FINA Committee Report

CPC Dissenting Report

FINA Pre-Budget Consultations

March 18, 2022

Discussion

The pre-budget consultations held by the Standing Committee on Finance for the anticipated 2022 federal government budget were delayed & abridged because of an unnecessary federal election called in the fall of 2021. As a result, many Canadians have not yet had an opportunity to have their say on whether they want to see their federal government spend even more or whether they would like to see their government live within its means.

Of those who did contribute to the pre-consultation process, more than 500 briefs and witnesses advanced untold billions of dollars in new spending requests, the vast majority of which were uncritically adopted by the Liberal, Bloc and NDP members with no independent analysis or study of their implications for taxpayers. It quickly became apparent that, rather than being a process that critically examines proposed expenditures to determine value for money and their contribution to economic growth, these consultations were all about perpetuating the federal government’s proclivity to spend, spend, spend.

Of particular concern is the fact that the consultation process failed to include a process under which the hundreds of spending requests could be prioritized and placed within the context of the government’s immensely challenging fiscal environment. There was no opportunity to have the Parliamentary Budget Officer cost the largest spending “asks”; neither was there a costing analysis for the dozens of spending requests that had no dollar amounts attached to them but that would almost certainly result in billions of dollars of additional pressure on Canada’s fiscal framework.

For all of those reasons, Conservative members of the committee declined to participate in putting forward recommendations, fully expecting that there would be no opportunity to deliver a consensus report on these consultations.

Recommending billions of dollars of new budgetary spending isn’t unique to this report. What should be of concern is what’s not in the report:

• There is no plan to balance the budget, only a vague request in Recommendation 1 for the government to deliver such a plan. Curiously, Recommendation 2 then requests that the government double down on its current fiscal anchor, which assures that the government will not balance its budget.
• There is no plan to control spending. The Report is devoid of any plan or even any serious discussion about the need to discipline and rein in spending, let alone a commitment to ensure spending is targeted and designed to get the best value for taxpayers. Instead, there is simply recommendation after recommendation to spend more.
• Of grave concern to Conservative members is the lack of attention paid in this Report to supporting growth and prosperity. Our country simply cannot sustain and improve its current level of government services unless our economy generates the wealth needed to pay for it. There are almost no recommendations to improve the investment environment in Canada; to stimulate the innovation sector; to remove internal trade barriers; to undertake comprehensive tax reform; and to generally establish a more competitive investment environment.
• Similarly, the Report remains devoid of any significant proposals to attack the most immediate threat to Canadian prosperity, namely soaring inflation and the skyrocketing cost of housing. With adjusted inflation currently running at a 30-year high of 5.7%, tackling the affordability crisis should be a priority for the federal government.

• “On inflation, it was entirely appropriate for fiscal and monetary authorities to take an aggressive stance when the pandemic first hit. We saw much success in this regard. However, here and around the globe, these stimulative policies have continued long after the recession has ended, and the result, not surprisingly, is inflation well above comfortable levels for inflation-targeting central banks,” Jeremy Kronick from the CD Howe Institute told the committee.
• Nowhere does the report question whether the Finance Minister’s “guardrails” around stimulus spending were triggered and the rationale for continuing to inject stimulus into an economy that has fully recovered and is now generating record inflation levels. The government’s upcoming budget must address the growing affordability crisis which threatens so many Canadian families and individuals.

While there was, understandably, limited testimony relating to the unfolding geo-political crises in the Ukraine and elsewhere, the upcoming federal budget must build in contingencies that take into account these serious challenges to Canadian prosperity and security.

In conclusion, this pre-budget consultation report does not responsibly address and support the economic growth & prosperity that Canadians have come to expect. By uncritically adopting more than 200 spending recommendations costing taxpayers hundreds of billions of dollars, Liberal, Bloc and NDP members of this committee are ignoring the inflationary pressures and affordability crisis that such recommendations, if accepted and incorporated into the 2022 Budget, would exacerbate. Similarly, the Committee’s failure to engage in a spending prioritization exercise and to make choices based on the government’s ability to sustain such spending within a defensible fiscal plan fails future generations of Canadians who will be saddled with the massive debt that is being left behind for them to repay. And without a realistic economic growth and competitiveness plan, Canada will be left without the tax revenues to sustain the public services that Canadians have come to expect from their government.

For all of these reasons, Conservatives cannot support the recommendations in this report.