Suddenly, the Great White North, recently famous for its probity and prudence the world over, appears ready to throw itself off a fiscal cliff.
What was forecast to be a small budget deficit in 2016-17 and 2017-18 now looks very likely to balloon to $25 billion in each of those two reporting years. The causes depend, of course, on whom you consult.
The Liberal government of Justin Trudeau blames its predecessors under former Prime Minister Stephen Harper, who, they say, underplayed the effect of falling oil prices even as they systematically told Canadians a far rosier tale of the nation’s basic economic strength than was probably justified.
The Opposition Tories, meanwhile, insist that the incoming Grits simply blew the budget by promising to pay for things they could never hope to afford (and, in the process, scrupulously avoided informing Canadians about the fundamental flaws in their accounting logic).
Indeed, there are a few skeletons in the fiscal closet that neither political party is especially keen to reveal.
For starters, the Conservative government never did have a handle on this whole business of running productive surpluses. It had a notion – and not a great one – that it could fool the country into believing that book entries in ledgers and cutbacks to essential programs, like infrastructure, would generate durable black ink in the public accounts for years to come.
Forget about crumbling roads, highways, bridges, canals, and military materiel. That was always someone else’s problem to solve. (It would have been theirs’, but electoral history spared them the humiliation of admitting to their own three-card-monte version of responsible government).
Secondly, the Harperites saw the writing on the oil sands years before they admitted they might be obliged to adjust their deficit and debt projections. In fact, the claim that no one saw cheap oil and gas prices coming down the pike as far back as 2012 is simply incredible.
At that time, the Americans were already moving aggressively towards oil and gas independence precisely because the Saudis and other OPEC nations were goosing their own production schedules and slashing margins at their state-owned facilities to squeeze western producers between a rock and a shale bed.
As for the nascent Trudeau government, it could never achieve its goal of simultaneously holding the line on deficits and opening the spigot. Anyone who thought it might. . .well. . .I own a bridge in Brooklyn you might be interested in taking off my hands.
In New Brunswick, we might properly wonder why we’re so concerned about our own province’s annual deficit, especially if the feds are so willing to increase the national one.
After all, Ottawa’s yearly shortfall could now increase by a per-capita factor of $1,000 (measured against the country’s population). That’s about 40 per cent less than ours in this East Coast jurisdiction.
But there is a difference, and it’s an important one.
Ottawa enjoys economies of scale that New Brunswick does not. The federal government has 33 million people whose open pockets they can pick. This province, meanwhile, still relies on the legal apparatus of transfers and Equalization from the ‘Centre’ with which to cover its debts.
Now, multiply that by 10 provinces and a territory or two, and you begin to get a sense of why a federal deficit is an entirely different animal than a provincial or territorial one. The former suddenly, if lamentably, becomes necessary.
If we want Ottawa’s books to balance, then we ought to begin in our towns, cities and regions. The fiscal cliffs are, in the end, our own to avoid.