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Sean Speer: No, the government is not running a tight fiscal policy

Commentary

As we await Finance Minister Chrystia Freeland’s forthcoming Fall Economic Statement, there’s a debate going on about whether the government is running a tight fiscal policy. Permit me to weigh into the debate: the answer is no. 

The case in favour depends on a set of flawed assumptions including relying on an inflated benchmark due to the massive spike in program spending during the pandemic and disregarding the pre-pandemic fiscal trendline. The real story here is that the Trudeau government significantly grew federal spending prior to the pandemic, raised it to unprecedented levels during the pandemic, and has kept them elevated in its aftermath. 

Let’s start with a definition. A tight or contractionary fiscal policy can refer to a budgetary surplus or, more generally, to lower government spending which in turn reduces aggregate demand in the economy.  

The former definition clearly doesn’t apply here. The federal government recorded a $90.2 billion deficit last year and, according to April’s budget, is projected to run a $52.8 billion this year—though the Parliamentary Budget Office anticipates that it will ultimately come in lower.

The latter definition technically applies. Program spending declined from a pandemic high of $608.5 billion in 2020-21 to $468.8 billion last year and is projected to fall further to $452.3 billion this year.

But this technical definition belies the underlying facts of the government’s fiscal policy. A major problem with the argument in favour of a tight fiscal policy is that it uses as its benchmark the unprecedented increase in program spending during the pandemic. Program spending jumped by 79.8 percent between 2019-20 and 2020-21. It’s hardly surprising therefore that spending is falling from such a historic high. 

What’s surprising is that after a nearly 80 percent year-over-year increase, it’s only decreasing by about 30 percent in the subsequent two years and then is set to resume growing again (see Figure 1). In other words, a considerable share of the pandemic-induced spike in program spending has proven to be far less temporary than it’s often characterized. 

Another way to see this is to try to forecast what would have happened to program spending were it not for the pandemic. As Figure 1 shows, during the Trudeau government’s first five years in office, program spending grew by an annual average of 6.4 percent. It’s important to note here that this level of sustained spending growth was in and of itself significant: it far outstripped key economic indicators such as real GDP growth or inflation over this period.

Figure 1. Graphic credit: Janice Nelson.

But if the government had merely kept spending growth at this rate, program spending in the current year would be $45.4 billion less than is currently projected (see Figure 2). This may provide a useful back-of-the-envelope sense of how much of the pandemic-induced spike in federal spending has persisted. 

Figure 2. Graphic credit: Janice Nelson.

The upshot is that rather than a true contraction in program spending, we’re actually seeing a level-step increase in the overall trendline that exceeds even the Trudeau government’s own pre-pandemic profligacy. Consider for instance that program spending in 2021-22 was nearly 19 percent of GDP which (excluding the extraordinary experience of 2020-21) is the highest percentage since 1982 and the fourth highest in records dating back to the mid-1960s.  

There’s also reason to believe that there are risks to the government’s own spending projections. Remember that program spending grew by an annual average of 6.4 percent in the five years prior to the pandemic. Over the five-year period between 2022-23 and 2026-27, the government is projecting program spending to grow by an average of just 1 percent. 

Notwithstanding the minister’s recent talk of restraint, it seems implausible given her government’s parliamentary agreement with the New Democrats and its own predispositions that it will be able to sustain such limited spending growth through an expected recession and the next election. 

To put it in perspective, an average growth rate of 1 percent is not much more than the spending growth in the last five years of the Harper government which the minister and other Liberals decried as “austerity” at the time. The point here isn’t about partisan hypocrisy but rather if one was betting his or her own money, the solid bet would be that program spending is only poised to grow even further in the coming years.

Which brings us back to the debate that we started with. Characterizing the Trudeau government’s fiscal policy as tight is the policy analysis equivalent of my toddler eating a lot of candy on Halloween night and then committing to eating slightly less candy thereafter and calling it a diet. Thursday’s Fall Economic Statement may be called various things but tight isn’t likely to be one of them. 

Kelden Formosa: Why you should pay attention to school board elections

Commentary

Trustee Mike Ramsay of the Waterloo Regional District School Board served on that board for almost 30 years. Carolyn Burjoski, a teacher and librarian, worked for the board for 20 years. This past year, they were both cancelled by the school board’s leadership, who were furious when they raised concerns about Critical Race Theory-inspired teaching in the classroom and youth gender transition literature in elementary school libraries.

Ramsay, who happens to be the only black member of the school board, was censured and barred from board meetings. Burjoski was not allowed to finish reading from the book to which she objected. Apparently, it was inappropriate to read from that book in a public school board meeting, but appropriate to keep it in libraries directed at children. She was later suspended from her job and bullied into an early retirement by the school board. Rather than just apologizing to her, the school board will now spend tens of thousands of dollars on lawsuits, money taken away from classrooms and students in need. 

