Taxpayers must cut through Carney’s budget spin and look at debt

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What is the most important tool used by shady financial advisors?

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Complexity.

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They use complexity and jargon to try to overwhelm you and sell you something that your common sense says you shouldn't buy.

This is exactly what Prime Minister Mark Carney is doing with all his talk about dividing the federal budget into operating and capital expenditures.

HOW QUICKLY DOES DEBT GROW?

As Carney muddies the budget waters, it's more important than ever for Canadians to look at one number, one indicator, to understand what's really happening: How fast is the debt growing?

Carney promises to “balance the operating budget by Budget 2028.”

Carney won't squat if debt continues to rise. And Carney plans to borrow another $60 billion in 2028.

Here's the main problem with Carney's accounting noise: Politicians want Canadians to think they are being fiscally responsible. But politicians really want to keep spending taxpayers' money. They hope that if they talk enough about balanced budgets, Canadians won't see their debt skyrocket.

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And the debt is growing. The Trudeau government has doubled the debt in ten years. Carney plans to increase debt by $255 billion over the next four years.

A HUGE BILL FOR FUTURE GENERATIONS

This huge amount of debt will result in huge tax bills for Canadians' children and grandchildren. A child born today already owes Ottawa $32,000—their share of the federal debt.

More debt also means Canadians are spending more money on interest payments.

This year, the federal government is charging every Canadian $1,300 to pay interest on their government credit card.

Carney doesn't balance the budget. But he plays fast and loose with the definition of “capital” expenses.

An analysis by the Parliamentary Budget Officer (PBO) found that “Carney's definition and categories expand the scope of capital expenditures beyond the current treatment of capital expenditures in Canada's public accounts.”

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The PBO added: “Based on our initial assessment, we believe the scope is overly broad and exceeds international practice, such as that adopted in the United Kingdom.”

CORPORATE WELFARE

The government's new criteria for capital expenditure include “operating subsidies” to businesses.

But more importantly, politicians should no longer be given cover to spend taxpayers' money on corporate welfare.

It wasn't an investment for taxpayers when politicians announced $12 million for Loblaw so the company could upgrade its refrigerators. It was a waste of taxpayers' money.

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When politicians gave a pasta maker $1.7 million citing the creation of 10 jobs, it was not an investment for taxpayers. It was a waste of taxpayers' money.

The PBO also notes that the government's capital and operating expenditure criteria will result “in a more favorable operating balance sheet, which will form the basis of one of the government's fiscal anchors.”

Simply put: Carney includes too little in operating expenses and too much in capital expenses. This means that “balancing the operating budget” has less weight and increases debt. This also means the government is relaxing its definition of capital expenditure.

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The real problem for taxpayers is not how the government presented its budget. The fact is that the government has doubled the debt in ten years and is wasting taxpayers' money like crazy. Canadians don't need politicians to put a new shade of lipstick on this budget pig;

Canadians need politicians to put an end to their debt-fuelled spending.

There is a lesson for Canadians and the Prime Minister in all this budget madness.

For Canadians, we will need to cut out the budget nonsense and focus on the most important number in the budget: how fast is the debt growing?

Carney said he should focus less on cutting the budget and more on cutting the debt.

— Franco Terrazzano is federal director of the Canadian Taxpayers Federation.

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