This post is a translation of the following article published today in the “Journal de Montréal”:
https://www.journaldemontreal.com/2020/01/22/le-plus-depensier
“The Fraser Institute has just released the level of federal spending per capita for the past year. Conclusion: by spending $9,066 per citizen in 2019, the Trudeau government will have peaked since 1870.
The Institute dates back to 1870 in its measure of government spending per capita, data adjusted for inflation in order to compare apples with apples.
If the Trudeau government was the biggest spender in Canadian history in 2019, it is interesting to look at the next two years in the rankings. The other two spending peaks occurred during major global crises: First, in the heart of the Second World War. Second, during the financial and economic crisis of 2009.
That says a lot. The two previous cases are directly associated with key moments when the explosion in state spending can be explained. For the war effort or to put the economy on artificial respiration. But why in 2019?
What explanation?
What would justify federal spending in 2019 exceeding that of the previous 152 years since Confederation? No objective criteria. Only a government with an outrageously spending tendency, which arrives in an election year and which exaggerates even more in its “orgy” of spending, namely by writing checks.
We will have found all the formulas of political language to justify spending so much. Canada “invests in people,” says Justin Trudeau. These pretty linguistic twists do not conceal reality. Canada is skyrocketing dollars, and to get to spend that much, our government is borrowing heavily.
Good economic growth in recent years has helped prevent the debt-to-GDP ratio from deteriorating. This is where they try to reassure us. However, there is a certain hypocrisy behind this supposed security. Because it’s obvious that at the slightest economic slowdown, this house of cards will collapse.
The concern
Let’s imagine a recession. Economic growth stagnates or declines, at the same time government revenues plummet and spending increases automatically. In no time, the deficit will explode and the debt-to-GDP ratio will do the same. To govern is to plan. It seems to me that we cannot ignore the dangers of this scenario.
What shocks me the most is that this torrent of spending does not even coincide with an era of dramatic improvement in one area. Canada is not revolutionizing its transportation systems with investments in state-of-the-art public transportation.
The downturn in the western provinces’ economy should be a wake-up call. The end of the oil economy within a few decades will cost Canada dearly. Other countries have taken advantage of the good years of oil wealth to put money aside. This is not our case.
I hope that in the closed retirement of Mr. Trudeau with his ministers, someone asked these questions. But I’m not sure at all.”
