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Economy

Federal government should listen to Canadians and restrain spending in upcoming budget

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From the Fraser Institute

By Grady Munro and Jake Fuss

The Trudeau government has repeatedly demonstrated a proclivity to increase spending and run deficits. Recent polling data shows that most Canadians are not in favour of this approach. When it tables its next budget on April 16, the government should listen to Canadians, restrain spending and provide a concrete plan to balance the budget.

The Trudeau government has increased spending substantially since taking office in 2015. When comparing the levels of inflation-adjusted, per-person program spending under every prime minister, Prime Minister Justin Trudeau has overseen the five-highest years of spending in the country’s history—even when COVID-related spending is excluded. Unsurprisingly, this proclivity to spend has resulted in eight consecutive deficits from 2015/16 to 2022/23, with another six planned from 2023/24 to 2028/29.

These eight years of borrowing have contributed to an $867.2 billion (or 82.0 per cent) increase in total gross government debt since 2014/15. Not only does this represent hundreds of billions that must be paid back by future generations, this debt run-up has also imposed significant costs on taxpayers through rising interest payments. In 2023/24, interest costs on federal government debt will reach a projected $46.5 billion—meaning more taxpayer dollars will go towards servicing debt than child-care benefits ($31.2 billion).

Again, while the Trudeau government was originally elected on the promise of higher spending for infrastructure and temporary deficits, recent polling data shows that Canadians are not happy with this approach—62.9 per cent of Canadians want the Trudeau government to cut spending. Conversely, less than a quarter (24.6 per cent) of respondents want the government to continue as planned (8.7 per cent want further increases in spending).

Of the respondents that feel the government should cut spending, 60.1 per cent want to use the savings to repay debt while 39.9 per cent want tax cuts. Debt reduction or tax relief would be a welcome development. But how much would the federal government need to cut spending to be in a position to balance the budget in the near future?

A recent study shows the federal government could simply limit the growth in annual program spending to 0.3 per cent for two years and balance the budget by 2026/27. In other words, the government could grow annual program spending by $2.9 billion from 2024/25 to 2026/27 and still balance the budget.

This is not to say the government wouldn’t face tough decisions in determining how to limit spending growth, and which areas of spending to target, but there’s a clear path to budget balance if the government wants to respect the wishes of most Canadians. And there are clear areas of spending where savings could be found.

For example, corporate welfare (i.e. government subsidies to businesses). Federal business subsidies nearly doubled from $6.5 billion in 2019 to $11.2 billion in 2022, yet research shows that they do little to promote economic growth and may actually harm the economy. Reducing or eliminating corporate welfare would help restrain overall spending.

After nearly a decade of growing spending and continuous deficits, Canadians have expressed a desire for the federal government to finally change its approach to fiscal policy. Through restrained spending there’s a clear path to a balanced budget that brings opportunities for debt reduction or tax relief—a path the Trudeau government can choose in its upcoming budget.

Alberta

Pierre Poilievre – Per Capita, Hardisty, Alberta Is the Most Important Little Town In Canada

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From Pierre Poilievre

The tiny town of Hardisty, Alberta (623 people) moves $90 billion in energy a year—that’s more than the GDP of some countries.

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Business

Why it’s time to repeal the oil tanker ban on B.C.’s north coast

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The Port of Prince Rupert on the north coast of British Columbia. Photo courtesy Prince Rupert Port Authority

From the Canadian Energy Centre

By Will Gibson

Moratorium does little to improve marine safety while sending the wrong message to energy investors

In 2019, Martha Hall Findlay, then-CEO of the Canada West Foundation, penned a strongly worded op-ed in the Globe and Mail calling the federal ban of oil tankers on B.C.’s northern coast “un-Canadian.”

Six years later, her opinion hasn’t changed.

“It was bad legislation and the government should get rid of it,” said Hall Findlay, now director of the University of Calgary’s School of Public Policy.

The moratorium, known as Bill C-48, banned vessels carrying more than 12,500 tonnes of oil from accessing northern B.C. ports.

Targeting products from one sector in one area does little to achieve the goal of overall improved marine transport safety, she said.

“There are risks associated with any kind of transportation with any goods, and not all of them are with oil tankers. All that singling out one part of one coast did was prevent more oil and gas from being produced that could be shipped off that coast,” she said.

Hall Findlay is a former Liberal MP who served as Suncor Energy’s chief sustainability officer before taking on her role at the University of Calgary.

She sees an opportunity to remove the tanker moratorium in light of changing attitudes about resource development across Canada and a new federal government that has publicly committed to delivering nation-building energy projects.

“There’s a greater recognition in large portions of the public across the country, not just Alberta and Saskatchewan, that Canada is too dependent on the United States as the only customer for our energy products,” she said.

“There are better alternatives to C-48, such as setting aside what are called Particularly Sensitive Sea Areas, which have been established in areas such as the Great Barrier Reef and the Galapagos Islands.”

The Business Council of British Columbia, which represents more than 200 companies, post-secondary institutions and industry associations, echoes Hall Findlay’s call for the tanker ban to be repealed.

“Comparable shipments face no such restrictions on the East Coast,” said Denise Mullen, the council’s director of environment, sustainability and Indigenous relations.

“This unfair treatment reinforces Canada’s over-reliance on the U.S. market, where Canadian oil is sold at a discount, by restricting access to Asia-Pacific markets.

“This results in billions in lost government revenues and reduced private investment at a time when our economy can least afford it.”

The ban on tanker traffic specifically in northern B.C. doesn’t make sense given Canada already has strong marine safety regulations in place, Mullen said.

Notably, completion of the Trans Mountain Pipeline expansion in 2024 also doubled marine spill response capacity on Canada’s West Coast. A $170 million investment added new equipment, personnel and response bases in the Salish Sea.

“The [C-48] moratorium adds little real protection while sending a damaging message to global investors,” she said.

“This undermines the confidence needed for long-term investment in critical trade-enabling infrastructure.”

Indigenous Resource Network executive director John Desjarlais senses there’s an openness to revisiting the issue for Indigenous communities.

“Sentiment has changed and evolved in the past six years,” he said.

“There are still concerns and trust that needs to be built. But there’s also a recognition that in addition to environmental impacts, [there are] consequences of not doing it in terms of an economic impact as well as the cascading socio-economic impacts.”

The ban effectively killed the proposed $16-billion Eagle Spirit project, an Indigenous-led pipeline that would have shipped oil from northern Alberta to a tidewater export terminal at Prince Rupert, B.C.

“When you have Indigenous participants who want to advance these projects, the moratorium needs to be revisited,” Desjarlais said.

He notes that in the six years since the tanker ban went into effect, there are growing partnerships between B.C. First Nations and the energy industry, including the Haisla Nation’s Cedar LNG project and the Nisga’a Nation’s Ksi Lisims LNG project.

This has deepened the trust that projects can mitigate risks while providing economic reconciliation and benefits to communities, Dejarlais said.

“Industry has come leaps and bounds in terms of working with First Nations,” he said.

“They are treating the rights of the communities they work with appropriately in terms of project risk and returns.”

Hall Findlay is cautiously optimistic that the tanker ban will be replaced by more appropriate legislation.

“I’m hoping that we see the revival of a federal government that brings pragmatism to governing the country,” she said.

“Repealing C-48 would be a sign of that happening.”

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