OTTAWA — Prime MInister Mark Carney must look to the past — but not the recent past — if he wants to improve the living standards of Canadians.
That’s the conclusion of a new study released Tuesday by the Fraser Institute , saying that Carney needs to steer clear of the fiscal path blazed by his immediate predecessor.
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“If the goal is to improve the living standards and general prosperity of Canadians, the Carney government should follow a different fiscal path than the Trudeau government, and emulate the Chretien government by lowering government spending, balancing the budget, and reducing government debt,” said study co-author Jake Fuss, who is also the Fraser Institute’s director of fiscal studies.
Chretien years strong, Trudeau years weak
The study analyzes and compares government spending, budgetary balances and debt accumulation of the (nearly) decade-long Jean Chretien, Stephen Harper, and Justin Trudeau governments — concluding that the Chretien years were among Canada’s strongest economically, an era of balanced budgets, reduced government spending and falling government debt.
The Trudeau decade, however, saw the highest levels of government spending, the largest deficits and the highest level of debt accumulation.
Chretien, who served as PM from 1993 until 2003, oversaw seven surplus budgets and three deficits.
In contrast, very single one of Trudeau’s nine budgets were deficits.
“The Carney government has inherited considerable fiscal and economic challenges from its predecessor,” read the study.
“An increasingly burdensome federal debt load, little to no recent improvement in individual living standards, and a collapse in business investment — that must be addressed if the government is to fulfil its promise of greater prosperity.”
The study also took into account how each government handled a major economic disruption.
“Multiple studies have shown that the Trudeau government’s response to the COVID-19 pandemic and recession was rife with problems that limited its effectiveness at promoting economic growth, and which exacerbated the massive fiscal impact of the disruptions,” the study read.
“In other words, the Trudeau government’s costly, poorly targeted, and somewhat ineffective response to the pandemic/recession is an important part of its overall fiscal and economic record, and thus should not be excluded from this analysis.”
Carney needs to return to days of balanced budgets, low spending
When examining each government’s inflation-adjusted averages of annual change in program spending per person, Chretien’s fell 0.3% across his 10 years, while Harper’s increased by 1.8%, and Trudeau grew by 5%.
The average annual budgetary balance per person, adjusted for inflation, was only $115 during the Chretien years, $545 during the Harper years, and $2,136 for Trudeau.
Study co-author Grady Munro said the study shows what Carney needs to strive towards securing future Canadian prosperity.
“It’s clear from the Chretien years that lower levels of government spending, balanced budgets, and declining government debt are critical foundations for stronger economic performance in Canada’s future,” he said.