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Lawrie McFarlane: PM’s repeated deficits leave Canadians in a financial hole

Tuesday’s federal budget brings to mind an old saying — that the apple doesn’t fall far from the tree. When the current Liberal administration was elected in 2015, Prime Minister Justin Trudeau inherited a surplus of $1.4 billion.
Question Period 20190319791.jpg
Prime Minister Justin Trudeau answers a question during question period in the House of Commons on Parliament Hill in Ottawa on Tuesday, March 19, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Tuesday’s federal budget brings to mind an old saying — that the apple doesn’t fall far from the tree.

When the current Liberal administration was elected in 2015, Prime Minister Justin Trudeau inherited a surplus of $1.4 billion. It is no exaggeration to say that the finance minister who accomplished this, Conservative Jim Flaherty, gave everything he had to balance the budget. He died shortly afterward of a massive heart attack.

Trudeau immediately set about destroying all that hard work. Over the past three years, his government budgeted deficits of $17.8 billion, $28.5 billion and $18 billion. (Some of those deficits ultimately came in lower than planned, due more to luck than sound management. Nevertheless, the fact that Ottawa is awash in red ink cannot be disputed.)

In Tuesday’s offering, we had more of the same. The forecast deficit for 2019 is $19.8 billion, with no surpluses anywhere in sight (this from a prime minister who promised balanced budgets in four years, and no deficit exceeding $10 billion).

What has this to do with apple trees? Trudeau’s father, Pierre, became prime minister for the first time in 1968.

And like his son, he inherited a surplus — just over $1 billion. When he left office, nine years later, his government bequeathed the nation a $41-billion deficit (all of the sums here are expressed in current dollars, meaning they are adjusted for inflation).

Following the defeat of Joe Clark’s government just a year later, Trudeau senior once again took over, inheriting at the outset a shortfall of $40 billion.

Four years later, after his famous walk in the snow, when he decided he had had enough, he left behind a staggering deficit of $92 billion.

This disastrous mismanagement of the country’s finances was carried on by Brian Mulroney’s Conservative administration, though not to the same extent. But it was Pierre Trudeau who initiated this massive spending spree, lifting annual shortfalls to such a level that we didn’t get back to a balanced budget for the better part of three decades.

Worse still, by the time the money ran out, every penny borrowed was commandeered to pay down the interest on previous deficits. The only beneficiaries of this madness lived in places such as New York and Zurich. There certainly weren’t any in Canada. It is this family tradition his son is carrying on.

There have been periods over the past 50 years when deficits were called for. The recession of 1982, when interest rates were in the high teens, took every developed nation by surprise. I don’t believe any of the western countries balanced their budgets at that time, or for some years following.

Likewise, the 2008 recession torpedoed revenues and left finance ministers scrambling for a time.

But the theory of fiscal management is that you balance the budget over the economic cycle — deficits in bad years followed by surpluses in good years.

Canada is currently enjoying a period of economic growth, and has been since the Liberals took office. Where is the excuse for swimming in red ink?

There’s more to this than sterile number-crunching. A company that behaved like that would go out of business. A family that did so would have to file for bankruptcy. Aren’t we entitled to expect the same degree of discipline from our elected representatives, whom we employ ourselves?

Our politicians have an answer for this. Not to worry, governments never go out of business.

Technically, that’s true, but substantively, it’s not. What happens is that services are left to wither on the vine, or are quietly abandoned.

Coast guard and lighthouse services are withdrawn. Statistics Canada has become an international joke, so insignificant is its research effort.

And our federal courts are unable to meet timeliness standards, meaning thousands of prisoners go free each year because of trial delay.

Some of these deficiencies predate the present administration, but they are all symptoms of the same disease — epic overspending that has left a succession of federal governments unable to meet their basic obligations.

Last Tuesday, we had another dose of that.