Juno News - February 20, 2024


Trudeau could balance the budget – so why doesn’t he？

Mentioned
Andrew Lawton
Convoy organizer reflects on two-year anniversary of Emergencies Act Justin Trudeau's ＂hate speech＂ ban is coming

Episode Stats


Length

7 minutes

Words per minute

195.22

Word count

1,482

Sentence count

—


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode of The Andrew Lawton Show, Andrew Lawton talks to the Director of Foresight Studies at the Fraser Institute, Dr. Jake Fomont, about a new report from the institute that suggests Canada could return to a balanced budget by 2027.

Transcript

Transcript generated with Whisper (turbo).
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 you're tuned in to the andrew lawton show
00:00:05.920 there's a little bit of good news it's it's kind of cloaked good news you got to really really
00:00:13.020 search for the good news because we know that the multi-billion dollar deficits which some
00:00:17.560 reports have said could last us decades are leading to a major debt crisis in canada which
00:00:23.000 is causing there to be more money that we have to spend on interest payments which is then causing
00:00:27.180 more deficits and it's very circular but courtesy of our friends at the fraser institute a case
00:00:33.280 for spending restraint in canada how the federal government can balance the budget
00:00:37.320 the report they have published finds it can in fact be done and if a government really really
00:00:43.640 wanted to the budget could be balanced by 2026 2027 well this sounded too good to be true so i wanted
00:00:51.480 to dig into it with jake fuss who is the director of fiscal studies at the fraser institute jake
00:00:56.560 always good to talk to you thanks for coming back on the show thanks very much for having me on okay
00:01:01.380 so you're saying it could be done you're not saying it will be done correct yeah absolutely i mean
00:01:07.520 obviously we've seen a market deterioration in the state of federal finances since 2015 with
00:01:12.200 substantial increases in spending and debt over that time but what we do in our study is just look
00:01:17.940 at a couple different scenarios of how we could actually return back to a balanced budget either by
00:01:22.660 2025 or 2026. 2026 i think is a very realistic scenario that just offers a solution for government
00:01:31.320 to really reduce the growth rate in spending over two years to 0.3 percent it wouldn't actually require
00:01:37.320 you to reduce spending from current 2024 levels we could actually get back to a balanced budget by
00:01:43.260 2026 if the government just simply demonstrates some spending restraint now this is i think an important
00:01:50.120 point because there are ways you could balance a budget that would not be particularly healthy or
00:01:54.620 sustainable i mean the government could raise taxes 500 and balance the budget uh and you know
00:02:00.460 it's it's it's balanced but you haven't actually had a good fiscal portrait what does your version
00:02:05.340 uh look like is it just spending cuts is it uh revenue increases or is it a combination of both
00:02:11.620 yeah so really what we're looking at here is just pulling back on spending
00:02:16.080 so there's actually a lot of important research from some harvard economists where they looked at
00:02:20.740 past history of fiscal consolidation among oecd countries and they found it was far more effective
00:02:25.980 to either reduce spending or show spending restraint rather than raising taxes to actually balance budgets
00:02:31.460 it's better economically and it was more successful fiscally as well so there's a lot of research around
00:02:37.380 this area and what we're simply proposing is just a 0.3 percent increase in spending for over a two-year
00:02:43.560 period um so that isn't even asking necessarily for spending reductions from current levels it's just
00:02:49.560 peeling back on that spending that you have planned um projected for the next two years um that's really
00:02:55.160 a realistic scenario for the government over a two-year period so we we've heard in the past and i
00:03:00.840 don't have the whole laundry list of them but we've heard from the parliamentary budget officer
00:03:04.920 some pretty grim projections i mean the one that really stood out a couple of years ago was that the
00:03:09.400 budget wouldn't be balanced until 2070. now that's based on the track that the government had set
00:03:15.400 out at the time uh you know it stands to reason that the longer we stay on the current track the
00:03:20.840 the longer it would take for this course correction you're describing right yeah that's that's part of
00:03:26.920 the issue too is it's not that we're in necessarily you know a crisis situation like we were in the mid 1990s
00:03:33.000 but if we keep going down this track of continually running deficits continually accumulating debt
