Gov­ern­ment spend­ing must stop

“Spend­ing within your means seems to be passé today,” former Ontario Premier Mike Har­ris told Saskat­chewan’s Pipeline Online energy pod­cast in March. “Nobody seems to care about defi­cits or debt. We need another ‘com­mon sense revolu­tion’—because, frankly, we’re bur­den­ing our chil­dren and grand­chil­dren.”

As Canada offi­cially enters a reces­sion, every single Cana­dian province is now run­ning a defi­cit, and over­all gov­ern­ment spend­ing com­prises a whop­ping 42.3 per cent of our coun­try’s total eco­nomy. As part of Ontario’s recent $244.2 bil­lion budget, for one, the pro­vin­cial defi­cit nearly doubled, to $13.8 bil­lion.

Gov­ern­ments can’t blame super-events for defi­cit spend­ing forever. At some point, they have to be cour­ageous enough to struc­tur­ally tackle health, edu­ca­tion, and social ser­vices reform—let alone tax reform. In the mean­time, a bal­loon­ing pub­lic sec­tor is driv­ing up spend­ing, redu­cing private invest­ment, and weak­en­ing pro­ductiv­ity.

This, as the per­sonal debts of Cana­dians are mir­ror­ing gov­ern­ments’ debts. Accord­ing to Stat­ist­ics Canada, house­hold debt is now $3.2 tril­lion, with more than $2 tril­lion in mort­gages. “After repeated eco­nomic shocks, there is declin­ing con­fid­ence, rising reli­ance on credit for essen­tials, and grow­ing emo­tional strain,” Cal­gary MNP pres­id­ent Grant Bazian recently told the fed­eral Com­mons fin­ance com­mit­tee. “Many Cana­dians are within $200 of insolv­ency each month.”

Prime Min­is­ter Mark Car­ney may be prom­ising to “work relent­lessly to cut waste.” But fed­eral gross debt is on track to hit $2.4 tril­lion, while debt interest is $59 bil­lion. Cur­rently, the debt is worth the equi­val­ent of more than $33,000 for every Cana­dian. Car­ney has even man­aged to out­spend his pre­de­cessor on the Privy Coun­cil office, includ­ing on gour­met in-flight meals for him and his entour­age, worth almost $200,000.

Mean­while, the fed­eral Par­lia­ment­ary Budget Officer and major credit rat­ing agen­cies are flag­ging a wor­ry­ing pat­tern: that major fed­eral spend­ing com­mit­ments are increas­ingly being made without basic details about deliv­ery or future con­trols. In March, Fin­ance Min­is­ter François-phil­ippe Cham­pagne even announced that the fed­eral gov­ern­ment had “found” $60 bil­lion in sav­ings across dif­fer­ent depart­ments, without nam­ing a single one. His Main Estim­ates, tabled in Feb­ru­ary, was no more expli­cit.

If gov­ern­ments are ser­i­ous about growth, they must refo­cus on effi­ciency: curb spend­ing, lower taxes, sim­plify reg­u­la­tions, cut red tape, accel­er­ate approvals, and remove bar­ri­ers to private invest­ment. Now.

Such eco­nomic dilet­tant­ism is becom­ing embar­rass­ing.

Cue the fed­eral gov­ern­ment’s launch of its “sov­er­eign wealth fund” with $25 bil­lion of bor­rowed money, which will also cost tax­pay­ers $750 mil­lion in debt interest charges. Moreover, Nor­way’s sov­er­eign wealth fund, built on sur­pluses, long-accu­mu­lated sav­ings and resource rev­en­ues, and cur­rently worth $USD 2 tril­lion, invests abroad. Canada’s pro­posed fund—which is more like a gov­ern­ment-run mutual fund—will invest in politi­cians’ and bur­eau­crats’ domestic pet projects and imit­ate the work of already-exist­ing entit­ies such as the Canada Infra­struc­ture Bank and Canada Growth fund.

How did we get here? An endemic spend­ing atti­tude. Some recent examples of ser­i­ous over-spend­ing, big and small(er):

• Almost $1 bil­lion for thir­teen FIFA World Cup games, shared among the fed­eral gov­ern­ment and host provinces.
• $4.2 bil­lion to replace the troubled fed­eral Phoenix pay sys­tem.
• $18 mil­lion to reopen the Cana­dian con­su­late in Milan, which show­cases “efforts to com­bat cli­mate change.”
• $300 mil­lion to fed­eral digital ser­vice Pre­scribeit, although fewer than five per cent of pre­scrip­tions flow through it.
• $1.2 mil­lion in cam­eras for home­less indi­vidu­als to take pho­tos for an arts-based exhib­i­tion approved under a “vet­eran home­less­ness” pro­gram.
• $194 mil­lion to the Nutri­tion North food sub­sidy pro­gram, des­pite “insuf­fi­cient evid­ence” that it’s actu­ally lower­ing gro­cery prices.
• $9 mil­lion for advert­ising in French-speak­ing coun­tries such as Cameroon and Togo, approved by the Depart­ment of Immig­ra­tion to pro­mote immig­ra­tion.
• $230 mil­lion in fed­eral fund­ing for north­ern com­munity pro­grams, includ­ing $50 mil­lion to sup­port a first Inuit-led uni­versity.
• $1.4 mil­lion on a ‘net zero’ gov­ern­ment-owned gar­age in White­horse, which took ten years to build.

We have to stop spend­ing like this.

If gov­ern­ments are ser­i­ous about growth, they must refo­cus on effi­ciency: curb spend­ing, lower taxes, sim­plify reg­u­la­tions, cut red tape, accel­er­ate approvals, and remove bar­ri­ers to private invest­ment. Now.

Bronwyn Eyre is a Senior Fellow at the MEI and a former minister of Energy for Saskatchewan. The views reflected in this opinion piece are her own.