The headlines coming out of today’s fall economic update by Finance Minister Bill Morneau highlight the record levels of new borrowing that will further bloat the already significant deficits created by the year-old Liberal government. While that is an accurate take on the Finance Minister’s economic update, what the Liberals are really borrowing is time.
When the Trudeau government came to power last year, they promised Canadians they would run two years of “modest deficits” (their words) in each of the next two fiscal years to fund their infrastructure and other campaign commitments, before returning to a balanced budget by 2019. After today, it is clear that plan is out the door. Today’s update confirmed that: the government will pile an additional $32 billion onto the national debt over the next five years, that they’ve dipped into their budget reserve, erasing $6 billion in contingency funding it had set aside in this year’s budget, and that there is no plan for getting the federal books back to balance.
Now, Canadians might be willing to forgive the spending, and maybe even overlook the lack of a concrete plan to get back to balance, if their plan appeared to be working. Unfortunately for the Finance Minister and his colleagues, it isn’t. As Conservative leader Rona Ambrose pointed out today in her post-economic update media availability, despite its lavish spending commitments, the Liberal plan has failed to produce a single net new full-time job, nor have they actually broken ground on any of the more than 800 infrastructure projects they’ve approved (ok, that’s an exaggeration. They have broken ground on one of those projects.)
Politically, the Liberal plan appears to be rooted in the hope that over time, the plan that isn’t working will, well, work. The 2019 election is still a long way off, the Liberals – especially their leader – are still riding high in the polls, and after a day or two our collective attention will shift to the political circus south of the border as we try and figure out what the new world order looks like after November 8. In the meantime, Minister Morneau is probably quite happy to talk about debt-to-GDP ratios, ballooning deficits and the role of private sector investments in infrastructure. It sure beats trying to explain the cash-for-access fundraising story that has dogged the Liberal government for the last couple of weeks.