Mark Slapinski


Carney’s Budget Officer Sounds Warning Bell


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Summary

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A new report from the Interim Parliamentary Budget Officer Jason Jakes raises concerns about Canada's ability to spend on defense. He talks about the lack of money being spent on equipment and equipment purchases, and the implications for the upcoming budget.

Transcript

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00:00:00.040 Mark Carney's right-hand man has an urgent warning.
00:00:03.040 If the Canadian Prime Minister doesn't immediately resign,
00:00:05.820 Canada is going to go bankrupt.
00:00:07.920 It's unclear what strategy the government will actually employ politically,
00:00:11.600 but opposition parties are also figuring out
00:00:13.400 if they're willing to force an election over this budget
00:00:15.520 due to be tabled Tuesday.
00:00:17.160 On the content of the budget,
00:00:18.720 government sources tell us the document itself has not been finalized.
00:00:22.040 So what do we need to watch for?
00:00:23.880 Jason Jakes is the Interim Parliamentary Budget Officer.
00:00:26.700 Hi, Mr. Jakes. Pleasure to welcome you back to studio.
00:00:28.580 Thanks for making the time.
00:00:29.400 Oh, my gosh. Thank you so much for the invitation.
00:00:31.420 We're all, of course, thinking of and looking ahead to the budget.
00:00:34.620 You've got a new report out today on capital spending on defense
00:00:38.540 that I think is kind of interesting in the context of the budget.
00:00:41.360 You make two very specific findings about how much they're spending now
00:00:45.620 and also how much they've been unable to spend.
00:00:48.080 What do you think Canadians should know about that
00:00:51.080 in light of the budget coming down the road?
00:00:53.500 Well, I think on your first point,
00:00:55.760 I think that's one of the key highlights,
00:00:57.700 and that we currently have within the government of Canada's spending plan for defense.
00:01:03.080 So this is the capital plan.
00:01:04.660 So this is the F-35s along with the Navy and other types of armaments.
00:01:11.160 We're looking at around $300 billion over the next 20 years,
00:01:14.540 and that's only for NATO 2%.
00:01:17.420 So this goes back, the data we're looking at goes back to June.
00:01:20.800 It does not include the additional commitment that's been made since that period of time
00:01:24.900 to get up to NATO 5%.
00:01:26.300 So if we're at 2%, $300 billion at 2%, we're looking at substantially more.
00:01:32.540 So additional potentially hundreds of billions of dollars on defense in order to hit those targets.
00:01:37.460 So let me translate what he's saying here.
00:01:39.900 Canada is in serious trouble and Carney needs to step down.
00:01:43.920 Of course, he's being a bit more gentle with his words than I am,
00:01:47.100 but I'm going to say it straight.
00:01:48.600 He's saying that Carney needs to go.
00:01:50.720 Put it this way, if Carney doesn't step down or he's not forced out next week,
00:01:55.160 Canada is going to be in more debt than it's ever been in before.
00:01:58.300 Just a quick note, I'm being heavily censored on YouTube.
00:02:02.120 So if you see this part, let me know in the comment section,
00:02:04.780 give me a quick like, and make sure you're still subscribed.
00:02:08.000 Thank you.
00:02:08.660 Now let's watch Parliamentary Budget Officer Jason Jakes
00:02:11.320 continue to give Canada more bad news about the upcoming budget.
00:02:14.940 In historical context, like how much is that?
00:02:18.860 How much money is that compared to what we usually spend?
00:02:22.420 It is, historically, it is a multiple of what most Canadians would be familiar with.
00:02:27.860 I know there are probably some viewers who would remember World War II,
00:02:32.140 so we're getting close to that period of time,
00:02:35.040 a little bit after probably the 1950s or so.
00:02:38.820 I think during the 1980s and 1970s,
00:02:41.420 we would see defense spending at around 3% of GDP, 3.5%,
00:02:45.300 going up to 5%, even with the dual purpose aspect.
00:02:49.960 So spending on infrastructure that could be used for defense as well as other areas,
00:02:53.700 even with that, it's a very high number.
