Mulcair's plan needs a rethink
Imagine meeting with your financial advisor to discuss your personal finances.
After reviewing your investments, your income, household debt levels, and other factors, your advisor gives you a fairly positive report; your retirement plans look to be on track, your finances are in decent shape and your debt is manageable.
Would you risk it all by celebrating and taking out a $200,000 loan to buy a fancy new sports car?
If you find yourself saying “no,” and shaking your head at the thought of such risky behaviour, I would encourage you to review some recent spending announcements by Tom Mulcair and the federal NDP.
But first, note what a report by the federal government’s Parliamentary Budget Officer (PBO) concluded this past July. The report projected that over the long term, the federal government is poised to run surpluses and be able to pay off its $617 billion in net debt by 2050.
If you assume the report is biased in favour of the federal government, I would point out that the Office of the Parliamentary Budget Officer is an independent office that has received praise from across the political spectrum.
It’s true that long-term projections – like the ones made in the PBO report – are extremely difficult to make with accuracy. However, what we can draw for certain from the report is the fact that significant increases in new spending (i.e. expensive election promises) would throw things off track.
That brings us to recent spending announcements by Tom Mulcair and the NDP. Mulcair has promised a massive new, national childcare program and a $400 million increase in annual spending on guaranteed income supplement payments.
Mulcair also committed to cancel the decision to slowly push back Old Age Security (OAS) eligibility to 67 years of age and has promised billions in additional transfers to provincial governments each year.
The total bill for Mulcair’s commitments isn’t clear, but it would be enormous to say the least.
One can’t forget that making difficult decisions – such as raising the eligibility age of OAS payments from 65 to 67 years (this is scheduled to be phased in beginning in 2023) – are why federal finances grew to become sustainable over the long-term.
In fact, the PBO credited that change with helping to improve the government’s fiscal outlook back in 2012. Given that people are living longer, it’s completely reasonable to push the eligibility threshold back a wee bit.
While the PBO projects the federal government’s finances to be sustainable over the long-term, they’ve noted things at the provincial level are a mess; a sizable financial hole is expected to persist for provincial governments.
A study by the Canadian Institute of Actuaries concluded a similar problem. They expect provincial health care spending to grow to represent 103 per cent of provincial budgets by 2037.
Both dire predictions are tied to our aging population and the failure of provincial governments to plan for it.
All this begs the question – if federal finances are seemingly on the right track, and as provincial finances are a mess, why is Tom Mulcair promising to create even more costly government services? Clearly, his reckless plan needs to be rethought.
Colin Craig works for the Manning Centre in Calgary and is the Author of The Government Wears Prada
This column was published by Sun Media on September 5, 2015