I find myself in the strange position of agreeing with the National Post and economists at the Fraser Institute. On issues of finance, they sometimes make sense.
According to Finance Minister Jim Flaherty, the federal government is on track to balance the budget by 2014-15 and end seven years of deficits while emerging with a $3.7 billion surplus. Conveniently, this is just in time for Canadians to head to the polls for the next federal election.
Any guesses on what will be the cornerstone of the Conservative Party's campaign strategy? If you guess what a wonderful job they are doing on the environment, repositioning Canada in a global market place, or their handling of the Senate, well, you are not going to win the prize.
No. We will continue to be bombarded with advertisements for Canada's Action Plan telling us how well it is working by giving people a $75 dollar tax credit for their kid's art program or whatever.
I am not really dissing the tax credits they are handing out to families or seniors. To some extent, they could be viewed as necessary.
But tax credits are part of the reason that we have incurred massive - and I do mean historically huge - deficits for the past six years. The Conservatives will have increased our national debt by $163.4 billion when all is said and done.
Over a five year period in Canadian history, an increase in our national debt of that size is only matched by the likes of Brian Mulroney and his Conservative government of the late 1980s. They managed to rack up $184.9 billion from 1988 to 1993.
Ironic that Conservative governments that describe themselves as fiscally prudent, good managers of our money and financially responsible, are the same governments that keep racking up massive deficits and debt.
Contrast that with the Liberals who, between 1998 and 2003 managed to shave $47.6 billion off of the national debt. Yes, off. The debt declined from $607.2 billion to $559.6 billion.
Indeed, Mr. Harper and his brand of Conservatives inherited a government that was heading in the right direction. By fiscal 2007-08, the debt was down to $516.3 billion. It made us the envy of the industrialized world.
No other country could claim to have their debt under control and declining the way that we could. Compared to our GDP, our debt was considered manageable.
Now, thanks to the last five years, our national debt has soared to new heights, climbing to $650.3 billion or roughly $19,127 per person.
All of this while we are being told by Flaherty and former Bank of Canada governor Mark Carney that individually, we are carrying too much debt. That we are maxing out on our credit cards and have too much equity tied up in real estate.
Our political leaders, on the other hand, keep spending well beyond our means. And I do mean our means because it is our money that they are spending, not theirs.
Many pundits have argued that we needed the stimulus plan. That we would have fallen into a recession or even flirted with a depression without it. If the government had not injected some $55.6 billion into the economy, the whole thing could have gone belly up.
Except what was that money really spent on? During the Great Depression, the infusion of funds from the federal government was used for infrastructure projects with a lasting impact. The fountain in Lost Lagoon in Stanley Park was one such project, as was the causeway that is now Georgia Street.
Where did the present government spend its billions? At Home Depot and Rona. Somehow that just isn't the same. House renovations are great but their value is only realized when you sell the house - and in this market, who can afford to sell their house?
With all of that said, the Minister Flaherty tells us that there is a light at the end of the tunnel. We shall return to surplus budgets soon. So, what should we do with the money?
The suggestion has been tabled that Falherty's economic update sets the stage for the Conservatives to deliver on promises they made during the last federal campaign, such as income splitting and doubling the amount that Canadians can squirrel away in tax-free savings accounts.
Why would you spend the surplus on paying off the huge debt that you have accumulated? That's not going to win any votes. Ironically, if the Liberals or NDP win, they will have to spend the next ten years cleaning up the debt mess from this Conservative government.
I agree with the National Post - pay down the debt first.
(By the way, the Conservatives haven't done a good job on the environment, they have mishandled position Canada in the global economy, and the Senate is a disaster that the prime minister should wear.)
