Freeland looks to take the federal debt to infinity and beyond
Finance Minister Chrystia Freeland's fall economic statement
It's official: the Trudeau government has taken the federal deficit from $19 billion to $381 billion in just nine months.
That's the staggering takeaway from Finance Minister Chrystia Freeland's fall economic statement, and it means Canada's total federal debt will for the first time shoot past $1 trillion in a few weeks.
Critics will argue that with the global pandemic, all this spending is necessary and with low interest rates it's really nothing to worry about.
This is wrong for at least four reasons.
First, even if some temporary emergency spending is necessary, it can't explain why the Trudeau government has managed to get such poor returns. Canada's deficit has increased the most among its G7 peer countries and yet still has the highest unemployment rate. In fact, it sent a whopping $54 billion out the door to compensate Canadians for $21 billion in lost income. Helping people out is one thing, but piling up new debt to send people two dollars for every one dollar they've lost is a very expensive way to miss the target. Second, not all new government spending is even related to the pandemic. Many of the Trudeau government's recent announcements--from green infrastructure to child care--are simply repackaged versions of their longstanding hobby horses, trotted out under the pretext of "reinventing" the economy. And yet if there wasn't enough money to pay for these things when the deficit was only $19 billion, how on earth can there be enough now that it's $381 billion? Third, just because the government needs to spend on pandemic priorities, doesn't mean it can't save money elsewhere. A prudent government would look at lower priority areas and show some restraint. Something as obvious as rolling back the bureaucracy to the size it was in 2017--two full years after Justin Trudeau came to office--would help save taxpayers at least $13 billion. It would also have the added benefit of demonstrating that those in government are willing to share the burden being borne by the millions of Canadians who have seen their jobs wiped out or their small businesses go bankrupt.