PBO, critics question federal high spending when planned stimulus is no longer needed


The federal government has said that parliamentary budget officials (PBOs) and others are concerned about the long-term economic implications of continuing to spend high, even though there is no reason to do so. increase.

“Since the pandemic began, the government has spent or will spend $ 541.9 billion on new measures, almost one-third of which. [$176.6 billion] It is not part of the COVID-19 compliance plan. ” PBO Eve Jiro said He released his mid-January report commenting on the Federal Government’s 2021 Economic and Fiscal Update (EFU), published December 14, 2021.

Giroud said the new measures announced at the EFU will be primarily in addition to the measures included in the Liberal Party’s 2021 election platform. 2025–26. “

Aaron Wudrick, director of the Macdonald-Laurier Institute’s national policy program, says the pandemic has given the Liberal Party political cover to introduce long-standing policy goals such as more government day care.

“This is just a government that likes to spend money. They were like before the pandemic, they were like during the pandemic, they will be like after the pandemic. They will be to some extent. I hope to show discipline forever, but that will be a big change from their past achievements, “Wudrick said.

Giroud suggested that the liberal goal of lowering the debt-to-GDP ratio, which is the fiscal anchor for the majority of the period, has since been revoked. 27.

He also wondered why he needed to continue spending so much when 106 percent of the work lost at the start of the pandemic had since recovered. In 2020, the federal government introduced specific “financial guardrails” (benchmarks primarily tied to the labor market) to help determine when to eliminate stimulus.

“The government’s own fiscal guardrail shows that stimulating spending should be reduced by the end of the 2021-22 fiscal year. Giraud reported in a press release on 19 January. “It seems that there is no longer any rationale for additional spending, which was initially set aside as a” stimulus “, in the publication of the book.”

“It’s always hard to stop spending”

Malcolm Bird, a professor of political science at the University of Winnipeg, says political motives help keep spending going if economics suggests it isn’t.

“There are political problems with cutting off cash,” Bird said in an interview.

“It’s always hard to stop spending because spending brings you votes and is positive. You go out, make announcements, give people money, and” Halley, Halley! “So spending is It’s fun, and chopping up spending isn’t fun. And spending the money you owe is better than spending the money you have to tax people. “

Statistics Canada Data Reported a year-on-year rise in the consumer price index 4.8% December 2021, 4.7% Recorded in November and October.

In the memo in mid-December RBC It suggested that inflation was more widespread. 58 percent Annual consumer basket prices in November have risen by more than 2% on average over the past three months from pre-pandemic (2019) levels. As transportation, labor and input costs continue to increase and flow through the supply chain, more goods and services are likely to be affected, RBC said.

Bird said: “We’re not really in an inflationary period. We’re here because prices are rising and living standards are declining accordingly. The dollar isn’t that advanced. It’s stressful to people. Another thing I think is to give. “

Bank of Canada’s Fourth Quarter of 2021 Business outlook surveyReleased on January 17, Bird points out that most companies are competing for workers and planning to raise wages to retain staff, and Bird does the same for the public sector. I’m looking forward to it.

“I don’t understand why the union didn’t call on the government about this and said,” Forget 1 percent. ” [wage hike], 5 percent is needed. If that happens … it will erase all of that inflationary profit from income. “

“Watch out for tax increases”

Wudrick states that Canadians have deposited much of their COVID bailouts in banks, so the full effect of “pre-loaded” economic stimuli is not felt. He is long-term concerned about millennials.

“More spending means higher debt costs, and if interest rates rise, it puts pressure on public services. As more money is spent paying interest, people are due to the taxes they pay. Will be less, “Wudrick said.

“Housing is affordable, especially for millions of middle-class Canadians. The population and workforce are aging and the number of workers per retired is declining soon. Unless there is a major course modification, it will all be a challenging future for young Canadians. “

The last time budgetary considerations weren’t overshadowed by the pandemic was 2019, when the Liberal Party was still the majority and Chrystia Freeland wasn’t yet the Minister of Finance. Woodrick said he wouldn’t be surprised if the tax went up.

“The next budget will tell us a lot about the government’s long-term post-COVID agenda, so we need to keep an eye on it very carefully,” he said.

“Watch out for tax increases. The government will start looking for ways to squeeze more Canadians. It’s not a matter of when and what tax to pay.”

Lee Harding

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Lee Harding is a Saskatchewan-based journalist and think tank researcher and contributor to The Epoch Times.