Christmas season is upon us and people all over Canada are sending Santa their wish lists. We in the Canadian Taxpayers Federation (CTF) released our wish list recently. We asked the government for a deficit action plan to balance the budget over three years. This would be a gift to taxpayers that would keep on giving as it would head off inevitable tax hikes that will be forced upon Canadians if our federal debt grows to record levels as planned.
Canada’s federal debt has once again climbed past the $500 billion mark. According to the Economist Intelligence Unit, Canada’s total public indebtedness has surpassed $1.1 trillion; ranking 22nd out of the 30 OECD countries for total public per capita indebtedness.
With ramped up spending on so-called ‘stimulus’ programs in 2009-10, the federal deficit is projected to be a record $55.9 billion, or $1,651 per Canadian. By 2014-15 another $170 billion is projected to be added to the debt burden. This new debt alone will cost $10,228 per taxpayer.
Fortunately, the federal government has a spending problem, not a revenue problem. Fortunately, because it’s fairly easy to fix. Program spending has skyrocketed by almost 60 per cent in only six years. This over-spending is unsustainable and must be reined in. Given how much the government has spent in the last decade, if increased government spending created jobs, every Canadian would have two.
The federal government projects that in 2014-15 it will continue to run deficits. Prime Minister Harper has stated he will neither raise taxes nor reduce spending in an effort to balance the budget. His approach only gets it half right, taxes need not rise. However, this do-nothing approach will saddle the nation with deficits in perpetuity.
The Parliamentary Budget Office (PBO) projects that by 2013-14 the deficit will still be as high as $19 billion and that action will be required to balance the budget.
Without any real plan to rein in spending, these structural deficits will remain a plague on the nation’s finances. A proactive plan to beat back the tide of red ink is needed, or else Canada may soon face a crisis as it did in the early 1990s.
It is for this reason that the CTF is calling on the federal government to implement a deficit action plan to balance the budget over three years.
Action Plan would reduce spending modestly; by only 10 per cent from current levels, returning it to 2008-09 levels. This would amount to a net $28 billion reduction over three years. Reductions would come from the following areas: ending one-time stimulus spending; ending regional development; eliminating corporate welfare subsidies; a 30 per cent reduction in provincial equalization; a 5 per cent reduction in most departmental operating budgets; and ending and privatizing some crown corporations.
Aside from these substantive reductions, political leadership also would be required. Politicians must lead by example if they are going to demand that others tighten their belts. To do this they should freeze their MP pay; reduce MP and committee travel and expense budgets; eliminate political subsidies; and, disclose in detail all MPs’ office, committee and Parliamentary Associations’ spending.
Borrowing money to continue deficit spending will only burden current and future generations with leave lumps of coal through tax hikes instead of presents of tax relief. Balancing the budget can only happen with strong political will in Ottawa. Let’s hope Santa leaves some political courage under our MPs’ trees this Christmas.