Welcome back to the age of big government in Canada

The word ‘government’ was all over Bill Morneau’s lips in his budget speech—with few mentions of ‘business.’ Times are a-changing.

Minister of Finance Bill Morneau responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on Monday, Feb. 22, 2016. (Sean Kilpatrick/CP)

Minister of Finance Bill Morneau responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on Monday, Feb. 22, 2016. (Sean Kilpatrick/CP)

When a budget is released, it’s tradition for economy watchers to pick apart the announced spending plans and cutbacks to declare the day’s winners and losers. There are certainly a lot of groups and interests that Finance Minister Bill Morneau would like everyone to think of as winners from his $300-billion budget—middle-class families, municipalities, veterans, middle-class families, Indigenous people, the environment, scientists, and even, in a roundabout way, the not-quite-middle-class royal family (Prince Harry’s Invictus Games will get $10 million to support its upcoming event in Toronto).

Yet one of the clearest winners from this budget has to be the wonks at the OECD and the IMF, two organizations that for some time now have been calling on governments to dig deep and spend their way out of their economic malaise. Translation? Run big deficits. Has there ever been a politician more eager to cloak himself in their counsel? As Morneau said during his speech, and repeatedly in the budget plan: Everything his government is doing now is at the “urging” and “recommendation” of the OECD and IMF.

If the election of Justin Trudeau last fall didn’t drive home the point enough, Tuesday’s budget had one underlying message for Canadians: big, activist, interventionist government is back in Canada’s economy.

Related: John Geddes on the sting after Trudeau’s honeymoon

Its outline is still vague, but it began to take shape as the government released details of its sprawling 10-year, $120-billion infrastructure plan. There was the usual mix of infrastructure as most people understand it—things like transit, roads and sewers—and the more amorphous social and cultural infrastructure the Harper government also liked to embrace.

At this point, Morneau’s budget only details phase one of his government’s infrastructure plans, a shovel-ready sum of around $12 billion.

But phase two—the “ambitious” infrastructure that will guide Canada’s transition to a low-carbon economy—will only start to develop its flesh later this year through consultation with other levels of government and institutional investors. It will be accompanied by direct investments in clean technology, infrastructure for electric vehicles and alternative fuels, as well as an innovation agenda that, the budget claims, will use a “client-centric” approach to scale up thousands of growing Canadian companies.

(As the government had indicated ahead of time, there was nothing in the budget about bailing out Bombardier. But it will be a shock to everyone if the activist Liberals don’t come through with the $1 billion Quebec has asked it to pitch in to save the company’s C-series jet program.)

Related: Paul Wells on the work the budget didn’t get done

There is clearly not the rush now to get Ottawa’s finances back in the black that existed during last year’s election campaign, when Trudeau promised a balanced budget by the end of his mandate. Both Trudeau and Morneau have already grown comfortable with the language of bigger government. Of the government’s $30-billion deficit for 2016-17, Morneau would only say he believes the government will “get back to a balanced budget over time.”

In fact, the only area where the Liberals are reeling in the size of government is in the realm of defence. The budget revealed the government is pushing back spending on new defence hardware to save themselves a whopping $1.32 billion in 2017-18.

The move toward a government-led economy was evident in Morneau’s speech in another interesting way. The word “government” warranted nearly 40 mentions in the 13-page speech, compared to just six mentions of “business”—an almost complete reversal from former finance minister Joe Oliver’s final budget speech.

Read Maclean’s full coverage of the 2016 federal budget.


Welcome back to the age of big government in Canada

  1. It’s obvious that a “BUSINESS” editor would shrink at the 2016 budget, accuse the Trudeau government of building a “Big Government” and hammer a criticism worthy of Stephen Harper against the Trudeau Budget. Clearly , “austerity measures” can only be the present-day solution to save the financial behind of our glorius financial behemoths. The decision of the Liberals to cut back defence spending “The budget revealed the government is pushing back spending on new defence hardware to save themselves a whopping $1.32 billion in 2017-18.” sounds good to me.

    You must have been born on a cow-farm in Alberta, but even they have elected an NDP government. Why don’t you remove yourself from the sad present-day McLeans and move to Missisipi. The population there would appreciate your views which it seems the present-day McLeans didn’t.

