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‘Canadians are paying the price’: MP Adam Chambers on why spending and the deficit will be big issues as Parliament returns

Commentary

With the federal Parliament back in session, The Hub’s editor-at-large, Sean Speer, spoke with Conservative MP Adam Chambers about some of the big economic and fiscal issues that are likely to animate the upcoming session, including the likelihood that the government will stay within its own fiscal guardrails in the 2024 budget. 

SEAN SPEER: As the House of Commons gets set for a new sitting, what issues do you think will animate the debate and what are you hoping to see out of the government?

ADAM CHAMBERS: Given that we return in the middle of budget season, I am hoping that we will see a restrained fiscal plan from the government. But recent history and habits don’t leave me encouraged.  

The government has increased spending on average nearly 6 percent per year since coming to office. Relative to pre-COVID levels the Liberals are spending roughly 25 percent more each year. And the Bank of Canada is now publicly pleading for help from governments to slow its spending growth so inflation can be contained.

In a couple of months, Statistics Canada will release its household income survey, which will update the poverty line and income levels in Canada. These results will be sobering as they will show the devastating effects that inflation has on low and fixed-income households in Canada. These data will further highlight the cost and consequences of the government’s inflationary spending. Only Conservatives have been warning that the government’s policy choices through increased spending and increased taxes on energy would ultimately contribute to making life more unaffordable for Canadians. 

SEAN SPEER: As a member of the Official Opposition, one tension that you must deal with is the balance between prosecuting your case against the government and setting out your own policies and priorities. How do you think about that balance? And should we anticipate more details about the Conservative Party’s own policy programme over the coming months? 

ADAM CHAMBERS: Every day presents a new scandal or misstep from government. It is our job to prosecute the government and hold it accountable for its decisions that have led to the considerable hurt to Canadians. In time, we will be releasing more ideas on what a Conservative government will offer to Canadians. However, I recommend anyone to listen to the recent speeches or videos by Mr. Poilievre, many of which highlight the party’s key themes—namely: Make work pay through lower taxes. Build homes. Fix the budget. Stop the crime. 

It is worth mentioning that the government has already stolen a few Conservative ideas for their own. Consider for instance the tying of federal funding to municipalities based on zoning regulations and densification around transit. This was announced last spring by Mr. Poilievre only to have the Liberals borrow that idea this fall. While flattering, it is a signal the government is out of ideas and scrambling to find solutions to problems that it previously claimed didn’t exist. 

SEAN SPEER: The 2024 budget is no doubt being worked on as we speak. What should we be looking for to judge whether the government is actually prepared to abide by its own fiscal guardrails including limiting the deficit to 1 percent of GDP over the next couple of years? And what are the risks if it fails to do so? 

ADAM CHAMBERS: Spending must be restrained as I mentioned earlier, but the Liberals have broken all other fiscal anchors, so there is reason to be skeptical. This is particularly surprising because inflation has driven up government revenues to record highs. Yet instead of using this extra revenue to improve Canada’s fiscal position, the Liberals have steadily increased spending. Old habits die hard. In eight years, the government hasn’t reduced a single program. I don’t expect them to start making difficult decisions now.  

In light of that backdrop, the government is going to have a hard time meeting their own guardrail of keeping annual deficits to 1 percent of GDP. Recent analysis by the Business Council of Canada suggests that in the post-Second World War era, the federal government has managed to record a deficit of less than 1 percent of GDP only twice when government spending exceeds 17 percent of GDP. 

Moreover, anyone who is not worried about Canada’s fiscal position is making a significant gamble on a “soft landing”—that is, that there will not be any serious economic downside events over the short and medium term. 

Any economic downside will significantly erode the fiscal capacity of the government. We are now spending $50B a year on interest on the debt. These debt service costs which already run over 10 percent of government revenues necessarily reduce the government’s flexibility to handle economic shocks. Unfortunately, that share will grow as the government rolls over $300B in borrowing this year due to its negligent decision to take on mostly short-term debt during the pandemic. This borrowing is now being refinanced at significantly higher rates and Canadians are paying the price.

Sean Speer: Canada really is broken right now

Commentary

Although the timing of the next federal election is unknown, it seems increasingly clear that the ballot question will be about whether voters believe that “Canada is broken.”

New polling conducted by Abacus Data on behalf of the consulting firm, Meredith and Boessenkool Policy Advisors, finds that just over 60 percent of Canadians today believe that the answer is yes—a 40 percent change since the 2021 election. The poll identifies various factors, including the cost of living (particularly food and fuel), housing, health care, immigration, and the prime minister himself, behind these gloomy public sentiments.  

It prompts the question: what explains the marked change in the public’s mood over the 28 months since the last election?

The Liberals might claim that the answer lies with Conservative leader Pierre Poilievre’s effective communications. According to this line of argument, his simple yet flawed slogans have come to crystalize the idea that Canada is broken in the minds of a sizeable majority of the public. 

