FERNANDO: Another Bill Comes Due For Liberal Failures
RE-printed without permission.
November 22 2023
By Spencer Fernando
As Debt Costs Explode, The Bill For Liberal Failure Comes Due, And We’ll Be Paying It For A Very Long Time
By Spencer Fernando, Exclusive to the National Citizens Coalition
To say that we aren’t being governed by the best would be quite an understatement.
Rarely – if ever – have we seen a Canadian government that is simultaneously so confident and so wrong over and over and over again.
Not just wrong here or there, but wrong on nearly everything, including the most fundamental aspects of governing a nation.
And so, with the disastrous fiscal update now out in the wild, let’s look at what Chrystia Freeland was saying back in 2020:
“It’s true that interest rates easily outpaced growth in the 1980s and 1990s. But as Olivier Blanchard, the former chief economist of the International Monetary Fund, pointed out in a seminal paper in 2019, those two decades seem to be an anomaly. Over the past 80 years, with the exception of the 1980s and 1990s, the pattern is the one we see today, where growth exceeds interest rates.
As we look ahead to an industrialized world with an ageing population and a tendency toward secular stagnation, deflation and sub-par growth seem likely to pose greater risks than the twin threats of inflation and spiraling debt that Mr. Chrétien and Mr. Martin successfully countered in the 1990s.
The upshot is that we are living today in a world where the risks of fiscal inaction outweigh the risks of fiscal action. Doing too little is more dangerous and potentially more costly than doing too much.”
This was when Freeland famously claimed Canada was ‘locking in’ debt at low-interest rates, and crowed about the fact that Canada’s debt servicing costs were low.
Freeland was warned at the time – including by Pierre Poilievre – that interest rates were set to rise, and that ‘sustainable’ debts and deficits would not remain so for long.
Freeland ignored those warnings. She continued to treat temporary low-interest rate conditions as permanent.
Sure, she gave lip service to the idea of fiscal responsibility, but she acted as if the word was some sort of magical incantation that would balance the budget, rather than something that required real restraint in spending.
Unfortunately, avoiding the supposed ‘risk’ of ‘fiscal inaction’ remained central to the entire Liberal approach. They felt every issue could be fixed by increasing spending, increasing taxes, and then – when that didn’t’ work – raising spending some more. And they bet their entire political project on it.
Every year brought more spending, every year brought a new shifting of the ‘guardrails’ that supposedly kept Canada’s debt sustainable, and every year pushed a return to fiscal responsibility even further back.
We were told that this was all necessary.
We were told that cuts would only make things worse.
We were told that all the spending would make life more affordable.
And we were told we could easily afford all of it without any long-term consequences.
How has that turned out?
Well, aside from the most cult-like Liberal partisans, there are few Canadians who doubt that this country is in a rapid tailspin.
Whether we look at crime, national unity, affordability, national security, our democratic institutions, or our international reputation, Canada has declined dramatically in the past eight years.
It’s all getting worse.
Canadians can see it. Canadians can feel it.
That alone would be enough to conclude that the Liberal era has been an era of absolute failure.
But that’s not even the half of it.
Not only has Canada fallen behind in nearly every conceivable category, but all that Liberal spending has driven up the cost of living, robbed Canadians of our purchasing power, and now left us with a debt bomb.
We spent more, we got less, and all that spending means we will get even less in the future.
The Liberals bet our entire economy and our future prosperity on a tax, spend, and borrow agenda. And then, they lost that bet.
Really, it would be more accurate to say that we lost that bet, since we’ll be the ones paying for it.
Justin Trudeau, Chrystia Freeland, the Liberal government, and all their enablers turned out to be completely wrong.
Canada’s near-stagnant GDP growth – which is itself heavily skewed by immigration growing the population rather than actual productivity growth – is lagging interest rates.
‘Fiscal action’ has resulted in widespread inflation and contributed to interest rate hikes.
And now, the bill for our supposedly ‘affordable’ debt is coming due.
When Freeland bragged about how affordable our debt was, Canada’s debt servicing costs were just above $20 billion per year.
This year, it will cost $46.5 billion to service that debt.
That increase of $26.5 billion is almost the same as what we spend on our entire national defence.
The cost of servicing the debt is set to grow even more, reaching about $61 billion per year in five years.
We will be paying for this long after the Liberals are out of power, and it will constrain the next federal government in some serious ways.
And – unlike a country like the United States where at least their economy is rapidly gaining in terms of productivity – we are not growing our way out of this debt.
We are already in a per capita GDP recession, with GDP growth lagging far behind population growth. Each Canadian is thus getting much poorer on average, which makes the burden of our surging debt costs even more difficult to manage.
There is no easy way out of this.
We can’t spend our way out, because that will only increase the debt, increase inflation, and increase debt servicing costs.
We can’t tax our way out, because that will reduce productivity and further hamper growth, and we need growth to reduce the relative burden of our debt.
And so, we must come to the conclusion that what is needed is a wholesale rejection of the Liberal approach to fiscal policy.
We need more free market competition, and we need it ASAP.
We need businesses to be liberated from the burden of the carbon tax and excessive regulations and left to succeed or fail on their own merits. Businesses should be freed to succeed, and left to fail when they fail, so productive assets can be utilized more efficiently instead of languishing in zombie companies propped up by the state.
We need to cut federal spending, to bring down inflation and ease interest rate pressures. We also need to cut spending to reduce the overall government share of the economy. Only a strong and ruthlessly competitive private sector can generate the productivity gains we need to make our debt more affordable, and that will never happen if the government is constantly expanding.
We need to cut immigration, as our social programs and housing market simply can’t handle such a rapid influx. Bringing immigration to levels more in line with the Harper era would be a good start to at least restore some sanity to the system.
And finally, even as we restrain spending, we need to cut taxes. The carbon tax must go, and personal taxes need to be brought down as well. Punishing productive Canadians with ever-higher taxes only serves to push the best of the best out of our country, meaning less innovation and less wealth for all of us.
Of course, the Liberal fiscal update featured none of this.
Instead, the Liberals hiked taxes, increased spending, gave no indication they would reduce immigration, and are planning even more government intervention and regulations to make housing ‘more affordable,’ despite this being the same approach that has failed time and time again.
The fiscal update proves that the Liberals are prepared to mortgage our future and leave generations of Canadians with a brutal debt burden in a desperate effort to hold on to power in the next election.
In this way at least, the Liberals remain consistent: They never miss an opportunity to screw over the Canadian People both now, and long into the future.
Spencer Fernando is one of the most popular and prolific political voices in Canada. He is a Campaign Fellow for the National Citizens Coalition. For more from Spencer, visit his website, and follow him on Facebook and Twitter.
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