The former TD Bank chief economist pulled no punches in his press conference: “This is pretty much unprecedented in post-war Canadian history. It is very daunting. Lots of governments have had it tough for two to three years. But then there was a reprieve. There is no reprieve here,” he said, pointing to low growth rates as far as the eye can see.
The report said the slow decline of Ontario’s manufacturing sector is partly to blame for the malaise that will see the deficit double and net debt rise to 50% of GDP by 2017/18. But it did not gloss over the culpability of a Liberal government that has failed to keep spending in line with revenue growth.
There it is folks. The first government that has actually put forward the truth and demanded that mathematics be honored.
My hat is off to Mr. Drummond. He stands alone among those who claim to be economists in that he does not put forward nonsense that flies in the face of fundamental mathematics. Rather, he has identified the problem (government spending more than it is willing or able to tax) and has therefore called for a cessation of the spiral into insolvency that inevitably follows if one does not cut that crap out!
Yet even so, even with Canada having a projected debt-to-GDP of just 50% by 2017, to arrest the acceleration per-capita government spending in real terms must be cut by 16% by that date!
The fact is that Canadian politicians, like those in Europe and the US, lied to the voters. This was not an accident and it is not an accident now. These individuals and government agencies knew damn well that what they were promising could not be funded, but they made the promises anyway.
Nonetheless one must applaud Canada for putting into stark relief that which must be done.
Now let’s see them implement it.