Can Chrystia Freeland write a Liberal budget that announces nothing?

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In the making of Liberal budgets, there is always room for more. That isn’t just a byproduct of the budget process, it’s the point. There has to be more spending to announce. That’s what a budget is for.

This has been so from the very first budget under Prime Minister Justin Trudeau, in 2016, which told Canadians the economy had turned worse so there’d be bigger deficits for years to come. And it was true right through last year’s budget, when, after the pile-up of pandemic debt and a commitment to additional health care transfers, it was deemed necessary to pour tens of billions into green industry.

But now things really do look different. The costs of servicing the debt are now crowding out the ability to pay for things Canadians want now or for the future.

That raises a problem for Finance Minister Chrystia Freeland: Can she write a Liberal budget that announces nothing?

Nothing, that is, in the sense of substantial new government spending.

There will have to be some costs booked for the pharmacare pilot program agreed upon with the NDP, though most of those expenses are to start in 2025. And budget books can always be filled with announcements about regulation, or deregulation, or policy initiatives to come, or reviews to be conducted.

But Liberal budgets are about spending announcements. Can Ms. Freeland resist the urge to scratch the Liberal itch to spend? Can she avoid announcing a shiny new program? Or offering benefits or breaks to hard-hit and/or politically important constituencies?

Ms. Freeland’s fall economic statement, delivered in November, didn’t include a lot of new spending announcements – although many had been made in the months prior. The numbers in that statement gave plenty of reasons for a pause in the parade of spending announcements.

The cost of servicing the national debt has gone up to $46.5-billion this year from $35-billion in the 2022-23 fiscal year, and it is projected to rise to $52.4-billion next year. That was a function of higher debt and higher interest rates, and even if rates ease off in the next year, the cost of servicing the debt is still expected to tick up.

That means a smaller percentage of taxpayer money can be spent on transfers for things such as health care or government programs, from transportation to the military – or more debt has to be added.

While Ms. Freeland promises “a good middle-class life for the next generation,“ economist Don Drummond believes the next generation is being saddled with debt. In the meantime, Canadians are already paying more for past consumption.

There’s certainly no reason to use deficit spending to stimulate the economy, said Mr. Drummond, the Stauffer-Dunning Fellow at Queen’s University and a former senior official in the Finance Department. Overall supply and demand are roughly balanced, so the economy doesn’t need the boost. More spending would be inflationary. There is no economic reason to run deficits right now.

Ms. Freeland has already promised that her April budget will meet the targets she set out in November, which include a gradual decline in the debt-to-GDP ratio. But Mr. Drummond argues the government is already operating on rosy projections and ignoring the risk that unforeseen circumstances could balloon the debt again. “Rather than a hope and a prayer that everything will work out by 2055, they should act upon it,” he said.

All that argues for a pause in new spending announcements. But no finance minister in Mr. Trudeau’s government has delivered a budget like that.

Making room for more spending has been part of Mr. Trudeau’s political identity all along. He won the 2015 election by saying he would break with the existing balanced budget religion and run deficits. If the deficit was running below projections, it was seen as extra room to spend.

Spending announcements are, in effect, the product. The Liberals have framed their criticism of Conservative Leader Pierre Poilievre around his promises to cut spending – allegedly harshly – and drawn themselves by contrast. It is almost hard to imagine the Liberals doing politics without more spending. And more.

However, there is also an argument to be made that there aren’t a lot of political points to be won with spending in Ms. Freeland’s 2024 budget. The Liberals are way behind in polls and finding their credibility with the public low. Trying to rebuild it without a whack of new spending might be a better political plan.

That just hasn’t been in the Liberal DNA. Can Ms. Freeland bravely announce nothing?