GOLDSTEIN: Trudeau’s pandemic spending means perpetual red ink — report

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Massive public spending by Prime Minister Justin Trudeau, even after the COVID-19 pandemic is over, will make it almost impossible for future governments to ever return to a balanced budget, according to a new study by the Fraser Institute.

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The study by the fiscally conservative think tank — Prime Ministers and Government Spending, Updated 2021 Edition — says federal program spending in 2020-21, the first year of the pandemic, soared to $17,121 per person, adjusted for inflation, “by far the highest level in Canada’s history.”

Spending in the current fiscal year of 2021-22 is estimated at $13,032 to $13,735 per person, which would be the second-highest level in Canada’s history, 42.4% to 50% higher than during the 2009 global recession and 64.8% to 73.7% higher than at the peak of the Second World War. 

Even though per-person program spending is projected to drop in 2022-23 to between $10,846 and $11,446, this would still be 12.2% to 18.4% higher than in 2019-20, the highest level of government spending prior to the COVID-19 pandemic.

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The study also says Trudeau is on track to record the five highest levels of per-person government spending in Canadian history for 2018, 2019, 2020, 2021, and 2022.

“These levels of spending are unprecedented in Canadian history, even when compared to other times of crisis like recessions and wartime,” said study author Jake Fuss, senior economist with the Fraser Institute.

“By all indications, the new normal level of federal program spending is substantially higher than even the record-high levels of spending we saw pre-COVID.

“This high level of deficit-financed spending will have to be repaid eventually and that will have implications for future taxpayers who will face tax hikes to pay for today’s spending.”

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Fuss’ estimates of per-person government spending for 2021-22 and 2022-23 are based on the Liberal and NDP platforms in the recent federal election.

His low-end estimates are based on the Liberal platform and the high-end estimates on the NDP one, “given the strong likelihood that these two parties will work in tandem in the minority government,” since together they control a majority of the seats in the House of Commons.

The study also projects that Trudeau will record the highest average annual increase in per-person government spending of any prime minister since the Second World War of between 11.7% and 12.4%.

In descending order from Trudeau are Louis St. Laurent (7.0%);  Lester Pearson (5.2%); Pierre Trudeau (4.1%); Paul Martin (2.6%); Stephen Harper (1.4%); John Diefenbaker (1.1%); Jean Chretien (- 0.3%); Brian Mulroney (- 0.3%) and Joe Clark (- 4.8%).

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The Trudeau government has said it needed to increase public spending dramatically to support workers, families, and businesses through the unprecedented economic downturn caused by the COVID-19 pandemic, and to position Canada so that the economy would be able to recover strongly in the post-pandemic period.

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It also said that Canada’s current large deficit and debt levels caused by that spending are manageable because of low-interest rates.

Last week, Statistics Canada reported the economy added 157,100 jobs in September, reducing the unemployment rate to 6.9% from 7.1% and restoring the labour market to pre-pandemic levels. 

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Finally, it should be noted that governments today provide far more public services than in previous decades, one of many examples being that during the Second World War, Canada did not have a medicare program.

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