Budget 2023: a fiscal fantasy
Canadians need a serious plan for long-term growth and prosperity
Budget 2023 is another big spending federal budget. It contains a record $490.5 billion in spending, resulting in a deficit of $40.1 billion.
The budget doubles down on the failed approach of previous Trudeau government budgets. There are billions of dollars in new spending – on consumption rather than investment. Furthermore, all this new spending comes without a plan to pay for it. In fact, the interest payments on the national debt, will hit $43.9 billion this year and climb to $50.3 billion by fiscal 2027-28. That’s more than what Canada spends on our military.
The budget is making the Bank of Canada’s job more difficult because all this new spending is contributing to inflation. Grocery prices are already skyrocketing. Year-over-year grocery prices reached 10.6 per cent in February, marking the seventh consecutive month of double-digit increases.
The budget does not meaningfully address the affordability crunch, which hits low-income Canadians particularly hard. For example, the one-time grocery rebate cheque of $467 for a family of four does not offset the annual increase in grocery bills of thousands of dollars for that family. The Trudeau government’s housing programs also do little to offset the doubling of rents and house prices in recent years. The government giveth with one hand, but taketh with two others.
Former Liberal Finance Minister John Manley said the following about the budget’s fiscal outlook, “We no longer have a commitment to a balanced budget in the fiscal plan… Anyone looking at those fiscal projections has got to say there’s downside risk there, there isn’t much upside risk.”
Derek Holt, Scotiabank’s economist said the following about Budget 2023, “Nothing is being done about productivity and competitiveness pressures that are mounting year by year. Big spending, big deficits, big debt, high taxes, high inflation, and bond market challenges are not the path to prosperity.”
Canadians need a serious plan for long-term growth and prosperity. Lowering taxes, fiscal restraint, harnessing our resources, allocating revenues to investment rather than consumption, are all measures that would support this goal.
Budget 2023 is not that plan. It’s a budget based on fiscal fantasy.