By Jason Clemens
and Jake Fuss
The Fraser Institute
According to Finance Minister Chrystia Freeland, on Monday the government of Prime Minister Justin Trudeau will provide an update on its 2020 spending.
But the government hasn’t delivered a full federal budget since March 2019, more than 20 months ago. That demonstrates little regard for democratic accountability.
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The democratic tradition calls for annual budgets. That allows the government of the day to be held accountable, by opposition in Parliament and Canadian citizens, for its short-term and longer-run spending, taxing and borrowing.
When the Liberals tabled their last full budget, they had a majority government, no one had heard of COVID-19 and the economy was growing – albeit slowly.
The government delivered an economic “snapshot” in July 2020. However, the financial and economic information was limited to the current fiscal year (2020-21). It offered no insight about future spending, taxes or debt, given current circumstances and future expectations.
The snapshot was worrying.
Federal spending was expected to increase from $350.8 billion last year to $592.6 billion and additional spending was announced shortly after. The national debt was projected to exceed $1 trillion.
The International Monetary Fund’s most recent analysis of industrialized countries projected that Canadian governments would borrow more than any of 34 other high-income countries in 2020. Canadian governments are expected to spend more than all countries except France, Belgium, Finland, Italy and Austria.
The prime minister, finance minister and other members of the government argue that circumstances are simply too fluid for a full budget.
But other governments facing the same circumstances have delivered budgets. Despite it being an election year, the United States delivered a budget. And the United Kingdom issued a budget early in the COVID-19 crisis and has provided several subsequent updates.
We don’t even need to look outside Canada, as most provinces have delivered budgets – including Saskatchewan and Ontario – with future projections about spending, taxes and borrowing.
The federal government has also not released a long-term forecast of its spending, taxing and borrowing since 2018. At the time, the government projected the budget wouldn’t be balanced until at least 2040.
A recent Fraser Institute study projected that the federal government wouldn’t balance its budget at any time over the next 30 years, absent a change in policy. The study also projected that federal debt (as a share of the economy) could exceed levels reached in the early 1990s, when the country faced a debt and currency crisis.
It’s hard not to interpret the federal government’s ongoing refusal to deliver a full budget as yet another example of avoiding accountability.
In the early days of COVID-19, the government sought unlimited spending, taxing and borrowing powers for 21 months. After parliamentary, media and public backlash, the government backtracked and secured authority to spend and borrow as needed without parliamentary approval to the end of September. But that still limited oversight and accountability.
The Parliamentary Budget Officer continues to publicly express frustration with a lack of transparency, disclosure and access to information on spending by the federal government.
Remember too that this is a minority government. In the October 2019 election, it had the lowest share of the popular vote for any party forming government in Canadian history.
This federal government must deliver a full budget for public scrutiny. It must provide an accounting of its current and planned spending, taxing and borrowing.
But the government says it will present only an abridged update this year, with a full budget next spring.
To hold the government accountable, citizens must be aware of the decisions that affect us today and tomorrow. This can only be done with a full budget.
Jason Clemens and Jake Fuss are economists with the Fraser Institute.
For interview requests, click here.
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