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The Good, the Bad and the Ugly—government budgets in 2024

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From the Fraser Institute

By Grady Munro and Jake Fuss

Research showed the federal government could balance its budget in two years by slowing spending growth, yet instead the government doubled down and increased spending well past its previous estimates (against the wishes of Canadians)

This fiscal year, most provinces (and the federal government) demonstrated irresponsible fiscal management, although some were better than others. Therefore, in the words of the 1966 film starring Clint Eastwood, let’s discuss The Good, the Bad and the Ugly of Canadian government budgets in 2024.

Falling in the “good” category are Alberta and New Brunswick—the only two provinces planning to run a balanced budget in 2024/25, with Alberta forecasting a $367 million surplus and New Brunswick forecasting a $41 million surplus. Both provinces forecast surpluses until at least 2026/27, and expect net debt (total debt minus financial assets) as a share of the economy to decline in the years to come. However, what keeps these provinces from having a great budget is that both chose to further increase spending in the face of higher revenues, while failing to deliver much-needed tax relief.

Alberta in particular remains at risk of seeing future surpluses disappear, as the province relies on historically high resource revenues to fund its high spending. Should these volatile revenues decline, the province would return to operating at a deficit and growing its debt burden.

Provinces in the “bad” category include, but aren’t limited to, Saskatchewan and Newfoundland and Labrador. Largely due to quick growth in program spending that wipes out any revenue gains, both provinces expect deficits in 2023/24 and 2024/25 before planning to balance their budgets in 2025/26. The risks of unchecked spending growth are most salient in Saskatchewan, where just one year ago the province projected surpluses in both 2023/24 and 2024/25. And resulting from many years of deficits and debt accumulation, debt interest costs in Newfoundland and Labrador are expected to reach $2,123 per person in 2024/25, the highest in Canada.

Key governments among the “ugly” are the federal government, Ontario and British Columbia. Let’s take them one by one.

The federal government delivered a budget that continues the same failed approach that’s produced nearly a decade of stagnation in Canadian living standards. The Trudeau government plans to run a $39.8 billion deficit in 2024/25, followed by deficits of $20.0 billion or higher until at least 2028/29. Prior to the budget, research showed the federal government could balance its budget in two years by slowing spending growth, yet instead the government doubled down and increased spending well past its previous estimates (against the wishes of Canadians).

In addition to continuous spending increases and debt accumulation, the Trudeau government increased capital gains taxes on all businesses and many Canadians. Presented as a way to make the tax system more “fair” while generating $20 billion in revenue, in reality it is a harmful tax increase that is unlikely to generate the planned amount of revenues while simultaneously hindering economic growth and prosperity.

Similar to the federal government, in its 2024 budget Ontario’s Ford government simply doubled down on the same approach it’s taken in previous years. This “stay the course” fiscal plan added an average of $3.8 billion in new annual program spending (compared to last year’s budget) over the three years from 2023/24 to 2025/26. This new spending delays the province’s expected return to surpluses until 2026/27, and rather than run a $200 million surplus in 2024/25 the Ford government now plans to run a $9.8 billion deficit.

Importantly, the Ford government failed to deliver any meaningful tax relief for Ontarians in this budget, which once again breaks its promise to reduce personal income tax rates. Given that Ontarians face some of the highest personal income tax rates in North America, relief would help keep money in people’s pockets while also promoting economic growth.

Finally, the Eby government in B.C. tabled a budget that can be best described as a generational error in terms of the planned debt accumulation. The government plans to run a $7.9 billion deficit in 2024/25, followed by deficits of $7.8 billion and $6.4 billion in 2025/26 and 2026/27, respectively. In other words, the Eby government plans to run deficits in the coming years that are nearly as large or larger than those expected in Ontario, despite B.C. having a little over one-third of Ontario’s population.

Runaway spending drives these deficits and will contribute to a $55.1 billion (74.7 per cent) increase in provincial net debt from 2023/24 to 2026/27. This massive runup in debt will result in higher debt interest costs, which leaves less money available for services such as healthcare and education, or pro-growth tax relief for British Columbians.

By and large, governments across Canada demonstrated an irresponsible approach to managing public finances in this year’s round of budgets. While there were a couple of bright spots, the majority of provinces instead chose to increase spending, grow deficits and debt, and introduce little to no meaningful tax relief.

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Economy

Trump’s Promise Of American Abundance, Fueled By ‘Liquid Gold’

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From the Daily Caller News Foundation

By JAMES P. PINKERTON

 

One of the brightest nuggets of policy in Donald Trump’s July 18 acceptance speech to the Republican convention in Milwaukee was his ode to “liquid gold.” That is, oil.

As part of his inflation-fighting plan, Trump offered a gleaming solution: increase energy production, thereby decreasing energy prices. “By slashing energy costs,” Trump declared, “we will in turn reduce the cost of transportation, manufacturing and all household goods.”

He continued: “We have more liquid gold under our feet than any other country by far. We are a nation that has the opportunity to make an absolute fortune with its energy.”

Indeed. According to the Institute for Energy Research (IER) technically recoverable oil resources in the U.S. total 2.136 trillion barrels. At the current price of around $80 a barrel, that’s some $171 trillion. And so, Trump concluded, “we will reduce our debt, $36 trillion.”

