COMMENTARY: Federal Budget 2018 — all the nice stuff borrowed money can eventually buy
A few years ago, while still a columnist for the National Post, I was in Toronto at some event, listening to the education minister in then-premier Dalton McGuinty’s Liberal government. Her name was Laurel Broten, and she was extolling all the wonderful things her government had done for education.
It sounded great. Teachers were being hired. Class sizes were smaller. Schools were being built and upgraded. More specialists were being hired. And, best of all, there had been no disruptions by strike or job action. The unions were happy!
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As I sat there I thought, for the love of God, Minister, don’t tell me what you’re accomplishing. Tell me how you’re paying for it.
Because that was the problem Ontario had back then. (It’s the problem Ontario still has, come to think of it, but that’s a column for another day.) Under McGuinty and later Kathleen Wynne, Ontario ran massive deficits until 2017. I grant that there was an economic crisis and a recession at one point. But the Ontario Liberals were running deficits before and after the crisis. The crisis and recession made them bigger, but it didn’t create them.
So, yeah, teachers and specialists got hired. Schools were built and renovated. Class sizes shrank. The unions were happy. And those are all good things, in the abstract. But life isn’t lived in the abstract. All of those things had costs, and Ontario couldn’t pay. So it borrowed. Don’t tell me all the wonderful things you’re doing until you can also tell me how it’s getting paid for. I could build a bunch of schools, too, if I had not the slightest care who’d pick up the tab.
That’s a long-winded introduction to our main topic, but I’m sure you can follow my logic. Tuesday’s federal budget was loaded with good news. Nothing Earth-shattering, of course, but something for everyone to love. Extended paternal benefits! More money for cybersecurity! A Bono-pleasing boost to foreign aid! Boosts to science and research spending, and plenty more for Indigenous services!
Obviously, you can always blow the execution, but on the face of it, Budget 2018 is full of good news for almost everyone. But it’s still all being paid for with borrowed money: $18.1 billion in deficit spending next year (including a safety cushion, but still). The borrowing will continue out at least beyond 2023.
Why? No, literally … why? Why can we not pay our bills without borrowing money?
Economists and partisans will scoff and tell me that the borrowed sums here are paltry compared to our massive economy. It’s a rounding error when compared with our more than $2 trillion in annual GDP. I grant that. But that also just speaks to my point — if the sums we’re borrowing are tiny for a country of our economic might, then surely it wouldn’t be too hard either to boost the revenues to close the gap or to make some targeted trims to spending and get back to black?
Yes, yes, easier said than done. Eighteen billion is a much bigger piece of the budget than it is the economy as a whole. And there are, of course, the political consequences of both higher taxes or reduced spending (and the Liberals are raising tax revenue, to be clear, just not significant enough to kill the deficit).
But the fact of the matter is simple: we don’t need to be running deficits. We didn’t really need to be running them during the latter years of the Harper government, either (I do recognize, as with McGuinty, that Harper’s hand was partially forced by the global economic crisis). The federal deficits of today, like those of the latter Harper years, are not deficits of necessity. There is no war, no natural disaster, no economic emergency. We’re borrowing from the future to pay for today because we simply can’t be bothered to actually pay for the stuff we’re actually consuming in the here and now.
Again, why? Yes, I understand that a country can run small deficits indefinitely so long as the economy grows faster than the debt-servicing costs. But that’s not a reason to borrow money. It’s just a bit of consolation if you’re forced to by circumstance. It’s hard to imagine a more optimal time and place in history for Canada than right now: we’re at peace (and not even funding our peace-time-sized military properly), the economy is sizzling, we’ve yet to feel the full impact of the upcoming demographic crunch, and at least as of the time I write this, NAFTA has not yet totally blown up.
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There is a finite number of dollars we’ll be able to borrow in a pinch, should we someday need to. Every buck we’re borrowing now is a buck we can’t borrow down the line when the stuff’s hitting the fan. It may never happen; it could happen tomorrow. Look at the recent geopolitical crises to have rocked the globe over the last generation: the collapse of the Soviet Union, 9/11, the 2008 crash, and the various and disparate global issues that have combined to make 2017 and 2018 so bizarre. The only thing they share was that they were largely unforeseen. We can’t assume we’ll see the next crisis coming in time to budget for it.
So don’t tell me about the nice things you’re going to do with money that you’re borrowing in the names of me and my children. Tell me what we can do with the money we have, and if what we’ve got is not enough, convince me and the rest of the voters why you need more. Until and unless we do these things, stop trying to buy my vote with my own money — especially if you have to borrow it, with interest.
Matt Gurney is host of The Exchange with Matt Gurney on Global News Radio 640 Toronto weekdays from 9 a.m. to 12 p.m. and a columnist for Global News.
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