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Federal deficit reached $381.6 billion in 2020, without budget for two consecutive years

Spending by all government levels in Canada hit 57.3 per cent of GDP in 2020. That’s more than at any time in our history, including both world wars.

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Canada’s 23 prime ministers have left a legacy, and each of those legacies affects all Canadians. One element critical to an analysis of each prime minister is whether they left the federal government more or less indebted than when first taking office.

By accounting for population growth and inflation, the Fraser Institute compared the debt accumulated by each prime minister through Canada’s history.

Historical context is vital to understanding the debt legacies of each prime minister. For instance, global conflicts such as the First and Second world wars and multiple economic down-turns contributed significantly to the substantial growth in debt per person during the tenures of Sir Robert Borden (188.1 per cent) and William Lyon Mackenzie King (145.2 per cent).

Per-person spending spiked during the First World War under Prime Minister Sir Robert Borden but essentially returned to pre-war levels once the war ended. The same is not true of the Second World War when William Lyon Mackenzie King was prime minister. Per-person spending stabilized at a permanently higher level after the end of that war. 

These downturns contributed significantly to federal debt accumulation but are out of the prime ministers’ direct control. The federal government collected less revenue and spent more as incomes declined, with Canadians more dependent on Employment Insurance services. 

In March 2020, over 1,000,000 Canadians lost their jobs – increasing dependency on EI – because of COVID-19. The official unemployment rate spiked by 5.2 percentage points to 13.0 per cent – the second-largest unemployment rate over the period since comparable data became available in 1976.

The next largest monthly job loss recorded since 1976 is the nearly 125,000 losses during the financial market crash or “Great Recession” of January 2009.

Because of COVID-19 and the subsequent government responses, Canada’s Real Gross Domestic Product (GDP) dropped 11.6 per cent in April 2020, following a 7.5 per cent decline in March. 

According to Statistics Canada, all 20 industrial sectors of the Canadian economy were down, producing the largest monthly decline since the series started in 1961, at that time.

In conjunction with the unemployment rate and havoc wrecked on industry, the fall fiscal update for 2020 forecasted the federal government’s deficit for the year at a whopping $381.6 billion.

Spending by all government levels in Canada hit 57.3 per cent of GDP in 2020. That’s more than at any time in our history, including both world wars. 

In the 12 straight deficit years beginning in 2008/09, Ottawa’s cumulative deficits totalled $282.3 billion in 2020 dollars. In other words, this year’s deficit is (in real terms) 35.2 per cent larger than all the deficits run during and in the decade following the “Great Recession” of 2008/09.

Per the most recent data available, the highest single-year per-person spending ($9,066) between 1870 and 2019 was under Prime Minister Justin Trudeau in 2019. 

For added perspective, here was the notable fiscal habits of prime ministers during adversarial periods in Canadian history:

While Prime Minister Arthur Meighen (1920-1921) recorded the largest average annual decline in per-person spending (-23.1 per cent), that decline, however, is primarily explained by the rapid drop in expenditures following World War I. 

Among post-Second World War prime ministers, Louis St. Laurent oversaw the largest annual average increase in per-person spending (7.0 per cent), though the Korean War partly influenced this spending. 

Prime Minister Joe Clark held the record for the largest average annual post-Second World War decline in per-person spending (-4.8 per cent), though his tenure was less than a year.

Both Prime Ministers Brian Mulroney and Jean Chrétien recorded average annual per-person spending declines of 0.3 per cent.

Pre-COVID estimates projected Trudeau to be the largest accumulator of federal debt per person (5.6 per cent) among prime ministers who did not fight a world war or experience an economic downturn during their tenure. 

Sir Mackenzie Bowell and Sir John Abbott are the only other prime ministers in Canada’s history who have increased federal debt without facing a global conflict or an economic downturn.

With a federal debt north of $1 trillion and combined government debt with the provinces exceeding $2 trillion, the pathway to debt reduction in 2021 and beyond remains unclear as the federal government has not tabled a federal budget in two years.

Dhaliwal is a Western Standard reporter based in Edmonton

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1 Comment

  1. Left Coast

    March 13, 2021 at 4:51 pm

    Pierre took Canada from a relatively low tax debt free nation to double digit inflation and record Deficits.

    Now Junior has given us a repeat performance . . . back in 2015 I said the Drama Teacher who never had a real job would be a Disaster . . . He has vastly exceeded even my worst case scenario!

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Top Ontario doc says separating vaxxed and unvaxxed best way to get COVID under control

Ontario has had more than 626,000 cases of COVID-19 which has left more than 10,000 people dead.

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One of the ways to bring the COVID-19 pandemic under control is to stop “the mixing of unvaccinated and vaccinated,” says Ontario’s chief medical officer.

“Basic means of protecting individuals is stopping the mixing of unvaccinated and vaccinated,” said Dr. Kieran Moore at a Tuesday press conference.

“And if our cases continue through and after the holidays we would make recommendations of government to continue the certification process in play. But we’ll continue to review the data. We do have a very robust testing strategy in Ontario for the winter months as we’ve released previously. We’ve purchased … 11 million rapid antigen test for all students in Ontario.”

Moore was asked whether COVID-19 is “something we’re just going to have to learn to live with” and whether it would ever go away.

“We have a long ways to go with the World Health Organization and other international organizations to try to decrease the number of individuals in which this virus can mutate and/or spread,” he said.

