In the next federal election all the political parties will at some point roll out what they will describe as “fully-costed” campaign platforms and when they do, we should all laugh them off the stage.
An economic and fiscal outlook report by Parliamentary Budget Officer Yves Giroux last week illustrates why.
Giroux predicted the Trudeau government has already blown past a commitment Finance Minister Chrystia Freeland made last year to keep the federal deficit at or below $40 billion for the 2023-24 fiscal year as a so-called “guardrail” to help insure excessive deficits don’t contribute to inflation.
On Thursday, just six months after Freeland repeated that commitment when unveiling her 2024-25 federal budget in April, Giroux estimated the actual federal deficit for 2023-24 won’t be $40 billion, but 17% higher at $46.8 billion.
Giroux also predicted the same thing will happen this year in the 2024-25 budget, where the deficit Freeland said would be $39.8 billion six months ago, is now expected to come in 16.6% higher at $46.4 billion.
While the federal government won’t have final deficit numbers for 2023-24 and firmer numbers for 2024-25 until its fall economic statement, which has yet to be delivered, the point is neither of these blown deficit predictions, according to the PBO, were long-range forecasts trying to predict the future years down the road.
They were predictions the PBO said became obsolete almost as soon as they were made.
The futility of the Liberals (or any other party) making accurate predictions about government deficits and spending years down the road was best illustrated during the 2015 federal election campaign, which brought Prime Minister Justin Trudeau and the Liberals to power with a majority government from third place in the Commons at the start of the campaign.
Two weeks before the election date, Trudeau issued what the Liberals claimed was a fully-costed “realistic, sustainable, prudent, and transparent” budget plan consistent with “core principles advocated by Canadian fiscal experts.”
Trudeau’s platform said that under his government there would be three years of “modest, short-term deficits” in 2016, 2017 and 2018 followed by a balanced budget with a $1-billion surplus in 2019.
Claiming Liberals knew how to balance budgets (a reference to the Jean Chretien/Paul Martin era when they actually did), Trudeau looked earnestly into the camera during the Sept. 17, 2015 leaders’ debate on the economy and said: “I am looking straight at Canadians and being honest the way I always have. We will balance that budget in 2019.”
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Trudeau’s campaign platform said the federal deficit under his leadership would be $9.9 billion in 2016, $9.5 billion in 2017 and $5.7 billion in 2018, with a balanced budget, including a $1-billion surplus, in 2019.
At the time, Conservative prime minister Stephen Harper mocked Trudeau’s so-called “tiny” deficit plan after examining the Liberals’ numbers.
“He (Trudeau) will run, he says, a modest deficit, a tiny deficit, so small you can hardly see the deficit,” Harper joked before a partisan Conservative crowd, pinching his fingers tightly together as the audience erupted into laughter.
While Harper lost the 2015 election, he was right about the Liberal plan being a farce, given the Liberals’ campaign spending promises.
What Trudeau and company actually delivered was a $19-billion deficit in 2016, another $19-billion deficit in 2017, $14 billion in 2018 and in 2019, the year they promised a $1 billion surplus, a $39.4-billion deficit.
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Keep in mind, that 2019 was the year before the pandemic hit, meaning the Liberals can’t use the worldwide recession caused by COVID as an excuse for their huge deficits from 2016 to 2019, which were all wildly inflated compared to what they had promised in 2015.
Post-pandemic, the Liberals have never come close to balancing the federal budget and the latest one they delivered in April contains no plan to do so through the 2028-29 fiscal year, which is as far as their current estimates go.
The Liberals are hardly the only political party in Canada to blow deficit targets claimed in their campaign platforms after becoming the government.
There are primarily two reasons for this.
First, the impossibility of predicting the course of the Canadian and global economies years in advance.
Second, the tendency of governments to try to resolve problems by throwing more money at them, regardless of whether that money is being spent wisely and efficiently and actually addressing the problem it’s intended to address.