Medieval may be in vogue these days but why we have a national policy to promote the drinking of mead is a head-scratcher
Finance Minister Chrystia Freeland. Photo by Blair Gable/Reuters The part of the federal government’s fall fiscal update I liked best — apart from the bits about mead and cider (more on that later) — was Finance Minister Chrystia Freeland’s fiscal backcasting.
Advertisement 2 This advertisement has not loaded yet, but your article continues below.
Table 1 of the update starts off by telling us what the April budget said the deficit was going to be between 2021 and 2027. The news was all bad: deficits as far as the eye could then see, a total of $261.3 billion in deficits.
Financial Post Top Stories Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300
Then the table gives us the impact of economic and fiscal developments since April on the deficit. All that news is really good: an improvement in the fiscal position of $104.8 billion through 2027. Not enough to erase all of the next five years’ deficits but certainly enough to get a good head start on deficit elimination.
But then the table tells us what will happen to the new lower deficits as a result of actions taken since the budget and in the fiscal update itself. I really love the first column of that table, the one for fiscal year 2021-22, which ended March 31, a week before the April budget. The budget’s “forecast” for the fiscal year that had just ended was a deficit of $113.8 billion. But the impact of economic and fiscal changes since then, mainly in the form of unexpected revenues, was $23.6 billion, for a final deficit of $90.2 billion. Much more money came flowing in than the government had expected.
Advertisement 3 This advertisement has not loaded yet, but your article continues below.
But that’s it. End of story for 2021-22. There were no further changes in the deficit from actions taken either since the budget or in the fall update. How could there be? The 2021-22 fiscal year was over. Any action would have had to be taken backward in time. Yes, we’re putting not-so-small fortunes into innovation these days but Ottawa’s pretend Elon Musks haven’t yet mastered time travel. So what happens for 2021-22 is that 100 per cent of the fiscal windfall goes to deficit reduction.
If only we could have had that for the future fiscal years, too! But on average over the next five years, 58 per cent of the windfall gets spent. That’s not very good impulse control for a finance minister who, as Matthew Lau tells us, just two days before her update kicked off Financial Literacy Month, which tries to teach Canadians the virtue of living debt-freer. Study after study over many decades have shown that when we ordinary folk get a financial windfall we save most of it, a phenomenon widely noted during the pandemic when savings rates spiked as governments fed people emergency money.
Advertisement 4 This advertisement has not loaded yet, but your article continues below.
The fiscal update adds a hefty $30.6 billion to the next five years’ deficits. But windfall-spenders never sleep. Actions since April’s budget had already added $21.6 billion.
What sorts of actions? Table A1.11 of the update lists 125 separate initiatives between April and November. A handy web app tells me there were 143 business days between the budget and the update. So Ottawa is not far from one action a day — in the summer! A hockey player is considered really good if he or she can score a point a game. I guess one action a day is what governments aim for.
Granted, some actions don’t cost too much. Ottawa will add spending of just $2 million in total over the next five years to increase “bilingual capacity in the public service.” And $1 million a year “improving responses to offender grievances.” (Offenders not getting satisfactory responses is a thing? How about law-abiding citizens not getting passports or prompt, correct tax-filing advice?) Then there’s $7 million over five years for “front-of-package labelling requirements,” though it’s not explained whether those are more or less expensive than back-of-package requirements.
Advertisement 5 This advertisement has not loaded yet, but your article continues below.
Recommended from Editorial Jack Mintz: Trudeau follows Biden down the path to economic ruin Terence Corcoran: Chrystia Freeland brings Chinese-capitalism to Ottawa Jack Mintz: Liberals need to restore their fiscal cred Other intra-budget initiatives are much more expensive: $5.89 billion this fiscal year for “specific claims settlement fund replenishment and co-development.” Or $1.2 billion this year and more than $500 million over the next five for “full and fair compensation for supply managed sectors” — more than $1.7 billion in total to compensate for letting Canadian consumers have greater access to U.S. poultry and dairy products under the new NAFTA 2.0, a good thing Donald Trump did for them.
Which brings us to mead and cider and new spending of $11 million this year and $16 million in each of the following five to maintain “excise duty relief for cider and mead.” Not that we discriminate against other consumable liquids: Ottawa is also providing $164 million over two years in “further support for the wine sector.”
This advertisement has not loaded yet, but your article continues below.
Article content Medieval may be in vogue these days but why we have a national policy to promote the drinking of mead is a head-scratcher. If you go to the Canada Revenue Agency’s website, you discover the tax exemption is only for 100 per cent Canadian cider and mead made from 100 per cent Canadian honey or apples. So what we’re really protecting is our apple growers and honey producers. I suppose if Russia invades us next and we had become reliant on foreign apples and honey, we’d be out of mead for the duration. But some things you can plan too much.
The intro to the detailed list of actions between the budget and the fall update says the measures listed “ensure that Canadians are continually well served by the programs they rely on and that government operations carry on as usual.” Sorry, but the impression the table gives is that when government operations carry on as usual, Canadians are neither continually nor continuously well served.