    • What’s good here? Thanks to,people like you, we now have a government that sees no roadblocks to an ambitious agenda to subvert individual rights and bury us under a second mountain of Trudeau debt. I’m 56, and have paid roughly $300 per month in additional taxes for my entire working (blue collar) life just to cover my share of the Trudeau debts, which did ZERO to make Canada a better place to live. Now, people like you have inflicted another less than worthless Trudeau on our nation.
      Does it not bother you that you grandchildren, should they choose productive private sector employment, will face an even greater mountain of taxation to climb, simply because we’ve let an imbecile loose with the public treasury? The first of his clan was simply evil. This one’s as dumb as a turtle, which may be worse. He’s not interested in making Canadians productive, self reliant, and wealthy. He’s devoted to making us a nation of wards of the state.
      Trudeau the elder fully understood that his beloved Marxism was a murderous ideology. If you dispute that notion, then the only other plausible consideration is that he was as thick as his boy. However, it is beyond the pale to even consider that Trudeau the younger has any grasp of the innate propensity of his chosen ideology towards mass murder.
      Unless, of course, you’re willing to accept that he is just as evil,as his old man.
      No other explanations are plausible.

  2. I see nothing wrong with increasing the deficit in these difficult times. It beats the hell out of the cruel austerity measures that some governments have chose.. This country was on a very scary path with the former government and appeared to be a lot like the conservatives in the U.S. Now that’s behind us and we can move on.

    • The problem with thinking that a deficit can boost economic growth is two-fold. Firstly, what if it doesn’t? Aside from the fact that there is little evidence, if any, that added debt burden on the economy means that there is now an even larger drag upon the economy in the form of government debt that must be supported by the tax paying private sector. The other problem is that any future economic growth is heavily dampened by the burden of the higher taxes necessary to pay off the new mountain of debt. The high taxes necessary to pay down the debts accrued via deficit financing degrade the abilities of families to save and invest. Monies that they might have earmarked for their own purposes are instead derailed by government largesse (Bombardier, anyone?). Monies that businesses might use to expand and hire new employees are diverted towards debt accrued that may or may not have had any of the desired benefits.
      There is NO economic upside to deficits. All they really do is transfer the short term pain of necessary cuts in government spending and instead impose long term pain of steady but small, incremental tax increases on to the backs of those who actually pay taxes.

      • Bil Greenwood- Your spin comes right out of the Harper playbook…give money to really rich people, they will donate to your party and you can use the funds to lie to Canadians about all the wonderfull things you are doing. Sorry that doesn’t really work. What might work is investing in education, R&D, infrastructure…invest in the future. We can continue to live off digging stuff out of the ground but if the price of these resources is not high enough it might be a good idea to have a back-up plan. All business tax is very low right now and Canadian businesses are sitting on $500 Trillion in cash and are not investing in growth. I own a couple of small businesses and don’t need a lower tax…I need people with skills, talent so we can develop more efficient, effective, environmentally responsible ways of making things.

        • Who says give money to anyone? Certainly not me. The money I earn belongs to me, not the federal government. “Investing” in education has merely resulted in extraordinary growth in the incomes of educators, while producing the same product. “Investing” in R&D is not driven by any government policies. It’s driven healthy economic prospects. What can the feds do about local infrastructure? Can some dweeb in Ottawa determine the infrastructure needs for Didsbury, AB? When they do try and do something about local infrastructure, it’s always- ALWAYS- some politically correct fantasy deal that saddles the local taxpayers with some white elephant that craps all over their paycheques (See: LRT) without providing any sort of tangible, broadly felt improvements in how their town or city works. How many cities in this country have used federal infrastructure funds to create- CREATE- traffic congestion in order to try and coerce both ridership of public transit AND more federal funds for public transit? I can name at least three.
          Like every Trudeau before him, this one is a waste of skin, and we’ll spend decades digging out from the hole he’s digging us into.

        • 500 trillion? Our entire GDP is less than 2 trillion, so your figures are off by about 499.5 trillion or so.

          …so we can develop more efficient, effective, environmentally responsible ways of making things.

          Doesn’t sound like you’ve got much of a business head on you, son. Real entrepreneurs don’t wait for the government to create opportunities for them. Real entrepreneurs are rebels and disruptors – they challenge the status quo, and often defy government and regulators (think Uber defying municipal taxi regulations for example), to force change onto a reluctant marketplace. They take risks. You, on the other hand, look to government to help you along. No wonder most western economies are so stagnant these days. The risk takers have become rent seekers.

    • Balancing a budget is not “austerity.” Spending recklessly is not “investment.” Debt is not “innovation.”

      This is the same senseless ‘newspeak’ you hear from the people running Greece.

  3. The quotes below illustrate how far to the free spending left Trudeau has moved the Liberals.:

    “If you think you can spend your way to prosperity you’re dreaming in technicolor,”
    Bob Rae, after trying to do just that as NDP Premier of Ontario from 1990 to 1995

    “The debt and deficit are not inventions of ideology. They are facts of arithmetic. The quicksand of compound interest is real. The debt and deficit are not inventions of ideology.”
    Finance Minister Paul Martin

Sign in to comment.