Government overspending cited as a concern of upcoming fiscal update

All right for more on what to expect from tomorrow’s fall economic statement I’m joined by Goldie Haider he is the president and CEO of the Business Council of Canada Goldie always good to see you again likewise good seeing you I I I heard Karina say critics worried

About the deficit and here you are uh what do you want to see from the government on the fiscal track there you’ve called for them to be more serious on their spending and and come up with a new fiscal anchor what are you hoping to see yeah we’re very concerned

That um you know there’s only two sides to The Ledger there’s a spending side and there’s the uh the revenue side and we’re seeing runaway spending this is a government that has to up it spending every 6 months because it blows through its spending and the reason is they they

Had a path they were showing us a path to balance they were showing us a form of fiscal anchor we didn’t agree with the method that they chose a debt to GDP ratio we would prefer to see 10% of your boring cost should be the maximum amount that you’re spending out of your

Revenues on that that will force you to make choices are we going to see that probably not we’re going to see more spending and this is very concerning because the truth is the programs that they think they’re putting into for people are jeopardized if we don’t get

The fiscal framework right it leads to Cuts so the promises don’t get materialized what’s the point so so the debt servicing anchor like so 10 cents on the dollar no more known that we think that would be helpful we think showing us a path to balance and why is this David is because

Of the fundamentals the fundamentals are what we’re seeing uh an economic slowdown so the revenues are going to drop inflation remains persistent over 3.8% still which is still almost twice what what’s there we heard the scoti bank uh uh come out with a report we heard Governor mlin say on numerous

Occasions uh spending by govern is actually inflationary and it is a is a part of the problem and we’ve got to we’ve got to address the the recession issue here we’ve got to prepare for that and I just don’t think the government’s prepared to do that well the the Scotia

Bank report which I’ve read I mean it’s actually provincial governments who are the biggest piece of that like they’re they’re they’re I mean the covid spending was a big part of that’s my use of the word governments yes I know I got you a lot of people hear that and they

Think right it’s even municipalities too so you know ahead of the cabinet Retreat you you wrote to the Prime Minister argument that the domestic economy was start starting to feel the weight of high interest rates and inflation since then we’ve seen growth numbers revise downwards going into this period of sort

Of low growth uncertainty but with inflation sticky I mean where do you think we are now is it getting better is it getting worse you see a path out of the the the challenges well look everybody talks about this so-called soft landing and you know I’m no

Economist but it seems to be a very difficult thing to do we may well be in a recession they usually for they’re usually confirmed after you’re into one we may well be into one certainly there’s an expectation that’s that there is an inevitability this acknowledging that it’s been like that for quite some

Time so you got to prepare for that uh if we’re going to do runaway spending if we’re not going to have revenues up if our borrowing costs are going to go up we run the risk of a downgrade if there’s one thing I think people need to understand even they don’t think about

It if the United States of America who has been downgraded and recently changed from a stable to a negative outlook by another rating agency if that were to happen to Canada the borrowing costs go up those borrowing costs go up we only have so much money so it’s going to have

To be cut from somewhere and so those very programs that may be necessary I’m not quite questioning the value of affordability issues or or or or housing what I am saying is we’ve been warning you consistently that this day will come and yet we spent and spent and spent and

Now when we may really need to do it it’s going to be really difficult to do right you talk about runaway spending here I think what we see in the US is a whole other category we don’t have the C Congress we are not the US dollar

Totally get it we’re not the reserve currency of the world but also the way that Congress operates resolutions I got you so so what do you do to get rid of like a lot of the money we’re spending uh the new spending certainly in most recent budget is on

The green transition which I believe you support a lot of it’s subsidies to businesses right do you cut that where do you go yeah look um a number of announcements were made previously under a different fiscal framework that they at least put out there saying here this

We’re budgeting this uh we were actually saying in the last budget the best way to address these issues is growth we have no growth strategy let’s work on growth the IRA forced countries around the world Canada is just one of them you either play or you pay right in some

Cases you pay to play um we’re doing that I acknowledge the efforts of the government frankly exceed my own expectations and the expectations I think the business community of what it is that they’re prepared to do what the government has is an implementation problem and we need to implement we need

To do so with greater urgency we’re waiting now for over 18 months from a report that the Prime Minister said he had commissioned effectively saying how are we going to ensure uh regulatory permitting and and uh so permitting uh projects to expedite uh projects in our national interest to help our allies

Decarbonized a priority of the government a priority of the business Community but we’re still waiting but in the short term the The Runaway spending line that you’ve used I mean give me give me some examples of that like what do you think you would like to see Chris

Freel say I I mean there’s talks about consultants and travel and stuff but those are kind of at the mar I don’t get I don’t get to do the autopsy uh on the budget or the fiscal framework but what I’m saying is let’s just look back you

Have a body of evidence here over the last three four five years certainly over the last two three years when she’s been I think two years that she’s been Minister having done more your forecasts are made and 6 months later they’re gone we used to be in an era you’ve been in

This town a long time it’s a 5-year forecast you may miss year three or four or five but you don’t miss 6 months what that suggests is a difficulty in saying no and we have to say no and we have to make choices and also we’re not growing

Our economy the greatest asset of this country is our human resources and our natural resources we should be leveraging those to the fullest to grow our economy I I I I I I agree that we’ve seen changes from say a March budget to a November fiscal update but the last

Five years have been unlike kind of any other I would give I’m not talking about Co I’m saying from once you’ve had to put your house in order I’m not the one saying this this is being reported all the time every 6 months somehow the forecasts are oops it’s 10 billion it’s

Five billion it’s almost like a billion doesn’t mean anything anymore yes it’s the new million uh but I wonder Goldie like if if if you believe what we’re hearing right all indications there are is that it’s going to be more of a return to form or at

Least a step towards a return to form clearly there’s an urgent need to do something on housing politically economically and just from a policy perspective I I mean what do you expect to see tomorrow what are the consequences of them not getting to sort of a a more balanced sort of not a

Balanced budget but a balanced approach to doing the finances we think they could send a really strong signal by recognizing the fundamentals of sound fiscal policy and having a fiscal anchor the the the the walking away from a fiscal anchor even if it’s not the one I prefer in the debt

To GDP ratio the walking away of a path to balance says to markets hey if you come here you are exposing yourself to higher taxes not just as a corporation as an individual because people aren’t stupid they know there’s only two sides to L Ledger someone has to pay we need

To send a stronger signal for investment to occur not just by Foreign companies getting subsidies by Canadian companies to say stay here I believe there’s a there’s a real opportunity for Canada here we are one of the gems of the world when it comes to natural resources and

Our human resources we’re blessed to be the neighbor of the G1 we have access to 1.5 billion people in our trade agreements we have the cleanest electricity grade we have Ingenuity we have academic programs all of that let’s leverage that in partnership with government I don’t see evidence of that

Happening the IRA response policies haven’t done that in your well they haven’t done anything there not even a website that’s my point so if you have a spending problem and an implementation problem you know what it leads to you have a credibility problem gotcha all right goalie thank you so much this

Goldie heider the president and CEO of the Business Council of Canada

Ahead of the federal government’s fall economic update Tuesday, Power and Politics speaks to Goldy Hyder, president and CEO of the Business Council of Canada, about his concerns over government overspending.

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