Proclaiming your government ‘fiscally responsible’ does not make it so

The government planned to spend $478.6 billion in 2024/25 and run a deficit of $27.8 billion. Its latest forecast, however, shows a larger deficit of $38.4 billion despite revenues being $32.6 billion higher than anticipated.

The Trudeau government will table its next federal budget on April 16. Before and after budget day, Canadians should be wary of carefully crafted and overly positive government rhetoric, which may bear little resemblance to the actual state of Ottawa’s finances and the government’s fiscal track record.

For example, federal Finance Minister Chrystia Freeland recently said the government plans “to invest in Canadians… in a fiscally responsible way.” At first glance, these comments seem reasonable. But consider the Trudeau government’s record on spending, deficits and debt over the last nine years.

Since taking office in 2015, the Trudeau government has demonstrated a proclivity to spend and borrow at nearly every turn. From 2018 to 2022, the Trudeau government recorded the five highest levels of federal spending per person (excluding debt interest costs) in Canadian history (inflation-adjusted). Recent projections from the government suggest it will possess the eight highest levels of per-person spending by the end of its current term next fall.

This repeated preference to turn on the spending taps has resulted in nine consecutive budget deficits, with federal debt reaching $2.0 trillion at the end of March 2024. Rapid debt accumulation means each Canadian was responsible for paying $1,160 in federal debt interest costs in 2023/24 alone and the government will likely need to raise taxes in the future.

The government also plans to continue running larger deficits than it did before COVID and borrow nearly $500 billion more by 2028/29.

To make matters worse, we can’t put much stock in their fiscal plans, as spending and deficits are almost always higher than government forecasts. Two years ago, for example, the government planned to spend $478.6 billion in 2024/25 and run a deficit of $27.8 billion. Its latest forecast, however, shows a larger deficit of $38.4 billion despite revenues being $32.6 billion higher than anticipated. A failure to restrain spending means the government now expects total spending to be $521.8 billion in 2024/25.

None of this points to any semblance of fiscal responsibility.

Ontario’s Finance Minister Peter Bethlenfalvy has made similar erroneous claims. When tabling that province’s budget last month, he said his fiscal plan, which includes a $9.8 billion deficit in 2024/25 and $59.7 billion in debt over three years, was a “prudent, responsible approach.”

Despite paying lip service to their strong stewardship of government finances, Minister Bethlenfalvy and Premier Doug Ford rarely waste an opportunity to increase spending and burden Ontarians with more debt. From 2017/18 to 2024/25, provincial revenues will have increased by a projected 36.5 per cent, yet the Ford government has more than wiped out these gains by increasing program spending by nearly 41.0 per cent over the same timeframe.

Moreover, Ontario’s per-person inflation-adjusted spending is higher now than it ever was during Kathleen Wynne’s tenure as premier. Due to the Ford government’s decision to post deficits in five of six years, in conjunction with significant spending on infrastructure, provincial debt has increased by close to $92.0 billion since 2017/18.

None of these facts point to a “prudent, responsible approach” to finances at Queen’s Park.

The current governments in both Toronto and Ottawa have remarkably poor track records with spending and debt. Proclaiming yourself to be fiscally responsible does not make it so. It’s time for finance ministers to stop playing word tricks and be honest about their own mismanagement.

Authors:

Jake Fuss and Grady Munro

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Automotive

Governments in Canada accelerate EV ‘investments’ as automakers reverse course

Published on May 15, 2024

Todayville

From the Fraser Institute

By Kenneth P. Green

Evidence continues to accrue that many of these “investments,” which are ultimately of course taxpayer funded, are risky ventures indeed.

Even as the much-vaunted electric vehicle (EV) transition slams into stiff headwinds, the Trudeau government and Ontario’s Ford government will pour another $5 billion in subsidies into Honda, which plans to build an EV battery plant and manufacture EVs in Ontario.

This comes on top of a long list of other such “investments” including $15 billion for Stellantis and LG Energy Solution, $13 billion for Volkswagen (with a real cost to Ottawa of $16.3 billion, per the Parliamentary Budget Officer), a combined $4.24 billion (federal/Quebec split) to Northvolt, a Swedish battery maker, and a combined $644 million (federal/Quebec split) to Ford Motor Company to build a cathode manufacturing plant in Quebec.

All this government subsidizing is of course meant to help remake the automobile, with the Trudeau government mandating that 100 per cent of new passenger vehicles and light trucks sold in Canada be zero-emission by 2035. But evidence continues to accrue that many of these “investments,” which are ultimately of course taxpayer funded, are risky ventures indeed.