One can see this interpretation in the actions and assertions of the government, including the prime minister’s claim last year that progressives need “better messaging” or new reports that Ottawa may be planning to “rebrand” the carbon tax. Yet interpreting the public’s anxiety and frustration as merely a communication problem misses the point.

The truth is there’s a profound sense of malaise in the country that Poilievre has channeled rather than catalysed. Although this sentiment has economic roots, it also reflects a deeper sense that the basic features of Canadian life aren’t functioning as well as they have in the past and that government action or inaction is largely responsible. 

The chief economic cause is Canada’s poor record on GDP per capita. It has been stagnant for six years, actually declining for the past six quarters, and is not expected to recover pandemic losses until 2027 or later. Even if one believes that GDP per capita is an incomplete economic measure, it’s self-evidently suboptimal for households and the economy as a whole that it’s shrinking rather than growing. We’re effectively facing a lost decade for Canadian living standards. 

A major factor behind these trends is the Trudeau government’s mismanaged immigration policy. We still don’t have an adequate explanation for what’s behind the unprecedented increase in the number of non-permanent residents entering the country. Was it a deliberate policy strategy? If so, why? And if wasn’t, how did it happen? 

This past year shouldn’t be viewed as a one-off either. Virtually all of the biggest year-over-year increases in the number of non-permanent residents have during the Trudeau government. It’s hard not to conclude therefore that it has amounted to either a purposeful or inadvertent policy strategy that seems to have been pursued without any consideration of the externalities. As economist Ben Rabidoux recently put it: “If this government were actively trying to stoke anti-immigration sentiment, it would be indistinguishable from current approach.”

Then there’s been the more than a decade-high increase in violent crime, a 30-year high in the murder rate, and daily evidence of urban disorder, including growing empirical questions about the harm-reduction model to deal with drugs and substance abuse. Public safety, which had by and large been a dormant political issue for years, has suddenly reemerged as a key concern for Canadians—particularly in our major cities. 

There are also new doubts about state capacity at the federal and provincial levels and whether we’re receiving good governance in exchange for our hard-earned tax dollars. The federal government’s employment footprint is now 40 percent larger under the Trudeau government and yet in parallel we’ve seen spending on third-party consultants grow by one-third since 2017 alone. This dissonance has naturally led to questions about what precisely we’re paying for or what we’re getting for it.  

One doesn’t need to fixate on outright scandals—such as the sole-source contract with WE Charity or the so-called “ghost contracts” with GC Strategies—to reach the conclusion that something seems off in Ottawa. Maybe it’s the consequence of hybrid work or an inattention to implementation or too much focus on provincial and local matters for which federal officials lack pre-existing competencies. Whatever the explanation, mounting government failures represent a threat to the public’s trust and are doubtless a contributing factor to the overall sense of malaise. 

Finally, there’s plenty of evidence that Canada’s role in the world has diminished under the Trudeau government’s watch. Although the government can point to different data on public spending on defence and national security that may make its record look better or worse, it seems incontrovertible that Canada is both more isolated and irrelevant than it has been in a long time. Our exclusion from key multilateral initiatives such as AUKUS and the Indo-Pacific Economic Framework is indicative of this alarming trend. 

The totality of these inexhaustive examples reflects an inherent political challenge for the government. Any attempt to dissuade the notion that Canada is broken risks looking out of touch. Yet any concession that the country is broken effectively concedes culpability. The Trudeau government is now going about fixing its own mistakes—including cutting the number of international student visas—which, in a way, is itself an inherent admission of guilt. 

Ultimately a judgement on whether Canada is broken is somewhat subjective and inevitably shot through with our ideological and partisan biases. But irrespective of how one comes down on this question, there are some interesting lessons from the Trudeau government’s complicated experience. 

A security guard stands in front of a broken window at the Hudson’s Bay Company store in Vancouver. Robert Skinner/The Canadian Press.

The biggest may be that Canadians aren’t particularly ideological. They’re really searching for quietly competent governance. They expect basic, reliable public administration and are prepared to punish governments that succumb to ideological excesses especially if it’s perceived to come at the expense of delivering on their basic needs. 

Prime Minister Trudeau came to office with a message that essentially offered the aspects of the previous Harper government that Canadians liked, including an economic focus, a commitment to sound public finances, and a general moderation on matters of culture and identity but in a more compassionate and positive packaging. It basically amounted to Harperism with a smile. 

Over time, however, the government seems to have misinterpreted its mandate to believe that Canadians had bought into a more full-throated progressivism including large-scale deficits and debt accumulation, a more active role for the state in the economy and society, and a growing nod to faddish trends in progressive identity politics. 

Today’s consistent polling in favour of the Conservative Party represents in large part a correction to these perceived excesses and failures of the Trudeau government. When Canadians tell pollsters that Canada is broken, they’re not saying that they’re giving up on the country. What they’re really saying is they want to get back to pragmatic governance. They want a government focused on its core responsibilities on the economy, immigration, crime, public administration, and Canada’s role in the world. Getting back to basic is ultimately the best way out of the sense of brokenness that has befallen us.