“But I do see a time when we’ll have low, endemic rates and it will turn out to be like influenza or other winter respiratory viruses where there’s a seasonality to it, where it does have an intermittent impact on our health-care system and like influenza, you need an annual vaccine to protect against it.”

Ontario has had more than 626,000 cases of COVID-19 which has left more than 10,000 people dead.

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Trudeau’s beach denier demoted

Trudeau was photographed twice on a beach in Tofino after deciding to skip the first day of a holiday he created — the National Day of Truth and Reconciliation on September 30.

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The Justin Trudeau spokesman who told reporters the prime minister “wasn’t on a beach” when he was, has been demoted, says Blacklock’s Reporter.

Trudeau was photographed twice on a beach in Tofino after deciding to skip the first day of a holiday he created — the National Day of Truth and Reconciliation on September 30.

Trudeau had promised to “set a higher bar for openness and transparency in government.”

Alex Wellstead will be “taking on new challenges” as press secretary to the industry minister, the Prime Minister’s Office said yesterday.  

Wellstead. Courtesy Twitter

Wellstead in a statement called it “a very difficult decision to make.” He had worked as Trudeau’s official spokesman for 20 months.

Wellstead on September 30 issued misleading statements to conceal the fact Trudeau spent the National Day for Truth and Reconciliation at a beach resort in Tofino, B.C.

“He wasn’t on a beach,” Wellstead told The Canadian Press at the time. Global News and the weekly Chilliwack Progress photographed Trudeau strolling on the beach and enjoying a glass of beer on a beachfront patio.

The Prime Minister’s Office claimed Trudeau was in private meetings in Ottawa. Staff flew an Indian Residential School “survivors’ flag” and issued a solemn statement in Trudeau’s name.

“We remember the children who never made it home,” it said.

Wellstead did not explain his conduct.

“You as a communicator need to understand everything,” Wellstead said in a March 30 interview with public relations students at Sheridan College in Oakville, Ont.

The prime minister in 2015 Ministerial Mandate letters said officials must be truthful and transparent.

“Members of the Parliamentary Press Gallery, indeed all journalists in Canada and abroad, are professionals who by asking necessary questions contribute in an important way to the democratic process,” wrote Trudeau.

“Your professionalism and engagement with them is essential.

“We have committed to set a higher bar for openness and transparency in government. It is time to shine more light on government to ensure it remains focused on the people it serves.

“Government and its information should be open by default. If we want Canadians to trust their government, we need a government that trusts Canadians.

“It is important that we acknowledge mistakes when we make them. Canadians do not expect us to be perfect. They expect us to be honest, open and sincere in our efforts to serve the public interest.”

Trudeau on October 6 apologized for the Tofino holiday.

“Traveling on September 30 was a mistake and I regret it,” the prime minister told reporters.

“What made you decide to take a personal trip on a day your government set aside to honour the victims and survivors of residential schools?” asked a reporter.

“Like I said, it was a mistake,” replied Trudeau.

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Feds threaten regulated businesses with COVID fines

The labour department in a statement said it would rewrite the Canada Labour Code to mandate vaccination for some 955,000 private sector employees in federally regulated sectors like air transportation, banking, broadcasting, grain milling, marine shipping, railways and interprovincial trucking.

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If they don’t mandate vaccination of workers, the Labour department is threatening to levy cash fines against airports, banks, radio stations and other federally-regulated employers, says Blacklock’s Reporter.

But the Liberals stopped short of repeating an earlier threat to strip workers of legal rights to challenge vaccine orders.

“It is time to move on,” said Government House Leader Mark Holland.

“Get vaccinated. That’s what Canadians expect to have happen.

“I think the country understands we have now 90% of Canadians who have had their first injection, over 86% with their second. All workplaces across the country” should promote vaccinations, he added.

The labour department in a statement said it would rewrite the Canada Labour Code to mandate vaccination for some 955,000 private sector employees in federally regulated sectors like air transportation, banking, broadcasting, grain milling, marine shipping, railways and interprovincial trucking.

First Nations businesses will be exempt.

“Employers who do not comply with their obligations under the Canada Labour Code may be subject to compliance and enforcement measures including administrative monetary penalties,” the notice said.

“The government will consult with key stakeholders, including representatives of small and medium-sized employers, as it works expeditiously to finalize the new regulations which would come into force in early 2022. The government will also develop resources to help federally regulated workplaces implement the COVID-19 vaccination requirements.”

The notice made no reference to a liability shield proposed by Prime Minister Justin Trudeau during the election campaign. Trudeau on September 1 said a re-elected Liberal cabinet would shield employers from any legal challenge of vaccination orders.

“We’ll stand firm on our commitment,” said Trudeau, adding: “We’ll protect businesses that mandate vaccinations from unjustified lawsuits.”

Canadians who declined a COVID-19 shot were “more than just wrong, because everyone’s entitled to their opinion, they are putting at risk their own kids and they’re putting at risk our kids as well,” said Trudeau.

“What about my choice to keep my kids safe? What about our choices to make sure we’re getting through this pandemic as quickly as we can?”

The Liberal Party in its September 1 campaign platform stated: “A re-elected Liberal government will table legislation to ensure every business and organization that decides to require proof of vaccination from employees and customers can do so without fear of a legal challenge.”

Compulsory vaccination breaches federal law, according to a May 19 statement by Privacy Commissioner Daniel Therrien and 1996 National Immunization Report by the Department of Health.

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