Guillaume Deschênes-Thériault

“Mr. Speaker, I will be splitting my time with the member for Calgary Crowfoot. This budget fails to establish a credible fiscal anchor to reduce the debt and to balance the budget. The fiscal anchors of Liberal budgets of the past decade were ever-changing and never met. The Prime Minister has continued with that practice. The national debt is increasing, interest costs are starting to take off and there is no plan to balance the budget. Here are the consequences. The Prime Minister risks losing credibility with financial markets because there is no credible fiscal anchor to reduce the debt and balance the budget. Canada’s experience in the mid-1990s demonstrates how quickly things can change when investors lose confidence. Debt crises have their small beginnings when interest expense grows faster than nominal GDP, and that is exactly what is happening. Interest expense on the debt is growing faster than nominal GDP, and interest on the national debt has now become the fastest-growing expense. Interest expense currently costs 11¢ of every tax dollar and is projected to rise to 14¢ in four short years. That is $85.5 billion a year, more than what the government spends on public health care. That is $8,000 a year for a typical family of four. Canada has the smallest of the G7 currencies, and ours is not a reserve currency. Canada also has some of the highest levels of household indebtedness in the world and some of the highest income taxes in the G7, which means that households already struggling to pay the bills and struggling with affordability have little ability to pay more in tax. Canada has some of the highest levels of subnational debt in the world, for which the federal government is the backstop. All this borrowing is also making life more unaffordable for individuals, families and companies. Massive increases in government debt compete with individuals, families and businesses for the money available to borrow from lenders. Lenders increase interest rates. The yields on the Government of Canada’s five- and ten-year bonds have been rising in recent years. These are key benchmarks that determine the bank’s cost of funds and interest rates for mortgages, lines of credit and car loans. These rising interest rates hit Canadian households particularly hard because of the high levels of household indebtedness in Canada, currently at $3.3 trillion. Another consequence of rising debt and interest costs is that Canada is rapidly losing fiscal capacity to deal with a future major crisis. In the last 20 years, Canada has faced two major crises: the 2008 global financial crisis and the 2020 pandemic. In those cases, Canada’s debt to GDP was roughly 30%, giving the government the fiscal firepower it needed to respond, and allowing the government to borrow upward of 5% to 15% of GDP in order to respond. The Prime Minister has stated, in his recently released national security strategy, that we must be prepared for a major crisis. It states that Canada needs to prepare for all contingencies up to and including war and other worst-case scenarios, and has put economic security at the heart of that plan. The next major crisis the Prime Minister says we must be prepared for requires fiscal capacity, just as was needed in 2008 and in 2020. The problem is that the debt is rising, and so are interest costs. They are reducing the capacity for the government to do that. The government’s debt to GDP is currently 40% and climbing, and interest costs are starting to take off. This is leaving less and less fiscal capacity to deal with a future crisis the Prime Minister says we must be prepared for. While the government is not facing an immediate fiscal impasse, it has become complacent in not having credible fiscal anchors to reduce the deficit and the growth of the national debt. All this spending in the budget also is not working. It is doubling down on what the previous Trudeau government did. In the Prime Minister’s first budget, deficits over five years were double that of Mr. Trudeau’s last budget. In the Prime Minister’s second budget, spending has been obscured by pushing it off the budget onto the balance sheet by capitalizing borrowing. For all the talk of increased business investment, employment growth and economic activity, little is showing up in the numbers. Food bank usage is at record highs, with some 2.35 million Canadians visiting a food bank each and every month, up 117% since 2019. Overall business capital formation has declined in five of the last six quarters and remains at the low levels of when Mr. Trudeau left office. Unemployment remains elevated, about 1% above pre-pandemic levels, because the economy is not generating enough jobs to push it down to roughly 5.5%. Productivity growth remains sluggish, if not non-existent, since the Bank of Canada declared a productivity emergency two and a half years ago. Economic growth remains stagnant, below 1% this year. All these things, food bank usage, overall business capital formation, unemployment, productivity and economic growth, have changed little in the last 18 months under the government. That is because the government has failed to introduce the fundamental supply side reforms necessary to spur investment, create growth, and raise incomes and paycheques for Canadians, reforms such as an overhaul of Canada’s competition policy to increase consumer choice and lower prices for struggling households; an overhaul of our taxes that the business community and experts have long called for in order to increase investment and incomes; an overhaul of our regulatory system, particularly for small- to medium-sized businesses; addressing interprovincial trade barriers; and so many other regulations that are strangling business and capital formation. The last thing I would like to say is this. This budget is an affront to Parliament. It is a travesty of a document. First of all, it is incoherent and impossible to understand. There are several definitions of net debt in this document. Its accounting definitions, operating versus investment, are so vague that even financial experts are finding it impossible to understand exactly what is going on. Off-budget items have been so massively expanded by capitalizing them on the balance sheet that the deficit figure has become a completely useless figure, and the debt is growing at more than twice the pace of the deficit. Here is the bigger travesty. The fact we had to wait this long to get the document is an outrage. The government made numerous announcements contained in the document months ago, outside the fiscal framework and outside Parliament. Parliamentarians should not have to learn about $36 billion in tax expenditures at some investment conference in downtown Toronto through the nightly news. This is the place where the Prime Minister should be telling Canadians how much the government plans to spend, how much it plans to tax, and how much it plans to borrow. The government has spent most of the last year announcing spending and taxation at its own organized conferences and its own contrived photo ops outside Parliament. To add insult to injury, when it does finally have an opportunity to tell us exactly what is going on in the budget, it is obscured by all sorts of financial chicanery. Finally, the head of government, for whom the budget document is supposed to be an aspirational and generational blueprint, is jetting off to yet another around-the-world tour, leaving us to pick through whatever gobbledygook this is. I have a message for the Prime Minister. This is not Goldman Sachs. This is not Brookfield. This is the Parliament of Canada, and democratic accountability in this place, particularly over the public purse and taxation, is sacrosanct. It is time to start showing up in Parliament and to start answering some questions.”