00:02:56.700 And critically, it's a really big increase within a very short period of time.
00:03:01.560 So in that context, I actually want to ask you,
00:03:03.140 because part of your analysis also reflected on the allocation of money,
00:03:07.380 but not spending it over time.
00:03:09.200 And I'm wondering, given that the scope of the planned increase,
00:03:12.980 if that would be a concern for you moving forward?
00:03:15.440 I think it's less of a concern for us,
00:03:20.340 because we only keep track of the numbers in the budget.
00:03:22.980 It definitely should be a concern for the government,
00:03:25.440 because as you point out, what we've seen,
00:03:27.540 at least in the first five or six years of the original plan,
00:03:30.620 was that there's close to $20 billion that they planned to spend on equipment.
00:03:34.600 That was not spent.
00:03:36.460 And in the situation where not only do you have to spend the money
00:03:39.120 to achieve the NATO commitment,
00:03:40.800 but as everyone realizes there are very real and imminent threats
00:03:44.320 the Canada faces at this point,
00:03:46.000 you actually need to procure the equipment and the material.
00:03:49.160 And as time goes by, if you're not able to spend the money,
00:03:52.380 you're not able to procure the equipment.
00:03:54.600 And as well, from an accounting perspective,
00:03:56.980 everyone knows how pernicious inflation is.
00:03:59.520 And so if you don't actually acquire the equipment in the time period provided,
00:04:05.740 by the time you do, the money is worth less.
00:04:08.440 So potentially you have to buy less than when you originally anticipated,
00:04:12.120 or you have to pay more, or a combination of the two.
00:04:15.180 So the overall budget is under a week away.
00:04:18.320 When you get that budget and you're able to look at it,
00:04:21.200 what kinds of fiscal anchors will you be utilizing to assess the sustainability?
00:04:26.640 I think the first one is the one that most economists would look to.
00:04:32.180 And I'd say it's the one that the government of Canada has looked to in the past,
00:04:35.720 and that's the debt-to-GDP anchor.
00:04:38.720 So what does debt look like in comparison to the overall economy?
00:04:43.400 And is debt growing faster than overall economic growth?
00:04:46.840 And the government of Canada itself has indicated that a declining debt-to-GDP ratio
00:04:51.300 is a very important indicator of fiscal sustainability,
00:04:54.140 as well as important for ensuring or securing Canada's AAA credit rating.
00:04:58.720 It's also something that the Liberal Party of Canada campaigned on
00:05:01.520 as part of their election platform in April.
00:05:04.900 And most recently, the Prime Minister indicated, I believe it was September 17th,
00:05:10.260 that declining debt was something that was part of the fiscal anchors
00:05:13.800 for the current government.
00:05:14.960 So that's definitely the first thing that I'll be looking at.
00:05:17.320 Based on what you've seen announced thus far,
00:05:20.140 and quite a bit has come out about what their intended spending is,
00:05:23.200 we don't know necessarily exactly what they're going to do
00:05:27.020 on the spending where government operations are concerned.
00:05:30.440 But based on what you've seen so far,
00:05:32.260 do you think it is realistic that that ratio would go down?
00:05:36.820 It's definitely possible.
00:05:38.380 And I think certainly, again, we don't have a lot of clarity right now,
00:05:42.460 precisely what the government has in mind.
00:05:44.000 One could foresee a situation where spending and the deficits
00:05:48.440 are substantially higher in the initial years,
00:05:50.580 and there's a substantial increase in spending on capital.
00:05:53.960 And at the same time, in the outer years,
00:05:56.160 economic growth as a result of those investments starts to pick up.
00:05:59.840 And as a result of that,
00:06:00.840 you have a declining debt-to-GDP ratio in the outer years.
00:06:04.200 And that's, again, what one would hope to see
00:06:06.400 with the potential additional spending that's on the table.
00:06:09.420 The other point of consideration,
00:06:11.040 and something else that we're going to be looking at in detail
00:06:13.400 on this coming Tuesday on the budget, are the cuts.
00:06:17.880 So the Prime Minister has used the word austerity.
