Friday April 1, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday April 1, 2022

Minister of Everything must tell Liberals they can’t have it all

Ms. Freeland is now tasked with delivering a budget at a critical time for Canada: when the country is in the early yet unstable stages of pandemic recovery, when a war is being fought in Ukraine, when drought caused by climate change has affected domestic and global yields and when inflation in Canada and abroad is surging. Indeed, the country is now at a precarious financial moment, when it could use the steady hand of that minister it saw on Feb. 24, speaking with genuine conviction about a policy she believes in deeply. What it doesn’t need is a minister dressed in Liberal garb, selling a politically advantageous budget when Canada can’t endure any more risk.

Next week, Ms. Freeland will produce a budget that accounts for her government’s many spending promises – and the new spending promises inherited through the supply-and-confidence agreement with the NDP, plus a likely increase in defence spending – while somehow also reassuring capital markets and stimulating long-term growth. This government has never been shy about spending beyond its means, and it has done so every year far beyond projections, while citing low interest rates and an ill-defined need to “invest” in the economy. The pandemic, of course, necessitated emergency spending on a record scale, although Canada’s trillion-dollar debt and projected deficits over the coming years now mean the country is staring down hefty financing costs: $43.5-billion in 2025-26, to cite one figure from a recent Parliamentary Budget Officer report. For context, the government is spending less than that to settle a years-long dispute over compensation for Indigenous children.

With the economy now recovering (GDP growth in the fourth quarter of 2021 exceeded the forecast rate, and the unemployment rate is down to prepandemic levels), the time for runaway, short-term spending is over, and indeed it risks exacerbating inflationary pressures. Interest rates are going up, and Canada’s debt-to-GDP ratio is projected to be 48 per cent for 2021-22 (up from 31.2 per cent in 2019-20), which means the government has far less room to manoeuvre should it get hit with another crisis. The Liberal Party’s impulse may be to continue to promise everything – Child care! Dental care! Fighter jets! Green retrofits! Rapid housing! – and to leave the bill for some future government to sort out, which is why Canada depends on Ms. Freeland now to make some tough calls and bring the budget down to earth. (The Globe & Mail)