Ottawa must curb its spending

The Canadian government spent more than $ 225 billion in nine months to deal with the pandemic, one of the highest amounts on the planet. The newspaper questioned experts to find out if this all-out generosity was justified.

• Read also: Here is the federal spending to respond to the pandemic

Between the $ 70 billion for the Canada Emergency Benefit and the $ 65 billion in emergency wage subsidies, the spending is such that “we have lost the sense of perspective. A billion dollars in February was huge, now it goes unnoticed, ”said the Parliamentary Budget Officer (PBO), Yves Giroux.


Yves Giroux.  Parliamentary Budget Officer

Photo Christopher Nardi

Yves Giroux. Parliamentary Budget Officer

His office, which brings together Parliament’s independent financial and economic analysts, has lost track of spending since, since prorogation in August, the government no longer says publicly how much each of its programs is costing it.

As a result, “Canadians do not know how quickly the meter is running,” laments Mr. Giroux, while it is they who foot the bill.

The Trudeau government has not presented a budget for almost two years, contenting itself with a brief economic portrait in July. A more detailed update on state finances is expected by the holiday break.

A former close associate of Justin Trudeau, now senior vice-president of public policy at the Business Council of Canada, Robert Asselin, is worried about the scale of the spending.

“We added 20% of our GDP [produit intérieur brut] to our deficit in seven months. That’s more than any other G20 country, ”said the man who served as director of policy and budget under former finance minister Bill Morneau from 2015 to 2017.

Oil

But for Scotiabank Provincial Economic and Fiscal Policy Director Rebekah Young, “that’s not necessarily a bad thing.”

Former official at Finance Canada and former member of the board of directors of the International Monetary Fund (IMF), she explains that as an oil-producing country, Canada is facing a double shock: the pandemic obviously, but also the fall. black gold prices resulting from the drop in demand, accentuated by the virus. Ottawa must therefore spend more than others to keep its head above water.

The federal government has therefore included in its spending related to COVID-19 programs to support employment in the petroleum sector in Alberta.

“Minimize damage”

The former Parliamentary Budget Officer, now president of the Institute of Public Finance and Democracy at the University of Ottawa, Kevin Page, is not throwing stones at the government either.

“We are not seeing an increase in the number of bankruptcies, both for households and businesses. This is an indication that we have succeeded in minimizing the damage, even though we are facing a severe recession, by far the most severe since the Second World War, ”he analyzes.

Based on income

However, everyone agrees that it is high time to target aid better in order to support those who need it most.

So far, there has been “laxity” in transfers to individuals and businesses, said Mr. Asselin.

“We applied universal criteria, whereas we could have better targeted aid based on income. “

“If you spend money, sending checks to everyone, regardless of income, you are not making good use of public funds,” he says.

This reflection also applies to the colossal purchases made by the government. The Journal, for example, revealed that Ottawa paid three times the price for medical gowns in the spring under a $ 371.3 million contract signed without tendering.

$ 225.9 billion, it’s like…

Almost twice the forecast spending ($ 127.08 billion), or the forecast revenues in Quebec in 2020-2021 ($ 118.7 billion).

Two-thirds of federal government spending recorded in 2018-2019 ($ 346 billion).

$ 11,700 billion

This is the value of the fiscal measures put in place by governments around the world to respond to the pandemic, or nearly 12% of global gross domestic product.

Source: International Monetary Fund, October 2020

TOO GENEROUS?

Robert asselin

  • First Vice-President Policy of the Business Council of Canada

“There is more money sleeping in the accounts of individuals and businesses than before the crisis. It’s striking, it’s unheard of. “

Despite the crisis, Canadians have more money in their pockets than a year ago. Per capita household income rose 10.1% in Canada, says the Organization for Economic Co-operation and Development.

For Robert Asselin, this is a sign that the government has probably given more than what people really needed.

But Kevin Page is not of the same opinion, judging that it is too early to draw such a conclusion.

“It’s a natural reaction that people put money aside in a situation of crisis and uncertainty like the one we are experiencing,” he says, adding that there are also fewer opportunities to spend.

Household income per capita and real GDP per capita

Source: Organization for Economic Co-operation and Development

THE RIDDLE EXPLODES

Helaina Gaspard

  • Governance and Institutions Director of the Institute of Public Finances and democracy at the University Ottawa

“The level of debt is much higher than during the crisis of the 1990s. It is an issue which must absolutely concern us. A very high debt means that we no longer have the fiscal space necessary to face another crisis. “

Parliamentary Budget Officer Yves Giroux predicts that the federal government’s annual deficit will peak at $ 328.5 billion in 2020-2021, unheard of since 1966-1967. This is 23 times more than in 2018-2019.

By untying the purse strings so much, the Liberals could have got their hands on a gear from which it will be difficult for them to extricate themselves.

“It’s always difficult for a government to withdraw aid, because helping people generously is politically very popular, it pays off in the short term,” said the senior vice-president of public policy of the Canadian Council of business, Robert Asselin.

The government should however repackage its programs by next summer, warns Mr. Giroux, otherwise the sustainability of public finances will be seriously compromised.

“We can afford such a deficit over one year, but not for another year,” he says.

But on the eve of an economic update that will follow a very ambitious Speech from the Throne, “the danger is that the government will use the crisis to incur expenses that it would not have had the power to do. latitude to do in normal times ”, fears Mr. Asselin.

Scotiabank’s Rebekah Young is hoping the Trudeau government will present a clear debt management strategy in its economic update, which he has so far declined to disclose.

According to the financial institution’s director of provincial economic and fiscal policies, this must be combined with a solid plan to fight the recession that focuses on green recovery.

Source: Public Accounts and Parliamentary Budget Officer

TRANSPARENCY

Kevin page


CANADA-POLITICS /

Photo QMI Agency, Chris Roussakis

  • Former Parliamentary Budget Officer

“No data means no debate. And that is dangerous. “

Since the prorogation of Parliament in July, and the appointment of Chrystia Freeland to the Department of Finance, the Canadian government has closed itself like an oyster, no longer regularly communicating the evolution of its spending, as it did before.

For the Parliamentary Budget Officer (PBO), Yves Giroux, and his predecessor Kevin Page, this is a major problem.

Mr. Page recalled that, during the 2008-2009 crisis, parliamentarians had succeeded in forcing the minority government to provide data on a quarterly basis in order to be able to assess the response to the crisis.

“If they do not have access to this information, it is much more difficult for parliamentarians to determine whether or not when the government tables bills to help sectors of the economy, there is really needs or if they are superfluous things ”, explains Mr. Giroux.

Unreliable estimates

In addition, when he makes spending announcements, “government estimates are not as strong as they should have been,” he adds.

“According to the discussions we had with several officials, they were often told: ‘You have to estimate the cost of this program because the Prime Minister will announce it tomorrow,'” he explains. .

In addition, “sometimes the program is changed between the time the official estimates the cost and the time of the announcement or even after the announcement,” continues the PBO.

Justin Trudeau announced in April nearly $ 1 billion in the Canada scholarship for student volunteering. This famous program was to be administered by an organization close to the Prime Minister’s family, WE Charity.

Over the course of the scandal that led to its cancellation, we finally learned that the deal between the state and WE was more like half a billion dollars.

www.journaldequebec.com

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