Deficits and elections

That’s an even bigger feat when you consider the Conservative Party of Canada really was born out of an intense dislike for the fiscal policies of both of those governments.

So, this year’s autumn fiscal update has to leave us wondering how federal budgets will be balanced. If there is a fiscal conservative left among any of the Ottawa political tribes, now might be a good time to be alarmed.

Many of us – stupidly, I suppose – had been expecting that the feds would be able to announce a projected small surplus of a couple of billion dollars for the current fiscal year.

But Finance Minister Joe Oliver cleared that up by announcing on Oct. 30 a fiscal update that included a projected deficit of $2.9 billion for the current fiscal year, thanks to slumping oil prices and $3.1 billion in shiny new tax relief for married people with kids.

The tax relief comes courtesy of an enriched and expanded universal child care benefit, the family tax cut (a.k.a. income splitting), increased dollar limits for the child care expense deduction and a doubling of the children’s fitness tax credit.

Oh, and what was supposed to be a surplus of $6.4 billion for the next fiscal year in the 2014 budget actually will turn out to be a smaller surplus of $1.9 billion.

We can credit this government with spending almost all of its fiscal surplus before it is even booked for the fiscal year. Another milestone in government spending.

When you throw in the expected $550 billion in payroll tax reductions in 2015 and 2016 that were given to small businesses last September, we have almost $27 billion of additional tax relief and benefits for this and the next five years.

So, how long can we realistically expect federal finances to stay in surplus country, given that Ottawa is in election mode and could stay that way for the next 10 months?

The New Democratic Party (NDP) is talking a national subsidized daycare plan. The Liberals, although not giving out many policy details, are talking about investing significantly in infrastructure.

Five-year federal forecasts historically haven’t been much good. How good are the forecasts that Oliver announced Oct. 30, when this year’s update documents are loaded with language such as “fragile global economy,” “stalled growth,” “ongoing uncertainly,” and “financial market turbulence”?

It would be naive to expect fiscal restraint from any party, now that we are locked into a year-long election campaign. Nor should we really expect politicians of any party to suppress their inner urges to buy off voters.

It also would be unrealistic to expect the media to take a break from their horse-race coverage of politics and the obsession about the next election.

But perhaps we should be concerned about how much political culture has grown tolerant of the prospect of a return to deficit financing.

The chronic deficits of the 1970s, 1980s and most of the 1990s not only did the federal balance sheet great harm, these deficits caused suffering to ordinary Canadians in every area, from high taxes (remember the federal deficit surtax?) to gargantuan interest rates.

Where are the business leaders old enough to remember what it was like to raise capital when Canada Savings Bonds were paying an annual return of 18%?

If the Liberals or NDP were trying to buy off voters this way, Bay Street would be foaming at the mouth. Imagine how Canada’s economic history would be different if Tom d’Aquino and business leaders like him hadn’t spent more than a decade railing against deficits.

Perhaps there is a CEO out there willing to take some time away from making 400% of what his or her average employee makes to raise the question of what the deficit is going to look like after the 2015 election.

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