There is a tendency in Canadian political debates to treat these kinds of episodes as sideshows, mere imports from the United States that are not really relevant north of the border. The story set out above may be bad, sure, but ultimately it’s an isolated incident, and we are sure that everything else is okay. In our country, the thinking goes, the adults are in charge, and any problems we hear about should be dismissed as isolated incidents that will be resolved by them.

I’m an elementary school teacher and a keen observer of news about education systems across the country. I think this complacent attitude is misplaced. In many places, there are not many adults left in the room. Many publicly funded school boards are run by progressive activists who are disconnected from the real needs of kids, parents, and teachers. Things really are as bad as the growing number of explicitly anti-woke candidates for school board trustee say they are. If anything, most parents and voters should be more concerned, and they should be more active in overseeing and directing the activities of local school boards across the country. 

Let’s discuss some of the most concerning examples. Oakville Trafalgar High School in Oakville drew international attention after students leaked photos of their shop teacher wearing massive prosthetic breasts in class. I think most people assumed the teacher would be reprimanded or even fired. After all, it’s obviously unprofessional and a clear distraction from learning, and may even be unsafe given all the dangerous equipment in a shop class. However, as far as we know, this teacher was neither reprimanded nor told to dress more professionally by their employer. Instead, the school board claimed this behaviour was protected gender expression under the Ontario Human Rights Code. Stephen Lecce, the provincial education minister, eventually wrote a mildly concerned note to the Ontario College of Teachers, but it appears the local school board thinks the teacher did nothing wrong. 

That’s one example, but it reflects the approach to gender embraced by many school boards. At a more systemic level, many schools instruct their teachers not to tell parents if their children socially transition into another gender while at school, including by not informing parents if teachers are calling their children by a different name than the one their parents gave them. This is despite the fact that (a) teachers’ authority to teach children is simply delegated to us by their parents, (b) we are not trained to diagnose gender dysphoria in young people or to suggest appropriate ways to treat it, and (c) we simply do not know or love our students the same way their parents do.

The question of the right way to help children with gender concerns is controversial and unsettled, and teachers are much less likely to be around to help kids pick up the pieces if something goes wrong than their parents are. Except in clear cases of abuse, teachers should support child-parent relationships, not undermine them, but many school boards’ policies discourage that. 

On race, many educators are encouraged to use lessons that, while not quoting the work of Critical Race Theory scholars like Ibram X. Kendi and Peggy McIntosh, reflect their ideas. These lessons often include quizzes and long discussions on privilege, where children and teens are told to compare which students are better—or worse—off than their peers through an explicitly racial lens. Academic studies of such lessons suggest that they either have no effect on reducing racial animus, or, in some cases, that they may even increase racial animus, but they are still widely recommended to teachers by unions and various school officials boards.

Speaking as a teacher of a diverse group of children, I cannot imagine why I would spend valuable class time teaching my students that they need to spend more time focused on their racial differences. Insofar as race comes into my classroom, it comes in the celebration of diversity and in teaching about how racism—making judgements based on racial differences—is harmful, wrong, and should be avoided.  

If these are some examples of what is going wrong in Canadian public schools, then a more heartening sign comes out of Vancouver, where a progressive school board was recently replaced by a more centrist one. In the wake of the Defund the Police movement, the Vancouver School Board (VSB) voted to end the School Liaison Officer program on the theory that policing was perceived as racist and harmful, despite increased concerns about violent crime across the region and in VSB schools. The VSB also voted to eliminate honours classes on the theory that providing bright public school students with selective instruction was bad for equity. The new school board majority was elected on a promise to reverse these policies, showing that many voters reject the excesses of progressive politics in education, even in large cities like Vancouver.

Across the country, parents and voters are increasingly expressing concerns about how race and gender are being addressed in our publicly-funded schools. This is a positive development. These schools are funded by taxpayers, so they should reflect broadly-shared values rather than the most cutting-edge views of the progressive movement. 

As a teacher in a publicly-funded school, what I really want is for school leaders to focus less on these hot topics and more on the everyday issues in education. How do we help kids recover from the learning loss and physical and mental health damage caused by COVID restrictions? How do we use the cognitive science of learning, especially the Science of Reading, to improve students’ literacy and numeracy skills? How do we support new teachers in developing warm, caring, and effective classroom management techniques?

But to turn our attention to these real issues, we need to first clear away the distractions, including the attempts of activist progressive school boards to focus education on fundamentally adult debates on race and gender. If we can move on from those issues, then we return our focus to helping all our students learn and meet their potential.