As the Wall Street Journal notes, Tesla, the biggest EV maker in the United States, has seen its share prices plummet (down 41 per cent this year) as the company struggles to sell its vehicles at the pace of previous years when first-adopters jumped into the EV market. Some would-be EV makers or users are postponing their own EV investments. Ford has killed it’s electric F-150 pickup truck, Hertz is dumping one-third of its fleet of EV rental vehicles, and Swedish EV company Polestar dropped 15 per cent of its global work force while Tesla is cutting 10 per cent of its global staff.

And in the U.S., a much larger potential market for EVs, a recent Gallup poll shows a market turning frosty. The percentage of Americans polled by Gallup who said they’re seriously considering buying an EV has been declining from 12 per cent in 2023 to 9 per cent in 2024. Even more troubling for would-be EV sellers is that only 35 per cent of poll respondents in 2024 said they “might consider” buying an EV in the future. That number is down from 43 per cent in 2023.

Overall, according to Gallup, “less than half of adults, 44 per cent, now say they are either seriously considering or might consider buying an EV in the future, down from 55 per cent in 2023, while the proportion not intending to buy one has increased from 41 per cent to 48 per cent.” In other words, in a future where government wants sellers to only sell EVs, almost half the U.S. public doesn’t want to buy one.

And yet, Canada’s governments are hitting the gas pedal on EVs, putting the hard-earned capital of Canadian taxpayers at significant risk. A smart government would have its finger in the wind and would slow down when faced with road bumps. It might even reset its GPS and change the course of its 2035 EV mandate for vehicles few motorists want to buy.

Author:

Kenneth P. Green

Senior Fellow, Fraser Institute

Automotive

Red States Sue California and the Biden Administration to Halt Electric Truck Mandates

Published on May 15, 2024

Todayville

From Heartland Daily News

By Nick Pope

“California and an unaccountable EPA are trying to transform our national trucking industry and supply chain infrastructure. This effort—coming at a time of heightened inflation and with an already-strained electrical grid—will devastate the trucking and logistics industry, raise prices for customers, and impact untold number of jobs across Nebraska and the country”

Large coalitions of red states are suing regulators in Washington, D.C., and California over rules designed to effectively require increases in electric vehicle (EV) adoption.

Nebraska is leading a 24-state coalition in a lawsuit against the Environmental Protection Agency’s (EPA) recently-finalized emissions standards for heavy-duty vehicles in the U.S. Court of Appeals for the D.C. Circuit, and a 17-state coalition suing the state of California in the U.S. District Court for the Eastern District of California over its Advanced Clean Fleet rules. Both regulations would increase the number of heavy-duty EVs on the road, a development that could cause serious disruptions and cost increases across the U.S. economy, as supply chain and trucking sector experts have previously told the Daily Caller News Foundation.

“California and an unaccountable EPA are trying to transform our national trucking industry and supply chain infrastructure. This effort—coming at a time of heightened inflation and with an already-strained electrical grid—will devastate the trucking and logistics industry, raise prices for customers, and impact untold number of jobs across Nebraska and the country,” Republican Nebraska Attorney General Mike Hilgers said in a statement. “Neither California nor the EPA has the constitutional power to dictate these nationwide rules to Americans. I am proud to lead our efforts to stop these unconstitutional attempts to remake our economy and am grateful to our sister states for joining our coalitions.”

While specifics vary depending on the type of heavy-duty vehicle, EPA’s emissions standards will effectively mandate that EVs make up 60% of new urban delivery trucks and 25% of long-haul tractors sold by 2032, according to The Wall Street Journal. The agency has also pushed aggressive emissions standards for light- and medium-duty vehicles that will similarly force an increase in EVs’ share of new car sales over the next decade.

California’s Advanced Clean Fleet rules, meanwhile, will require that 100% of trucks sold in the state will be zero-emissions models starting in 2036, according to the California Air Resources Board (CARB). While not federal, the California rules are of importance to other states because there are numerous other states who follow California’s emissions standards, which can be tighter than those required by the EPA and other federal agencies.

Critics fear that this dynamic will effectively enable California to set national policies and nudge manufacturers in the direction of EVs at a greater rate and scale than the Biden administration is pursuing.

Trucking industry and supply chain experts have previously told the DCNF that both regulations threaten to cause serious problems for the country’s supply chains and wider economy given that the technology for electric and zero-emissions trucks is simply not yet ready to be mandated at scale, among other issues.

Neither CARB nor the EPA responded immediately to requests for comment.

Nick Pope is a contributor to The Daily Caller News Service.

Originally published by The Daily Caller. Republished with permission.