In this episode, we take a deep dive into the PBO's report on the Liberal government's 2019-20 budget. We talk about the mistakes made by the government, how they misallocated the money, and the impact on the economy.
00:00:25.360From our perspective, we think that the definition the government's used around capital investments is overly expensive.
00:00:32.500And in particular, they've thrown some things in there, some categories of spending, which other jurisdictions in other countries would not typically include.
00:00:41.140Most notably, the inspiration, of course, for this framework comes from the United Kingdom.
00:00:45.840And in the case of the UK, it's a far narrower definition.
00:00:48.380And, of course, the biggest risk with all of this is if you're not spending on productive capital investments, if you have an overly broad definition, then you're not going to get the investment impact and the growth in the economy that the government expects.
00:01:02.000So, Mark Carney, in large part, printed a lot of money when he was the governor of the Bank of England, right?
00:01:09.880He printed a lot of money, created a lot of problems as well.
00:01:14.600And we're getting these warnings from the Parliamentary Budget Officer, who is interim.
00:01:18.800And then the government says, let's get the next graphic here.
00:01:23.520We're going to replace that Budget Officer.
00:01:52.700But that's what he was attempting to do.
00:01:55.660But what he saw was that there is so much spending on the operations that he couldn't do it honestly.
00:02:01.760And so, what the PBO is saying is that he actually moved things from the operational ledger to the capital ledger in order to make the books look better.
00:02:14.060So, basically, not only did he cook the books, he overcooked the books.
00:02:17.460And so, what we're left with now is a false stating of the spending by putting operational dollars in the capital ledger so that he can have a quote-unquote win of balancing the operational budget, which he still won't do.
00:02:34.020But the whole, it was just a shell game meant to trick Canadians that he was actually fiscally responsible.
00:02:41.060When the reality is they spent $78 billion.
00:02:44.580Then, as they said, so the PBO comes out and as is his job and his duty to come out and say, well, actually, we've got some difficulty.
00:02:55.220He used in an earlier committee testimony, stupefying, stunning the amount of the spending.
00:04:07.980I mean, the reality is that there are tens and hundreds of different departments.
00:04:12.220The financial statements for the government are tens, if not hundreds of pages.
00:04:17.200Just the budget alone is hundreds of pages.
00:04:20.720So being able to parse that information and get a full understanding of it is extremely difficult.
00:04:26.400And that's why we need a professional like the PBO.
00:04:30.860And it's his job to go through and with his extensive training and accounting, et cetera, to be able to pull out the important bits of information that parliamentarians and, more importantly, Canadians can see.
00:04:45.060And, like, for someone in his role to come out and use the words like stupefying, stunning, or to call out the government for misallocating the spending or mislabeling the spending is something.
00:04:59.060This is just not something that he would take lightly, and I think he said that as much.
00:08:28.460And if you want historical proof, it even goes back before Justin Trudeau, right to his father.
00:08:33.780If you guys go, I've got some homework for your audience here, especially if you're on your iPad right now or watching this, go and Google the U.S. dollar compared to the Canadian dollar and then overlay that with who was in power.
00:08:47.020You will see incredible correlation between when conservatives are in power and a strong Canadian dollar and when liberals are in power and a weak Canadian dollar.
00:08:56.380And that all has to do with excessive spending.
00:08:59.000So, underneath the Mulroney air, the Canadian dollar is strong.
00:09:02.820Underneath Harper, we almost hit parity.
00:09:31.580The reality is a strong dollar backed by a strong Canadian government that knows how to spend within its means.
00:09:40.580It means that the purchasing power of Canadians gets stronger and stronger.
00:09:44.160And in addition to the Canadian dollar getting weak, which in itself helps or hurts the inflation numbers, increasing inflation higher and higher,
00:09:53.040that expenditure also crowds out investment dollar, meaning that those dollars which are printed create more and more inflation.
00:10:00.280And so you get this just nasty death cycle of an economy where you end up getting a weaker and weaker dollar that feeds on itself, which is greater inflation.
00:10:09.140We need to have a turn away from central planning, a turn away from excess of expenditure and back to empowering Canadians because it's Canadians that made this country the best place on earth.
00:10:20.980And it'll be the Canadian people that return us back to where we need to be.
00:10:24.900Well, hopefully we have some gold reserves.