Editorial: Liberals must change their fiscal priorities
Prime Minister Justin Trudeau. (File photo)
Talk about putting a damper on sunny ways!
Prime Minister Justin Trudeau is basking in the glow of good Canadian economic data. In the first quarter of this year, the country’s economy averaged impressive 3.7 per cent growth, stronger even than growth south of the border. It’s good and welcome news.
“New jobs numbers are out: Unemployment is at 5.7%” Trudeau tweeted on Jan. 5. “The lowest since the Labour Force survey began in 1976. Congratulations Canadians! Your hard work is paying off — and we’re going to keep working for you.”
Something worth celebrating. But don’t uncork the champagne yet.
That’s because buried data unearthed by CBC News reveals these numbers are temporary. The finance department expects significantly lower growth in coming years, according to an internal memo obtained by the state broadcaster.
The memo, obtained via access to information, was written for Finance Minister Bill Morneau and forecasts average growth of just 1.7 per cent per year from now until 2022.
Yikes, talk about a downgrade.
“This very rapid pace of growth is not sustainable going forward as . . . transitory factors start to wane and interest rates will likely continue rising,” the report states.
Economists have already publicly warned the 3.7 per cent growth, largely the result of a booming housing industry, is unsustainable.
While the PM was quick to tweet this month’s good news, expect less celebratory posts going forward.
One of the consequences will be fewer tax dollars for government coffers.
This presents a challenge for the cash-hungry Liberals.
In October’s fall economic update, the Liberals reduced their deficit significantly. Initially budgeted at $28.5 billion, it is now down to $19.9 billion.
That was great news but came with the caveat it is still twice what Trudeau promised during the 2015 election campaign.
And Trudeau and Morneau managed to decrease the deficit only because of strong revenues.
Given this government’s aversion to fiscal responsibility, low economic growth going forward presents challenges that won’t be solved with pot profits.
What to do now? Here’s a thought: Rein in deficit spending. We’re not in a recession and with interest rates expected to rise, things could get even worse.
The Liberals need to change their fiscal priorities.