The Canadian Manifesto by Conrad Black

Author:Conrad Black
Language: eng
Format: epub
Publisher: The Sutherland House Inc.

4) Fiscal Policy

In general, governments should be responsible and try not to spend, and the Chrétien, Martin, and Harper governments were exemplary, if not slightly fetishistic, in this regard. The spending envelope can be expanded if the fiscal and related policies are growth-oriented but non-inflationary. Certain national goals, most notoriously wars in which the survival of the country’s vital interests and independence are at stake, justify expansive spending, especially if economic growth is such that deficits do not add appreciably to public debt as a share of GDP.

Instead of a rigorous criterion of balancing the budget, Canada should define national goals with serious spending implications, term them out reasonably, and keep all income taxes to thirty-three per cent personal and twenty per cent corporate ceilings, and adjust the rate on non-essential spending adequate to provide a comfort level that the proportion of accumulated federal debt to GDP does not exceed two-thirds. Spending is good as long as it is affordable and useful. With a hard-backed currency and a firm policy of not allowing debt levels to get over our head as an economy (i.e., within the fifty-to-sixty-seven-per-cent zone as a percentage of GDP), there will be incentive for investment, productivity increases, little inflation, and a benign cycle.

There is no point to obsessing on the percentage of spending occupied by the public sector, as long as public-sector spending is intelligent and not based on excessive taxation or deficits. Because of Canada’s large size and relatively sparse population, it will always require a good deal of infrastructure and this will require the intermittent continuation of the fruitful collaboration of the public and private sectors in economic expansion and supporting activities, the tradition that has been described above.

Canada spent the first half of the last fifty years piling up large deficits transferring money through the equalization and other federal programs from the wealthiest provinces to the less-advantaged regions, but in fact mainly to Quebec, in the higher interest of preventing a breakup of Confederation. The strain on the country’s treasury and financial condition was substantial and the Canadian dollar bottomed out in the late 1980s at about sixty-five cents, U.S.

For most of the succeeding period, as was mentioned earlier in this essay, spending responsibilities were piled onto the provinces without accompanying sources of tax collection being vacated, and the federal government balanced its budget, though the provincial and municipal governments were seriously strained. The Justin Trudeau government has racked up significant deficits for no apparent purpose that justifies such deficits, and has simply been wasteful.

Now a new administration in the United States has sharply reduced taxes, largely deregulated business, and has generated a sharply growing economy at about three times the rate of growth of the Canadian economy and thirteen times the rate of the growth of the economy of the Eurozone despite the formidable and smoothly purring German engine at the centre of it.

There is no evidence to this point that Canada, as it normally does, is benefitting from this powerful surge in the American economy to growth rates recently over four per cent.

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