21 Apr 2021 The Federal Budget Misses the Mark
On April 19, the federal government released its 2021-2022 budget, its first budget in two years and the first since the start of the COVID-19 pandemic. Back in September, ARPA called on the government and all the opposition parties to craft a fiscally responsible plan aimed at returning Canada to a balanced budget or at least a declining debt-to-GDP ratio.
This budget misses that mark by $155 billion dollars – that is the projected size of this year’s federal deficit. As for the debt-to-GDP ratio, that is not projected to decline until the next fiscal year. This year, for every dollar of revenue that the federal government collects, it will be spending $1.40.
Much of the projected deficit this year is because of a commitment to extend temporary COVID-19 relief programs until September 2021. However, the government also announced several structural spending commitments that will continue long after the worst of COVID-19 has subsided, including:
- $30 billion devoted to childcare in the next five years, with the goal of reaching a $10-a-day childcare by 2026,
- $18 billion set aside for Indigenous communities, and
- $17.6 billion earmarked for a green recovery.
Despite the Liberal government’s eagerness to spend, there were no mentions of a basic income or a national pharmacare strategy, two (very) expensive proposals that the Liberals and the NDP have been courting recently. No significant new taxes were introduced or increased either.
Finance Minister Chrystia Freeland claims that these massive expenditures are investments for future economic growth, but many of these programs help other levels of government, businesses, or individuals simply tread water. As we’ve mentioned before, the abstract idea of the government providing aid to families and businesses is sensible since government restrictions are putting people out of work. However, many of these COVID-19 support programs are poorly designed and overly broad, removing incentives for people to work or giving cash to individuals or businesses that do not need any support.
Good economic policy is not only about dollars and cents or even fiscal responsibility. It is about creating an environment when Canadians can flourish and live virtuous lives.
Good economic policy is not only about dollars and cents or even fiscal responsibility. It is about creating an environment when Canadians can flourish and live virtuous lives. The federal government’s foray into a national childcare strategy has great implications for how Canadians – and Christians – can flourish and live virtuous lives. Stay tuned next week as we investigate what a Christian reaction to childcare should be.
God calls each person, as a bearer of His image, to exercise fruitful stewardship over our world, its resources, and our finances. When governments squander the money that God has entrusted to them through inefficient programs or policies that reward wrong behavior, Christians in a democratic country are called to remind their governments what proper stewardship looks like.
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