Although there have been some changes in the calculation methods used for national accounting, there has not been a single real balanced budget since the 2008 financial crisis. In other words, for 13 years now, spending has exceeded revenues despite Canada’s relatively high tax rates. Worse still, the net federal debt has increased by nearly 63% during the pandemic.
The temporary aid programs related to COVID-19 have caused the deficit to explode, and it is imperative that we establish a clear plan for winding them down. As celebrated economist and Nobel Prize laureate Milton Friedman rightly pointed out, “Nothing is so permanent as a temporary government program.” The federal parties must therefore avoid falling into the trap of preserving these temporary measures.
We propose that the federal parties commit themselves to forming an independent standing expenditure review committee, to review all spending, pandemic-related or not. Indeed, this is just what the federal government did following the financial crisis of 2008-2009. The committee generated recurring savings of over $5 billion and contributed significantly to the government’s ability to balance the budget. By establishing a clear savings target for each department or agency to hit, it becomes easier to compare and evaluate the merit of each public policy proposal. This committee would therefore encourage the different departments to increase the efficiency of their programs, which would lead to better performance per dollar spent. Budgetary balance should be at the forefront of the election platforms of all the federal parties, for the sake of Canada’s future generations.