The Good, the Bad and the Ugly—government budgets in 2024

Research showed the federal government could balance its budget in two years by slowing spending growth, yet instead the government doubled down and increased spending well past its previous estimates (against the wishes of Canadians)

This fiscal year, most provinces (and the federal government) demonstrated irresponsible fiscal management, although some were better than others. Therefore, in the words of the 1966 film starring Clint Eastwood, let’s discuss The Good, the Bad and the Ugly of Canadian government budgets in 2024.

Falling in the “good” category are Alberta and New Brunswick—the only two provinces planning to run a balanced budget in 2024/25, with Alberta forecasting a $367 million surplus and New Brunswick forecasting a $41 million surplus. Both provinces forecast surpluses until at least 2026/27, and expect net debt (total debt minus financial assets) as a share of the economy to decline in the years to come. However, what keeps these provinces from having a great budget is that both chose to further increase spending in the face of higher revenues, while failing to deliver much-needed tax relief.

Alberta in particular remains at risk of seeing future surpluses disappear, as the province relies on historically high resource revenues to fund its high spending. Should these volatile revenues decline, the province would return to operating at a deficit and growing its debt burden.

Provinces in the “bad” category include, but aren’t limited to, Saskatchewan and Newfoundland and Labrador. Largely due to quick growth in program spending that wipes out any revenue gains, both provinces expect deficits in 2023/24 and 2024/25 before planning to balance their budgets in 2025/26. The risks of unchecked spending growth are most salient in Saskatchewan, where just one year ago the province projected surpluses in both 2023/24 and 2024/25. And resulting from many years of deficits and debt accumulation, debt interest costs in Newfoundland and Labrador are expected to reach $2,123 per person in 2024/25, the highest in Canada.

Key governments among the “ugly” are the federal government, Ontario and British Columbia. Let’s take them one by one.

The federal government delivered a budget that continues the same failed approach that’s produced nearly a decade of stagnation in Canadian living standards. The Trudeau government plans to run a $39.8 billion deficit in 2024/25, followed by deficits of $20.0 billion or higher until at least 2028/29. Prior to the budget, research showed the federal government could balance its budget in two years by slowing spending growth, yet instead the government doubled down and increased spending well past its previous estimates (against the wishes of Canadians).

In addition to continuous spending increases and debt accumulation, the Trudeau government increased capital gains taxes on all businesses and many Canadians. Presented as a way to make the tax system more “fair” while generating $20 billion in revenue, in reality it is a harmful tax increase that is unlikely to generate the planned amount of revenues while simultaneously hindering economic growth and prosperity.

Similar to the federal government, in its 2024 budget Ontario’s Ford government simply doubled down on the same approach it’s taken in previous years. This “stay the course” fiscal plan added an average of $3.8 billion in new annual program spending (compared to last year’s budget) over the three years from 2023/24 to 2025/26. This new spending delays the province’s expected return to surpluses until 2026/27, and rather than run a $200 million surplus in 2024/25 the Ford government now plans to run a $9.8 billion deficit.

Importantly, the Ford government failed to deliver any meaningful tax relief for Ontarians in this budget, which once again breaks its promise to reduce personal income tax rates. Given that Ontarians face some of the highest personal income tax rates in North America, relief would help keep money in people’s pockets while also promoting economic growth.

Finally, the Eby government in B.C. tabled a budget that can be best described as a generational error in terms of the planned debt accumulation. The government plans to run a $7.9 billion deficit in 2024/25, followed by deficits of $7.8 billion and $6.4 billion in 2025/26 and 2026/27, respectively. In other words, the Eby government plans to run deficits in the coming years that are nearly as large or larger than those expected in Ontario, despite B.C. having a little over one-third of Ontario’s population.

Runaway spending drives these deficits and will contribute to a $55.1 billion (74.7 per cent) increase in provincial net debt from 2023/24 to 2026/27. This massive runup in debt will result in higher debt interest costs, which leaves less money available for services such as healthcare and education, or pro-growth tax relief for British Columbians.