00:06:20.660 And I was working for the Parliamentary Budget Office in 2012
00:06:23.740 with Kevin Page,
00:06:25.300 when Kevin had to take the government to court
00:06:27.360 around the transparency or lack thereof
00:06:29.800 with respect to the impact of the cuts.
00:06:32.240 So something we're going to be looking at in detail is,
00:06:35.400 are the cuts actually provided?
00:06:37.560 Is there a listing of the cuts?
00:06:38.640 Can we see the cuts by program?
00:06:41.500 Do we know which public servants are being laid off across those programs?
00:06:45.920 And can the government actually articulate clear service-level impacts?
00:06:50.440 Because if...
00:06:51.200 Is that what constitutes transparency in your mind?
00:06:53.760 Like, those things need to be spelled out?
00:06:55.480 You can't just say, you know,
00:06:56.980 we're going to adjust the workforce by 10,000?
00:06:59.860 Oh, no.
00:07:00.400 And again, going back to the precedent set by Kevin
00:07:03.780 and the office as part of Budget 2012,
00:07:06.340 that's the foundation.
00:07:07.720 Without that information,
00:07:08.800 parliamentarians,
00:07:09.900 they really won't know what they're voting on
00:07:11.640 in terms of spending constraint and cuts.
00:07:14.060 So that's something that we're definitely going to be looking at in detail
00:07:16.960 as soon as we get our hands on the budget.
00:07:19.400 One final question for you on the scope of those cuts.
00:07:21.720 Because yesterday, the finance minister said something very interesting,
00:07:24.620 which I had not heard him say before
00:07:26.420 in response to questions about what you just mentioned.
00:07:28.520 In that, basically, the size of the public service
00:07:32.300 had to get to a more sustainable level.
00:07:35.200 Sustainable is the word, I believe, that he used.
00:07:37.480 And he referenced a period before COVID.
00:07:40.240 If you look at the size of the public service now
00:07:42.720 versus pre-pandemic,
00:07:44.620 what would the scope of that kind of cut look like?
00:07:48.620 Yeah.
00:07:49.400 If you go back to pre-pandemic,
00:07:52.840 you're looking at tens of thousands of positions
00:07:55.880 potentially eliminated across the public service.
00:07:58.520 Again, on our end,
00:08:01.540 something, it's less about the people
00:08:03.660 and it's really about the programs.
00:08:05.440 So public servants are hired to support government programs
00:08:08.960 that the people of Canada benefit from.
00:08:11.880 And that's why, notwithstanding,
00:08:13.900 it's a good starting point to figure out
00:08:15.360 how many public servants might be affected
00:08:17.520 by the budget on Tuesday.
00:08:18.620 What we're more interested in is
00:08:20.920 what are the actual service-level impacts
00:08:22.940 and what are Canadians going to feel?
00:08:25.260 Because on our end,
00:08:26.160 one of the things that,
00:08:27.280 as an independent parliamentary budget office,
00:08:29.280 one of the things we've seen in the past
00:08:30.600 is if the government doesn't have a clear sense
00:08:33.040 of the service-level impacts,
00:08:34.680 there's a very high risk of retrenchment.
00:08:36.960 So if something is announced,
00:08:38.440 the service-level impacts are significant,
00:08:40.760 and politically,
00:08:41.540 it's not sustainable to actually carry it out
00:08:43.940 or actually implement
00:08:44.740 what they've initially announced.
00:08:46.040 And just to be clear,
00:08:47.080 is it acceptable if they say
00:08:48.600 stage one in this budget is the volume,
00:08:51.240 stage two is figuring out how that unfolds?
00:08:55.240 I guess it comes back to,
00:08:56.640 as a transparency organization,
00:08:59.100 absolutely not.
00:09:00.160 Okay.
00:09:00.540 Yeah.
00:09:01.080 Canada is at a very important crossroads right now,
00:09:03.940 arguably more important than any other crossroads
00:09:06.380 that we've ever been at before,
00:09:08.160 even more so than World War II.
