Canadian Governments Have Failed to Slay the Real Deficit We Face

This week, we saw a tale of two budgets.

The federal Conservative budget was all about cutting taxes.

The Ontario Liberal budget was all about investing in transit.

Both governments created deficits as part of the global stimulus effort during the Great Recession.

In their budget, the Harper Conservatives cut and scrapped and blew the deficit down. Well, sort of: they slashed contingency fees and programs to do it.

In their budget, the Wynne Liberals made a small dent in their deficit. Instead, where they made cuts -- such as selling off shares in Hydro One (albeit that the government will still maintain a de facto majority) -- they funnelled those savings back into transit projects.

Let's look at transit, just as an example, because it really illuminates the differences between the two governments.

Stephen Harper is cutting some $3 billion from infrastructure funding for the next two or three years, before slowly putting some of that money back in, adding up to a total of $1 billion for transit by 2019. So, overall, that's still in the neighbourhood of a $2-billion cut compared to what the government spent in 2010, but the Conservatives (as they often do) touted it as largesse.

Kathleen Wynne, on the other hand, will invest an additional $49.8 billion into transit over the next decade in the Greater Toronto Area alone.

In my hometown of Mississauga, the contrast is clearest: the Wynne Liberals announced this week that they would entirely fund a $1.6 billion regional LRT line from Port Credit to Brampton.

Yes, one project funded by the Ontario government is worth more than the federal government's entire transit fund for the entire country. (My mother was very happy.)

Those on the right -- like the Canadian Tax Haters' Coalition (sorry, I mean Taxpayers) -- applauded the Harper government for cutting taxes, even if most of those taxes favour the rich, and were afforded only by cutting things like healthcare ($36 billion less over the next decade than the Health Accord guranteed), infrastructure as previously mentioned, veterans' services (for shame) and pensions (raising the retirement age will cost an average senior $28,000).

That same Tax Haters' Coalition condemned the Wynne Liberals for "runaway spending" and not balancing their books.

Their shortsightedness is appalling.

Here's the final point I want to make: not all deficits are bad.

Thanks to former Prime Minister Paul Martin, I think we've all been conditioned to think that balanced budgets are very good things. In general, they are. And, even speaking as a Liberal, Ontario's debt-to-GDP ratio is getting worrisome. We should balance the budget by 2017-18 as the Finance Minister maintains he will.

But that doesn't mean it is prudent or even smart to slash and scrap into a surplus like Harper has done.

Because there is a real menace out there: there is another deficit we face, one more alarming than the deficit we face on paper, since interest rates have never been lower in memory.

Canada's infrastructure deficit is estimated at nearly $400 billion -- and growing.

That's scary.

The proof is clear: commutes take longer than ever, there's no seats on Toronto subways, even buses are snarled in traffic. Successive governments have failed to slay the real deficit we face, the infrastructure one.

By cutting infrastructure before giving less money across the whole country than Ontario gave for one LRT line, the Harper Conservatives have clearly displayed their economic myopia.

The infrastructure deficit will cripple this country. A modest federal deficit when we face very, very low interest rates could have been used to make a dent in that infrastructure deficit.

In that sense, Premier Wynne's budget, for all the condemnation from the right, makes far more sense.

Besides working to cut our infrastructure deficit and commute times, transit spending makes plain economic sense. For every $1 invested into transit projects we see a $3 return of economic output.

So yes, it was a tale of two budgets: It was the best of times at Queen's Park, it was the worst of times in Ottawa, it was the age of wisdom, it was the age of foolishness...
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Original Article
Source: huffingtonpost.ca/
Author: Jonathan Crombie