By and large, governments across Canada demonstrated an irresponsible approach to managing public finances in this year’s round of budgets. While there were a couple of bright spots, the majority of provinces instead chose to increase spending, grow deficits and debt, and introduce little to no meaningful tax relief.

Authors:

Grady Munro and Jake Fuss

Related Topics:#FraserInstitute #GovernmentBudgets #GradyMunro #JakeFuss

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European Voters Are Taking Sledgehammer To Continent’s Radical Open Borders And Climate Agenda

Published on July 2, 2024

Todayville

From the Daily Caller News Foundation

By RICHARD HOLT

The results from both the recent European Parliamentary elections and France’s snap legislative elections have surprised our socialist friends across the ocean.

Despite the consistent rejection of climate activism in national elections, the ultra-left European Union Parliament has continued to loom darkly on its subjugated member states with failing “climate” and “open border” policies. The election results are more than just a passing trend: they are a clear repudiation of the left-wing policies on immigration and climate that have dominated the EU’s agenda in recent years.

Voters across Europe have expressed their dissatisfaction with these policies, which they perceive as economically burdensome and socially disruptive. In Germany, for example, center-right Christian Democrats (CDU) secured 30.2% of the vote, while the conservative Alternative for Germany (AfD) surged to 16%, a significant increase from their previous performance. This rise in support for the AfD is a direct response to the German government’s aggressive climate policies and its handling of immigration.

The German government’s climate agenda — particularly the Energiewende, has placed a heavy financial burden on households and businesses. Within the framework is a policy called “Marginal Pricing.” This means that the price of electricity at any given time is set by the most expensive power plant needed to meet demand at that moment. The overall transition to renewable energy has led to some of the highest electricity prices in Europe, with German households paying significantly more than the European average. These high costs have not only strained family budgets but have also impacted the competitiveness of German industries, leading to job losses and economic uncertainty.

Moreover, the decision to phase out coal and nuclear energy without adequate alternatives has left the country reliant on costly and inconsistent renewable sources. This dual energy system has created inefficiencies and further driven up costs. The frustration over these economic pressures has been a significant factor in the rise of conservative parties, who promise to alleviate these burdens by rolling back stringent climate regulations.

Immigration policies have also played a crucial role in the electorate’s shift to the right. Germany, and indeed much of Europe, has experienced a significant influx of asylum seekers over the past decade. The public’s growing concern over immigration, coupled with the perceived inability of left-wing parties to manage this influx effectively, has driven voters toward conservative alternatives. The AfD, for instance, has capitalized on these concerns, positioning itself as the defender of national borders and cultural identity.

This trend is not confined to Germany. In France, the legislative elections held this weekend show a significant shift to the right there as well. Marine Le Pen’s National Rally garnered over 33% of the vote, a dramatic win reflecting public dissatisfaction with Macron’s failed policies. Macron’s policies in regards to taxes, pensions and immigration coupled with long-term protests has eroded support for his centrist alliance, which only received about 21% of the vote. The left-wing New Popular Front, including La France Insoumise and the Socialist Party, trailed with around 28% of the vote. This rightward shift is part of a broader European trend where voters are increasingly turning to conservative parties in response to economic strain and immigration concerns.

The success of these parties underscores a growing demand for policies that prioritize national sovereignty and economic pragmatism over ideological commitments to climate activism and open borders. Voters are increasingly skeptical of policies that they perceive as detached from the realities of everyday life. The economic strain of high energy costs, combined with the social challenges of integrating large numbers of immigrants, has fueled a backlash against the left-wing establishment.

The rightward shift in the elections for the European Parliament is a powerful statement against the dubious feel-good policies from a failed left-wing activism on climate and immigration. It is a demand for a more market-centered approach that considers the economic and social realities faced by regular Europeans. The rise of conservative parties across the continent is not just a political realignment but a profound demand for sanity.

