It was the best of times during the worst of times for this besieged-from-every-direction Liberal government.
It’s bi-annual work of fiscal fiction rolled out Tuesday as the fall update staged a desperate bid to reverse the Liberals’ downward spiral in the polls while trying to soften its drunken-sailor-spending image.
But good news came Tuesday on three unexpected fronts. Inflation dipped lower to 3.1 per cent courtesy of cheaper fill-ups, grocery chains under government pressure promised price drops and freezes; and the jarring news that South Koreans would take 1,600 jobs at a heavily subsidized Windsor battery plant was desperately blame-shifted to a free trade deal from the Stephen Harper era, although the $15-billion subsidy itself was all Justin Trudeau.
Into that mix dropped Chrystia Freeland’s fourth fiscal update as finance minister.
Here endeth the good news.
The economy, to use the prime minister’s narrative from a few months back, will “suck” as our growth rate goes palliative at a barely detectable pulse of 0.4 per cent while unemployment surges to a potential seven per cent next year.
But the truly stunning figure is not just the size of the annual deficit, which is holding at $40 billion pending a red-ink tidal-wave next year to pay for massive-ticket items like the estimated $11-billion national pharmacare tab and looming fighter jet purchases.
It’s rising interest on a national debt that has more than doubled under eight years of Liberal rule.
In just five years that debt-financing tab will hit the jaw-dropping intersection where the $60-billion cost of paying interest approximates the cost of all federal transfers for health care.
Try to get your head around that. Paying interest, which delivers no value to the Canadian quality of life, will match the federal share of dealing with all those sick baby boomers. Put another way, that equals two full years of military spending, which isn’t as impressive given the terrible shape the cash-strapped forces are in these days.
But amid all those dark clouds there are some silver-lining signs that Freeland gets the message that she can’t keep sprinkling billions of deficit dollars like rose petals in a honeymoon suite.
Most of the new spending is not immediate and much of it will be repayable.
The $15 billion allocated to help induce housing construction comes in the form of repayable loans and doesn’t kick in until 2025, an election year that polls forecast will bring a change in government, which will have no obligation to enact the promise anyway.
The same applies for that “new” billion-dollar payment to build more affordable housing.
And it’s worth noting all this support, if it indeed materializes, will deliver only a fraction of the 3.5 million new houses needed to meet the demand in just six years.
But when the Liberals weren’t shovelling money into the future for self-promotion purposes in the next campaign, they were using policy tools instead of cash in smaller efforts to make things better for Canadians.
The Canadian mortgage charter is a vaguely interesting idea, if it has any teeth to actually protect foreclosure-bound homeowners from the fees and penalties of renewing mortgages under higher rates. Points for trying but, unfortunately, it sounds like another of those Liberal publicity stunts that will never be effectively implemented.
Crackdowns on what the government labels “junk fees” is another potential thumbs-up move that requires no taxpayer contributions. It would prohibit seat airline selection charges for children to sit beside their parents (which is negative publicity waiting to happen if it happens), investigate international cellphone roaming charges and demand banks reduce their NSF fees.
It’s about time they eliminated the GST on psychotherapy and counselling services (my conflict of interest declaration being I have a daughter who is a psychotherapist).
And incredibly that old chestnut of knocking down interprovincial barriers to help skilled professions and trades relocate to where jobs can be found is back on the agenda, something talked about for decades to no avail and a concept Quebec will never allow.
To try and be guardedly optimistic, Freeland’s fiscal update does bend, if not break, the usual cycle of having fall updates boldly boost spending from spring budgets and then have spring budgets extravagantly elevate spending from the previously bloated update.
But it’s still a bleak snapshot of the books as Canada enters uncertain economic times that are sure to worsen the fiscal forecast.
And lest we forget, as debt servicing charges and health-care costs achieve an ugly budgetary equilibrium, this red-ink burden is not one to be borne by the current crop of parents and grandparents.
The borrowing of today will be paid with high interest by the kids who become the taxpayers of tomorrow.
For squandering their hard-earned income tax on the questionable expenses we have incurred, they are owed a proactive apology.
That’s the bottom line.