Prime Minister Justin Trudeau’s Liberal government is on track to spend nearly as much this year as Ottawa did to stimulate the economy at the height of the global recession, according to a new study.
The right-leaning Fraser Institute tracked inflation-adjusted annual per person government spending by prime ministers since Canada’s confederation. The public policy think-tank calculated Ottawa will spend $8,639 per person this year, $72 less than the record set by Stephen Harper in 2009.
The report found Trudeau’s government can lay claim to two of the top three highest years for government spending on record, outside of economic recession and war time.
“To see this high level of peacetime spending when the economy is also growing could spell trouble for Canadian taxpayers in the future,” Jason Clemens, executive vice-president of the Fraser Institute and co-author of report, wrote in a news release on Tuesday. “Higher spending often leads to higher deficits and more debt that ultimately must be paid by taxpayers.”
The analysis focused on government spending by prime ministers, excluding interest costs on government debt.
In 2015, Trudeau unveiled a $186.7-billion, 12-year infrastructure plan with repairs to aging roadways and bridges, green energy funding, public transit expansion and housing improvements in northern communities among its priorities. Progress has been slow to materialize, prompting the Department of Finance to shift billions of planned spending into future years, and Ottawa’s budget watchdog to demand details.
The Trudeau government’s third budget contains no timetable to balance the books. It also includes new spending measures designed to advance science and innovation, and break down barriers keeping women from fully participating in the workforce.
“The past few years have seen rapid and historic increases in deficit-finance government spending in Ottawa at a time when the economy is growing,” Clemens wrote.
The Office of the Parliamentary Budget Officer announced in September that the current federal fiscal policy is “sustainable over the long term,” noting Ottawa could permanently increase spending or reduce taxes by 1.4 per cent of GDP or $29 billion, while maintaining current net debt.
The Prime Ministers and Government Spending, 2019 report comes on the heels of another released last week by the Fraser Institute.
The Innovation in Canada: An Assessment of Recent Experience report suggests billions of government spending aimed at spurring innovation has yielded “relatively weak” performance.
The government allocated $8.2 billion to various innovation programs in the 2017 budget alone, that report said. The authors advise Ottawa to change its incentive and financial programs “so that innovation in Canada becomes more of a ‘bottom-up’ phenomenon.”