I've been asked about stagflation. For those who don't know stagflation, we are discussing the budget. It's possible we could enter into a stagflation era with this. We should really ask the Minister of Finance, in our “finding Freeland exercise”— if we could have a chance to ask her a question—if she believes that $3.1 trillion in spending in the next five years will result in stagflation. Stagflation is when both interest rates and inflation are going up and unemployment is going up, all at the same time.
Pierre Trudeau, in 1974, ran against Robert Stanfield, one of the greatest Nova Scotians in public office we've ever had. The airport in Halifax is named after him. In 1974 Trudeau ran on a solution, which I personally don't agree with, called “wage and price controls”. The government would impose a limit on the increase in prices and wages as a way to control out-of-control spending, and the spending by the government that caused this.
Pierre Trudeau ran around the election—like a "gunslinger", they used to call him—saying, zap! You're frozen. Zap! You're frozen. He was making fun of Robert L. Stanfield, saying he would absolutely never impose wage and price controls, because they were ridiculous.
Mr. Trudeau won a majority government in 1974, from his minority. Guess what the first thing he did in his budget was? I can hear you, but I want you to guess. He brought in wage and price controls. He actually did the opposite—surprisingly, for a Liberal Prime Minister—of what he promised in the campaign. He froze everyone's wages. He froze everyone's prices.
When he finally took those off, it led to some of the problems with the Right Honourable John Turner. When he finally took those off, of course, you know what happens with pent-up demand and pent-up wage demands. We're seeing that now as a result of COVID. We've just seen that with the public service strike. There is pent-up demand and increased demands on wages, as the increased cost of living increases the demand on wages. The giving of increased wages puts more money into the market. More money into the market chasing fewer goods creates more inflation. That's a part of stagflation that I believe we're going to get into.
It would be great to be able to talk to the Minister of Finance about that era and the history of her boss's father and party in creating that in the 1970s—and potentially doing it again—but to go back to Mr. Blaikie's question, that resulted in $468 billion of national debt in 1984.
In 1984, the deficit of Pierre Trudeau, his last deficit—imagine this—was 8.9% of GDP. I don't like communicating with alphabet numbers and percentages, so based on today's gross domestic product—the value of everything we produce in Canada— if we ran a deficit of 8.9% of GDP, do you know what that deficit would be today? Just for one year, it would be $157 billion, and that puts into perspective the legacy of Pierre Trudeau when Brian Mulroney took power. Imagine that.
I guess some were probably saying, “Well, $157 billion, we're rather conservative as a Liberal government, then, in only producing a $44-billion deficit this year.” They would be wrong, because it's those build-ups of deficits that created the situation we were in then and that to get out of took us 20 years.
MP Blaikie, that was the mess in 1984 when Brian Mulroney won that historic election. There were 282 seats in the House of Commons. Do you know how many seats Brian Mulroney won? The Canadian public loved Pierre Trudeau and the Liberal legacy of 18 years so much that Brian Mulroney won 211 of 282 seats. Imagine managing that caucus in government. Boy oh boy, it's tough enough for the Liberals to manage a minority caucus with the NDP in the room. To manage a caucus of 211 people in 282 seats in the House of Commons, both sides of the opposition side, one end and the other, were filled with Conservatives, with the 30- and 40-seat Liberals and NDP in the middle. I don't know if MP Blaikie's father was first elected then, but I'm pretty sure he was elected in that election.
That's the mess they inherited.
MP Blaikie asked about the Mulroney deficits. Well, the key thing in breaking the back of a deficit is to first of all break the structural deficit. We soon will have a growing structural deficit issue in this country once again. We had a massive structural deficit. Do you want to know how bad that structural deficit was? The budget for the government in 1984 was $95 billion. Thirty-eight cents of every dollar the government collected and spent, guess what it went to...? It went to paying interest on Pierre Trudeau's debt.
Can you imagine that now? Thirty-eight per cent of every tax dollar going to pay interest: That was more than health care and defence combined. We know that defence spending was cut. The only thing that was cut under Pierre Trudeau's government was defence spending. It was cut by 50% while hundreds of new programs, initiatives and Crown corporations were created. That's the colossal mess left by the father.