Conservative leadership candidate Pierre Poilievre said on Wednesday that if elected, he would introduce new legislation that would force the federal government to offset every dollar of new spending with a cut in something else, a program he calls “pay according to consumption “. “budget approach.
Poilievre’s plan is basically to limit federal spending so that it is not much higher than it is now. The legislation, if passed, would require the government to find money for new measures within existing budgets, rather than increase debt and taxes to cover new costs.
The Conservative MP’s campaign said there would be exemptions for spending related to “national emergencies such as wars, pandemics and natural disasters”. He also said that “increases in previously budgeted spending,” such as the annual increase in Canada’s health transfer and increases in military spending, would be exempt.
As it stands, the Poilievre campaign said, “there is no incentive for anyone in the government to eliminate failed or wasteful programs.”
“In return, ministers could not introduce new programs without getting rid of old ones, they would have to look for waste that would otherwise be stolen from taxpayers in perpetuity,” the campaign said in a background document. sent to journalists.
Poilievre has blamed the Liberal government’s high-spending budgets for inflation, a charge the government has rejected, saying the COVID-19 pandemic and the war in Ukraine are largely to blame for recent price spikes.
Inflation is rising
Canada’s inflation rate has risen rapidly. According to data released Wednesday by Statistics Canada, the global inflation rate reached 7.7% in May, an increase driven largely by a massive rise in the price of gasoline over the past year.
The government has defended its COVID-related spending, saying it helped the country avoid economic ruin during the worst of the pandemic.
“The cost of government is increasing the cost of living,” Poilievre said in a statement. “Half a trillion dollars of inflationary deficits have raised the cost of goods and inflationary taxes have raised the costs for companies that manufacture these goods. Why are deficits and taxes so high? To finance colossal increases in spending.” .
Gasoline is shown at more than $ 2 a liter at a Vancouver gas station. Conservative leadership candidate Pierre Poilievre blamed the federal government’s spending on inflation, while the Liberal government maintains that COVID-19 and the war in Ukraine are largely responsible for rising prices. (Ben Nelms / CBC)
Poilievre said many families and businesses are already following a pay-as-you-go approach when it comes to drawing up their budgets, and so should the federal government.
“When they spend more on one thing, they spend less on another. A family budget can afford a $ 2,000 vacation or a $ 2,000 renovation. Not both. They have to choose,” Poilievre said.
Ideas on tax liability
Kevin Page, a former parliamentary budget officer (PBO) and expert on federal tax issues, said it is difficult to compare government spending with what Canadians do each month with their own checkbooks.
The federal government’s fiscal firepower does not compare to the average Canadian household, he said.
“There are limits to good comparisons of government and household budgets. Governments address broad public good issues with different time perspectives and may borrow money. [at much lower rates] than private households, “Page told CBC News.
He said that any remuneration program should be flexible to take into account changes in the economy, and that there should be savings for spending on capital goods, such as large infrastructure projects, because they represent “much higher returns for the future”. generations ”.
“In general, many economists are concerned about the deficit bias in governments and therefore encourage them to hear about spending rules,” Page said, referring to the tendency of governments to allow deficit and debt levels. audience increase continuously.
“It’s a good thing that Conservative leaders are coming up with ideas on fiscal responsibility,” he said.
For the past three decades, the U.S. Congress has had a pay-as-you-go approach to using the budget at different times. The program was successful in the 1990s when the U.S. eliminated its deficit after looking for a combination of tax increases and spending cuts.
But the rule has been regularly ignored by lawmakers, with Republicans pushing for uncompensated tax cuts and Democrats introducing new social programs without changes to other so-called “rights” programs such as pensions and health care for the elderly. .