Richard Holt is an ambassador for Project 21, an initiative of The National Center for Public Policy Research to promote the views of African-Americans whose entrepreneurial spirit, dedication to family and commitment to individual responsibility have not traditionally been echoed by the nation’s civil rights establishment. He is also a political consultant at Sirius Campaigns with over two decades of experience working on campaigns for local, state and federal offices across the country.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

Featured image credit: Marine Le Pen (Screen Capture/CSPAN)

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Can Hawaii afford climate change lawsuit settlement?

Published on July 1, 2024

Todayville

From The Center Square

By Kim Jarrett

Hawaii recently entered into a settlement in a first-of-its-kind lawsuit that requires the state to implement climate change initiatives by court order, setting forth a potential template for lawsuits in other states.

Thirteen young people, at least one as young as nine, filed the lawsuit against the Hawaii Department of Transportation in June 2022. They said the state DOT needed to do more to protect the state and their future from climate change.

The state spent $3 million settling the lawsuit, money the attorney general’s office said was “well-spent” to avoid a trial that would have started June 24.

The settlement provides a road map of tasks the DOT must do per the court order. These include creating a greenhouse gas reduction plan for the Hawaii Department of Transportation that could cost the state more. Only one price tag is included in the plan—$40 million for public electric charging stations and charging infrastructure for all state and county vehicles by 2030.

The agreement includes a dispute-resolution component that could keep differences out of court. But, the First Circuit of Hawaii will oversee the settlement until 2045 if Hawaii has not met its zero-emission goals.

The Hawaii Department of Transportation must receive “sufficient appropriations” from the Hawaii Legislature, but the settlement does not include a specific amount for the other requirements.

Gov. Josh Green admitted it would not be inexpensive or easy. He said the court order would help him when he had to go to the Legislature and say, “Look, we have to do this.”

“We have these policies in mind but we don’t have the resources that come from the Legislature,” Green said. “We don’t often have the absolute insistence of the courts to do certain things so having a settlement like this creates some guarantees.”

For two years, the governor has pushed for a $25 tourist fee that has not passed the Legislature.

“We have 10 million individuals that come to Hawaii every year,” Green said. “Can you imagine only for a moment if we successfully were humbly asking people to pay $25 when they came to the state? That would be $250 million every single year to pay for the bikeways, extra to bring very advanced analytics to what our carbon impact is from any of the technologies we use, money to get bond to navigate major protections against erosion of the coastline.”

Thomas Yamachika, president of the Tax Foundation of Hawaii, told The Center Square, “There’s going to be some pain,” when finding money to implement the settlement’s initiatives. The Legislature passed tax breaks this year to increase the standard income tax deduction in odd years and lower tax rates for all brackets in even years. It’s possible those tax cuts could be “walked back,” Yamachika said.

Truth in Accounting, which does an annual financial analysis of the 50 states, told The Center Square that Hawaii is already $11 billion in debt.

“The state doesn’t have money sitting around that can be used for settlements like this,” said Sheila A. Weinberg, founder and CEO of Truth in Accounting. “To pay for this settlement, taxes will have to be raised or services and benefits will have to be cut. The other option is to even underfund the pension and retiree health care benefits even more.”

Hawaii is the first to settle a climate change lawsuit, but it may not be the last. The case may set a precedent in other states where young people have filed lawsuits over climate concerns, according to an op-ed written by Cara Horowitz, executive director of the Emmett Institute on Climate Change and the institute’s communications director, Evan George.

“Many defendants facing climate lawsuits — notably including Hawaii officials in the earlier stages of this case — often protest that climate change policy should be made by legislatures, not judges,” Horowitz and George said in the op-ed published in the Los Angeles Times. “This landmark settlement demonstrates that the courts can hold decision-makers accountable if they fail to live up to their promises.”