Madam Speaker, in my short time as an MP, so much has changed in our country and in our world. I could not help but be reminded of Shakespeare’s Julius Caesar, when Brutus says, “There is a tide in the affairs of men, which, taken at the flood, leads on to fortune.... On such a full sea are we now afloat, and we must take the current when it serves, or lose our ventures.”
As legislators, it is time to recognize that we are in the throes of history. What we decide today will either lead us to future success or down a dangerous path. I am saddened to say that the path this budget presents is one that could really lead our country into peril. Even before the pandemic, the government’s vacuous promise to balance the budget by 2019 had long been abandoned and broken. Canada’s debt had risen, and a view of the horizon displayed a sea of deficits and red ink for years to come. The cupboard had already been spent bare.
By June 2020, Fitch had already downgraded our national credit rating. Standard & Poor's was warning at the same time that it could also downgrade us at some point over the next couple of years “should the deterioration in the government's fiscal position become more severe and prolonged than we currently expect.” I think we can safely say that Canada's fiscal position is more severe and prolonged. Credit rating agencies do not react well to vast, irresponsible spending with absolutely no plan to return to balance. Based on what I see in this budget, the government could not care less what the credit rating agencies think. There are real consequences to being downgraded. It means more difficulty borrowing and higher interest rates.
The government has at best treated any fiscal anchors with disdain, and they are in fact absent from this budget. From breaking promises to balance the budget by 2019 to maintaining a decreasing debt-to-GDP ratio, these measures were simply ignored. The lack of fiscal responsibility has been absolutely staggering, and all Canadians should be very worried about what is coming next.
I want to be clear, because the government will say that surely I am not saying I would not have protected Canadians during the pandemic. I am not saying that; I am saying that things could have been done far better. I believe the Conservatives would have avoided many of the errors in the emergency programs that we have seen. There were so many obvious errors that led to gaps in the commercial rent subsidy, the wage subsidy and the CEBA, leaving so many Canadians out in the cold. Some of these errors border on negligence at worst and incompetence at best. It took our continued efforts to point out these errors time and again before the government made necessary changes.
My caution today has to do with interest rates. I really want to talk about interest rates because the rationale used by the Minister of Finance for this massive past and future spending has been that interest rates are historically low. On Monday, she said, “In today’s low interest rate environment, not only can we afford these investments, it would be short-sighted of us not to make them.” She was basically telling us that it would be irresponsible not to borrow.
All this new debt presents huge risks in reality that vulnerable Canadians just cannot take in this precarious time we are in now. This abandonment of prudent financial management without sound fiscal anchors should worry future generations. The Liberals are literally rolling the dice, playing with real lives and gambling that interest rates will not rise.
What my colleagues across the way fail to mention is that the government does not entirely control these rates. Market forces also establish interest rates. Just ask former prime minister Paul Martin, who, as the finance minister in 1995, brought in the most draconian budget in Canadian history, actually cutting health transfers to provinces. It took Martin’s 1995 budget, with its $25 billion in cuts, to address the problem head-on. Canada was so substantially downgraded by the credit rating agencies in the mid-1990s that in June 1995 The Wall Street Journal called Canada “an honorary member of the Third World”. That year, the federal budget included cuts of over 10% in total spending. It slashed national defence, customs and immigration spending. It reduced the size of the civil service. Health care transfers were slashed, and other things as well. This, I might add, was all under a Liberal government.
In 1995, the bank rate was 7.31% and Canada was in a full-blown debt crisis. In justifying these massive cuts, Mr. Martin said:
There are times in the progress of a people when fundamental challenges must be faced, when fundamental choices made, and new course charted. For Canada, this is one of those times. Our resolve, our values, our very way of life as Canadians are being tested. The choice is clear.
Those are prophetic words. I fear that with the magnitude of new spending in the budget, the government will likely lead us down a path into a new debt crisis. For my colleagues across the way, if they really think this cannot happen again, they have their heads in the sand.
Governments around the world, including Canada, have engaged in trillions in quantitative easing. This printing of money has diluted the money supply across the globe.
Historically, as economies recover from crises like these, inflation takes hold and interest rates rise. With a debt approaching $1.2 trillion, an interest rate of 7.31% today would cost roughly $80 billion a year. That amount represents nearly two full years of health care transfers to every single province.
The budget is a let down for Canadians. It represents misguided and risky spending from a government that does not seem to understand we cannot keep running the printing press and ratcheting up the credit card bill.
Since 2015, I have heard countless concerns about the government's blatant disregard for fiscal prudence, and this budget is just more evidence of it. When I talk to small business owners in my community, they do not just go and borrow money without having an eye on the future. They take into account the impact of what an increase in interest rates would actually mean.
The government likes to say that it took on debt so Canadians did not have to. That is a good one, but it is simply not true. In reality, this debt has to be paid for by Canadian taxpayers and the future ones to come.
What the government has really done is use the credit card of future generations to put them deeper into debt, which can only be repaid at the end of the day by higher taxes or program cuts, as the example Mr. Martin put forward clearly substantiates.
Every man, woman and child in Canada each now owes over $33,000 in debt. There are 82,574 people in my riding. Thanks to the government’s cavalier spending, my community now owes $2,724,942,000 in federal debt. Workers in my community who are struggling to get back to work needed a real plan to get them back on their feet, and I have already heard from many who are deeply disappointed. Stripped of their wages and their hours slashed, they were absolutely desperate to see a plan and leadership to help them find their way back.
For example, I cannot help but think of aviation workers at the Winnipeg airport who have been pleading for support and are continually let down.
Our party’s leader has put forward a bold plan, Canada’s recovery plan. This plan is what real leadership looks like. It will create financial security and certainty, secure our future and deliver a Canada where those who have been hurt financially by this pandemic can get back to work.
This is all about securing good jobs for Canadians, securing the manufacturing industry in Canada, securing our economy and leading people out of the darkness and back into the light. Highly respected Canadian economist Jack Mintz said,
“[The] Minister of Finance...argues higher debt loads will be easily manageable over the next five years. But they put Canada at risk. Large primary deficits in the next several years and rising interest rates will destroy the fiscal firepower we would need should another recession come our way.”
I ask the Minister of Finance to heed these warnings and learn from our history so it does not repeat itself. However, mostly I ask, for the sake of all Canadians, that she take the tide that leads on to fortune.
