy Analyst, Fraser Institute

From the Fraser Institute

By Jake Fuss and Grady Munro

On Thursday, the House of Commons passed legislation (tabled by the Trudeau government) that would temporarily suspend the federal Goods and Services Tax (GST) on select items from December 14 to February 15 at an estimated cost of $1.6 billion, as part of the government’s “more money in your pocket” plan. The legislation now goes to the Senate for approval.

The government has delayed a separate proposal—to give Canadians $250 rebate cheques—in light of NDP demands to expand eligibility to include seniors. The original proposal would have sent cheques to an estimated 18.7 million Canadians (who worked in 2023 and earned $150,000 or less) at a cost of $4.7 billion. While aimed at all Canadians, this proposal is eerily similar to the recent move by Ontario’s Ford government, which plans to send $200 cheques to Ontarians. And again, it’s just bad policy.

Why?

Consider this. During the recent discussion about increasing Old Age Security payments by 10 per cent for seniors aged 65 to 74, former Bank of Canada governor David Dodge said, “The last thing that we need to be spending money on at this point in time is boosting consumption for relatively well-off people.” This critique also applies to the Trudeau government’s $250 rebate cheques, which would go to many well-off Canadians. Indeed, based on the government’s original proposal, a couple earning a combined household income of up to $300,000 could receive these cheques.

Moreover, because onetime payouts and temporary tax breaks don’t incentivize people to work and invest, they don’t help raise living standards. But permanent tax cuts, such as reducing personal income tax rates or lowering capital gains taxes, would provide a stronger incentive for Canadians to work more and make investments because they get to keep more of the money they earn. That would help drive economic growth, create jobs and provide more economic opportunities for workers across the income spectrum.

In fact, the Trudeau government’s plan may actually hurt economic growth in the long run. The government is expected to run budget deficits for the foreseeable future, and will likely borrow the billions needed to pay for the GST break and $250 cheques. In other words, this “relief” package will likely increase the federal deficit in 2024 and potentially 2025. By borrowing more money, the government will increase the tax burden on future generations of Canadians who ultimately must pay off today’s debt. And just as lower taxes improve economic incentives, this higher future tax burden will worsen incentives and likely stifle economic growth and reduce living standards.

Don’t be deceived. While it’s nice to get a cheque in the mail and have a couple months free of the GST for some items, the Trudeau government’s “more money in your pocket” plan is bad policy.