Tim Sargent alluded earlier to the fact that it can be appropriate to run deficits during recessions, but when the economy is operating at capacity—and clearly it was operating beyond capacity at times recently, because we had a huge increase in inflation—government borrowing is going to be taking away resources that could have been used for investment.
One of the problems we have in Canada, and certainly have had over a number of years now, is that for every dollar of income we generate in the economy, we consume a certain amount as households.
There's a lot that has been invested in residential construction with population growth and we're very glad to have had that, but after you've done those two things, you don't have a lot left for non-residential investment. If the government is borrowing money that might have been used for investment and it's turned into consumption instead, that's one of the reasons why we are getting poorer.
I will just mention with respect to fiscal targets that I'm very old-fashioned. I think that, as in the C.D. Howe Institute, we're a not-for-profit. What do we aim for on the bottom line? You don't aim for a deficit. As soon as you've gone below zero, it means that people aren't taking the money as seriously. You don't have to justify an extra dollar here with what you would cut somewhere else.
I think that running deficits all the time really undermines budgetary discipline, and I think it's one of the reasons we've seen such big spending increases—without much for it in many cases. The CRA has increased its head count enormously. Are they better at processing our taxes than they were? They're not.