According to a report released yesterday by Finance Canada, the current government is on track to balance the budget by 2045. This result is potentially an improvement as the Liberal’s projected they would take until 2055 to balance the budget. However, the likelihood of forecasting budget balances 28 years into the future with any degree of accuracy is quite small.
The Canada of 1989 was quite different from the Canada of today. The Canada of 2045 will change in ways we can’t imagine now. Canada’s budget deficit in 1988-89 was $29.9 billion and the debt crisis that marked the early years of the Chretien government was still five years in the future. The financial meltdown of 2008 had a budgetary impact that could not have been foreseen two decades earlier. In 12 of the 26 years following 1989 the federal budget was in surplus. Absolutely no one would have predicted that result in 1989.
In 2016-17 the Canadian government ran a $17.8 billion deficit. This was almost $8 billion higher than the Liberals promised in the 2015 campaign. Despite promising in the election campaign to balance the budget by 2019-20 the Liberal’s forecast in the spring that they wouldn’t balance the budget until 2055. The wild swing in the actual results a mere 16 months after the election, coupled with a further big chance in the projection ten months after that shows how unrealistic it is to forecast the budget balance 28 years from now.
Do Budgets Balance Themselves?
In the 2015 campaign, the Conservatives used a quote of Justin Trudeau saying the budget would balance itself. The background to Justin’s answer was the relative impact of budget cuts or tax increases on the budgetary balance. The Liberals ran on spending increases between $35 billion and $40 billion a year over its first four years in office. The Liberals also offered revenue increases of between $24 billion and $30 billion a year in those first four years.
The Liberals have not met their promise on the budget deficit due to the expense side of the calculation. The Liberals have spent far more than they promised to in the 2015 campaign. Despite higher revenues than forecast, the Liberals still missed their deficit forecast their first full year in office. The spring budget indicated they would miss their deficit promises in their first, and hopefully only mandate under the leadership of Justin Trudeau.
Out Of Touch With Middle-Class Canadians
The Liberals based their 2015 campaign on an appeal to the middle class. Their 2015 platform was called A New Plan For A Stronger Middle Class. However, the Liberal’s major problem is they are out of touch with the concerns of middle-class Canadians.
Bill Morneau has run afoul of middle-class Canadians with his shady handling of his personal wealth. Justin Trudeau’s ethical concerns with his vacations in the Bahamas on the Aga Khan’s private island could not be further from the everyday concerns of middle-class Canadians.
The fact the Liberal’s are on track to only miss their balanced budget promise by 26 years is another piece of evidence showing how far removed Justin’s Liberal Party of Canada is from the values middle-class Canadians hold dear.