00:03:39.240 and with elevated interest rates now that means you're borrowing more and more money more of that
00:03:43.640 money is going towards debt interest costs which are already consuming a substantial amount of revenue
00:03:49.400 over 10 percent in the current year so that that problem really just gets worse over time the longer
00:03:54.840 you put this off i mean the latest fiscal projections for the government show we're not going
00:03:58.920 to balance the budget any time before 2028 at the earliest and that's only because their projections
00:04:04.280 go out five years and that's where they end so you know other reports from the pbo show it's going to
00:04:09.160 be longer than that so we really need to start talking about actual solutions here rather than just
00:04:14.360 kicking the can down the road and hoping this goes away somehow i know there's often a difference
00:04:19.880 between you know politics and policy and i think both sides tend to be annoyed with the other
00:04:24.680 uh because they say that the other doesn't you know understand how things are i'm aware of the
00:04:29.160 challenge that there isn't just a line item in the federal budget called waste that you can look at
00:04:33.720 and say all right well let's just cut waste waste is uh buried and embedded in a lot of different
00:04:38.440 departments so how easy would it be or how difficult would it be to really go in and find ways that you
00:04:43.160 could make some of these adjustments that you're talking about without taking a hatchet to entire
00:04:48.920 programs or departments which politically tend to be very difficult to justify doing well i think
00:04:54.760 they should take the approach that the kretchen government took in the 1990s they really had a
00:04:59.000 six-step process to evaluate programs and services on a case-by-case basis um you know so it was about
00:05:05.160 you know is this an appropriate role for government to be involved in um are we running this program or
00:05:10.200 service as efficiently as possible so they had a whole set of criteria that they were looking at
00:05:15.480 and they're not just you know chopping for the sake of chopping um they're actually evaluating
00:05:19.640 these programs on whether or not they're actually effective and whether they're serving what what
00:05:24.200 the program actually is trying or intending to do um so i think that's a similar approach that the
00:05:29.320 federal government could take now um but we know that you know over the years there's many examples
00:05:34.040 of government fiscal waste um you know we had one report that looked at auditor general reports
00:05:39.480 between the 1980s and 2013 and it found that you know mismanagement or waste of government was well
00:05:46.360 over 100 billion dollars during that time according to those auditor general reports so we know that
00:05:51.800 this is an area where the government can certainly make changes um is cutting back on that fiscal waste
00:05:57.640 or removing it entirely yeah and what you're talking about here largely looks like a question of
00:06:03.320 efficiency not extraneous programs you're not saying we need to cut this or cut that in a sense that
00:06:09.240 would it looks like have a huge effect on service delivery are you no exactly i mean that and that's
00:06:15.720 just the whole point here it's actually about having effective spending too um you know there is a role
00:06:21.160 for government there is a role for programs and services ultimately but the government also needs to
00:06:26.040 have physical objectives they need to have goals and anchors keeping them um you know on on a certain
00:06:31.240 track as well you know right now we just kind of have policy that isn't even following the government's
00:06:36.280 own self-imposed rules they're not following their fiscal anchors you know or the fiscal goals or
00:06:41.800 fiscal rules however you want to phrase it um and so we don't really have anything containing government
00:06:46.920 finances right now um so we really need a plan moving forward about not only what we're spending
00:06:52.760 the money on but also taking that bigger picture look at government spending as well who says fiscal
00:06:58.680 policy can't be interesting as we head into our weekend here jake fuss director of fiscal studies at the
00:07:04.120 fraser institute the study in question is called a case for spending restraint in canada how the
00:07:09.400 federal government can balance the budget so i think the real takeaway it can be done uh if you
00:07:13.880 don't do it it's just because you've decided not to so uh that would be the warning i'd put at the
00:07:17.720 feet of any federal lawmakers here jake always a pleasure thanks for coming on today thanks very
00:07:23.000 much for having me on thanks for listening to the andrew lawton show support the program by donating to
00:07:28.120 true north at www.tnc.news