00:09:10.380 On one hand,
00:09:11.060 we have the option of MPs doing the right thing
00:09:13.300 and forcing Carney out of parliament.
00:09:15.640 On the other hand,
00:09:16.960 MPs can vote with Carney,
00:09:19.180 and his budget will destroy our economy
00:09:21.240 and the lives of her children
00:09:22.820 and her grandchildren.
00:09:24.580 Now, Carney would be right to resign.
00:09:26.900 However, a man with an ego as big as his
00:09:29.380 simply will not do the right thing.
00:09:31.660 Now, of course,
00:09:32.420 Carney's PBO,
00:09:33.820 the parliamentary budget officer,
00:09:35.540 didn't directly call for Carney's resignation.
00:09:38.280 But if you listen closely,
00:09:39.780 if you read between the lines,
00:09:41.020 that's exactly what he's saying.
00:09:43.300 If this budget passes,
00:09:44.880 we're going to be living under austerity measures
00:09:46.820 that are worse than World War II,
00:09:49.300 and that's with the sky-high trillion dollar deficit
00:09:52.820 that comes along with it.
00:09:54.360 Carney misled Canadians.
00:09:56.160 He misled voters.
00:09:57.500 He misled the liberals.
00:09:59.000 He misled everyone.
00:10:00.380 He's supposed to get a deal with Donald Trump.
00:10:02.220 It's been eight months.
00:10:03.300 There's no deal.
00:10:04.500 Actually, we have worse tariffs
00:10:05.860 than we did before he got into office.
00:10:08.140 He was supposed to fix the economy.
00:10:09.560 He was supposed to get projects going.
00:10:11.940 Build, baby, build.
00:10:12.720 Those were his words.
00:10:14.120 Where are the projects?
00:10:15.440 Canada doesn't have one major project
00:10:17.760 that has been passed by him
00:10:19.760 since he's been in office.
00:10:21.440 Let that one sink in.
00:10:22.800 All Carney has done
00:10:23.700 is use the prime minister's office
00:10:25.420 to enrich himself,
00:10:26.840 and he's using taxpayer money
00:10:28.280 as his personal ATM.
00:10:30.600 He's flying all over the world,
00:10:32.500 staying at nice hotels,
00:10:34.140 eating fancy meals,
00:10:35.940 burning money like it doesn't mean nothing.
00:10:38.000 And of course,
00:10:39.440 your money doesn't mean anything to him
00:10:41.200 because he can take it
00:10:42.520 whether you like it or not.
00:10:44.420 And on top of that, 1.00
00:10:45.040 he's got a bunch of stupid people 1.00
00:10:46.260 that will vote for him 1.00
00:10:47.340 no matter what he does.
00:10:48.600 People in Canada,
00:10:49.620 including children,
00:10:50.680 are literally starving.
00:10:52.280 And I'm not being hyperbolic.
00:10:54.100 Food bank usage in this country
00:10:55.660 has more than doubled since 2019.
00:10:58.520 Trudeau created the mess,
00:11:00.140 and Carney is making it worse.
00:11:02.300 Now I hope more Canadians are waking up 0.87
00:11:04.260 and realizing that Carney is a fraud.
00:11:06.640 Now, of course,
00:11:08.200 most liberals will never wake up,
00:11:10.120 but all we need is enough liberals
00:11:11.560 to wake up,
00:11:12.700 admit that they made a mistake,
00:11:14.780 and vote blue next time.
00:11:16.600 The good news is that
00:11:17.440 we might have a Christmas election.
00:11:19.380 So if Canadians come to their senses,
00:11:21.720 some of them realize
00:11:22.600 they made a mistake,
00:11:23.380 the liberal ones,
00:11:24.500 they vote Polly Eve,
00:11:25.700 we could have a majority,
00:11:27.620 possibly a supermajority.
00:11:29.280 Once again,
00:11:30.240 have some faith,
00:11:31.420 have some patience,
00:11:32.680 we're going to win,
00:11:33.580 and we're going to win big.
00:11:34.400 Have a great night,
00:11:35.840 have a great weekend,
00:11:37.060 happy Halloween.