Mini Budget Misses What Matters Most

This week in Ottawa, the federal Liberal government announced the “fall fiscal update.” In recent years, this update has evolved from a mere fiscal update to a ‘mini-budget’ where the government makes political announcements about programs and spending.
The spending has once again increased, as evidenced by the numbers.

For example, deficits for the fiscal year 2024-25 and the following fiscal year 2025-26 are expected to be higher than forecasted.

The revised 2024-25 and 2025-26 deficits are now $38.4 billion and $38.3 billion, respectively. The original forecasts were $35.0 billion in 2024-25 and $26.8 billion in 2025-26.
In other words, the original forecast was an attempt to reduce spending. However, as is often the case with the Trudeau Liberal government, spending consistently increases.

What is also interesting is that, although this budget update mentions “more housing” multiple times, in reality, a significant portion of this spending is only being announced today for programs that are still years away.
A few examples of this include $15 billion in new loan funding for an apartment construction program. However, that program will not be available until fiscal year 2025-26.

Similarly, there is an additional commitment to allocate $1 billion over three years for what the Liberals call an “Affordable Housing Fund” for non-profit, co-op, and public housing. However, this funding will not begin until the fiscal year 2025-26.
I mention the program implementation dates because the next fixed federal election date is October 25, 2025. Many of these announcements are intended to sound like the government is taking action today. In reality, they will be part of an election budget in an election year.
Apart from the future spending mentioned in this mini-budget, there is no discussion about the impact of that spending on Canadians.

According to a report by Scotiabank last week, approximately 42% of the Bank of Canada’s 475 basis points increase is attributed to increased government spending.
To clarify, this does not solely refer to federal government spending. It encompasses spending at all levels of government.
Unsurprisingly, the Scotiabank report states, and I quote, “Overall, our results suggest fiscal policy at all levels of government has been poorly calibrated from an inflation management perspective.”
Many Canadians are burdened with mortgage payments or rent they cannot afford. Similarly, there is a comparable situation with lines of credit, credit cards, and other loans.

And yet, despite the affordability crisis, the Trudeau Liberal government, which recently exempted home heating oil from the federal carbon tax, still intends to quadruple the carbon tax by 2030 on other home heating fuels such as natural gas and propane.
While the carbon tax in British Columbia is a provincial policy, the current NDP government intends to continue implementing it.
This week’s question is: Do you agree with Scotiabank’s statement suggesting that “fiscal policy at all levels of government has been poorly calibrated from an inflation management perspective”? Why or why not?
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