As former Alaska governor Sarah Palin would say, “You betcha.” In Palin’s Alaska, oil is so abundant, relative to the population, that everyone gets a check from the state. Last year, it was $1,312. For a family of four, that’s more than $5000. Our goal should be that every American gets such an energy dividend.

Moreover, the abundance of America’s carbon fuels is not limited to oil. According to IER, we have 3.391 trillion cubic feet of natural gas. That’s worth $165 trillion.

To be sure, these staggering dollar totals can’t be counted directly against the national debt—or in support of some future tax cut. Yet every dollar of our energy assets would contribute to the economy, and if even 10  percent of the humongous total could be available to the public, we could, in fact, pay off the national debt.

Moreover, thanks to fracking and other enhanced recovery techniques, we keep finding more energy: Human ingenuity has upended old beliefs about energy shortages, ushering in an almost Moore’s Law-ish surge in production.

Indeed, there’s so much oil and gas (and coal) that an emerging school of thought holds that carbon fuels aren’t “fossil” at all, but rather, the product of earth’s vulcanism. The core of this earth, after all, is the same temperature as the surface of the sun. Perhaps all that heat is cooking something.

In any case, we keep finding more oil, and not just in the U.S.

So how, exactly, do we take advantage of this planetary cornucopia? As Palin said, as Trump said, and as the convention crowd chanted, “drill, baby, drill.”

Okay, but what about climate change? Most Republicans don’t worry too much about that, but if Democrats do, they should be reassured that we can capture the carbon and so take it out of the atmosphere. Trees and other green vegetation have been capturing carbon for eons; the element is, in fact, vital to their very existence. Similarly, the human body is 18 percent carbon. Yes, all of us ourselves are carbon sinks.

So we, being smart, can capture vastly more carbon — capturing it in everything from wood to cement, from plastics to nanotubes. These in turn can be landfill, construction materials — maybe even a space elevator.

We can, in fact, establish a a circular carbon economy: carbon fuels extracted, burned, and then recycled back into feedstocks. By this reckoning, carbon fuels are renewable. Such creative thinking can power all those energy-hungry data centers on which Big Tech and AI depend. So there’s the makings of a bipartisan “Grand Carbon Bargain,” uniting mostly blue-state tech with mostly red-state energy. More energy + more tech = more wealth for all.

In Milwaukee, Trump spoke of American “energy dominance,” and that’s great. But with all the energy we can produce and consume, we can speak of economic abundance — and that’s even greater.

James P. Pinkerton served in the White House domestic policy offices of Presidents Ronald Reagan and George H.W. Bush. He is the author, most recently, of “The Secret of Directional Investing: Making Money Amidst the Red-Blue Rumble.”

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Trudeau pledges another $500 million to Ukraine as Canadian military suffers

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From LifeSiteNews

By Clare Marie Merkowsky

Despite the nation’s own armed forces grappling with an alarming recruitment crisis, Justin Trudeau and his government have poured over $13.3 billion into Ukraine.

More Canadians tax dollars are being sent overseas as Prime Minister Justin Trudeau has promised an additional $500 million in military aid to Ukraine. 

During a July 10 meeting with Ukrainian President Volodymyr Zelensky, Trudeau announced that he would send another $500 million to Ukraine as it continues its war against Russia, despite an ongoing decline in Canada’s military recruitment.  

“We’re happy to offer we’re announcing today $500 million more military aid this year for Ukraine, to help through this very difficult situation,” Trudeau said. 

In addition to the $500 million, Canada will also provide much of Ukraine’s fighter jet pilot training as Ukraine receives its first F-16s. 

Trudeau’s statement comes after Canada has been under fire for failing to meet NATO’s mandate that all members commit at least two percent of their gross domestic product (GDP) to the military alliance. 

According to his 2024 budget, Trudeau plans to spend $8.1 billion over five years, starting in 2024-25, and $73.0 billion over 20 years on the Department of National Defence.   

Interestingly, $8.1 billion divided equally over five years is $1,620,000 each year for the Canadian military. Therefore, Trudeau’s pledge of $500 million means he is spending just under a third on Ukraine compared to what he plans to spend on Canadians.  

Indeed, Trudeau seems reluctant to spend money on the Canadian military, as evidenced when Canadian troops in Latvia were forced to purchase their own helmets and food when the Trudeau government failed to provide proper supplies.  

Weeks later, Trudeau lectured the same troops on “climate change” and disinformation.       

However, at the same time, Trudeau readily sends Canadian tax dollars overseas to Ukraine. Since the Russia-Ukraine war began in 2022, Canada has given Ukraine over $13.3 billion, including $4 billion in direct military assistance.    

In May, Trudeau’s office announced $3.02 billion in funding for Ukraine, including millions of taxpayer dollars to promote “gender-inclusive demining.”  

Trudeau’s ongoing funding for Ukraine comes as many Canadians are struggling to pay for basics such as food, shelter, and heating. According to a recent government report, fast-rising food costs in Canada have led to many people feeling a sense of “hopelessness and desperation” with nowhere to turn for help.  

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