Municipal Election Announcement

Hi everyone,

Scott de Lange Boom here with a special announcement.

I will be running for Vancouver City Council and will be seeking the NPA’s nomination. I wanted to give our loyal listeners the news first. It is because of our listeners and patreon supporters that this show has been so successful and exceeded both Ian’s and my expectations. A big heartfelt thank you to everyone.

Vancouver is facing significant challenges. We have an unprecedented housing crisis, our transportation infrastructure is overburdened and insufficient and everyday the business close down and people move away due to the high cost of being in Vancouver. In the face of these challenges, I felt I could no longer just comment from the sidelines, I needed to get involved and work to bring about the change Vancouver needs. I look forward, over the next coming weeks and months, to releasing a detailed plan for accomplishing that.

It is going to be long and difficult road between now and the election in October. But I intend to keep on with the podcast. You, our listeners have been incredible and I have no intention of letting you down. How we are going to deal with the election is a matter Ian and I are still discussing. The last thing I want is to turn PolitiCoast into the “Get Scott Elected Podcast”, that is not why you listen to us. If you have any thoughts on the matter, please let us know.

Vancouver needs new leadership. And a city council that isn’t just going to pass the buck and play the blame game with the province but will instead use every tool available to address the housing crisis. I can’t do this alone. If you want to help, the most important thing you can do right now is join the NPA to vote in the nominations. If you want to volunteer or donate you can go to to find out more.

Vancouver Byelection Thoughts

Today is the byelection to fill the seat vacated by Geoff Meggs, and to elect an entire school board after the last one was unceremoniously fired by the provincial government. I gave some of my thoughts on Episode 56 of the podcast, but wanted to put a few more thoughts down about the byelection. I am going to focus on the council seat because I have not followed the school board election closely. This post is going to focus on the main candidates. While there is a lot I like in Damian Murphy’s response to Abundant Housing Vancouver’s questionnaire, at the end of the day, he and the other independent candidates, save one, have a near zero  chance of getting elected.

As with most of the coverage and discussions of the byelection, I place housing at the top of the list of principal issues. Which isn’t to say that some other issue couldn’t be the tie breaker between two candidates, only that housing accounts for about 98% of my decision matrix. At least as far as this election goes, I am more or less a single issue voter. The other criteria I am looking at is whether candidates propose policies that are actually within the city council’s jurisdiction to enact. A candidate wins no points from me for proposing something the city council can not do. The election campaign is effectively an extended job interview. I wouldn’t hire someone who showed up to job interview not knowing what the job is, and I am not going to vote for someone who doesn’t seem to know what the role of the city councilor is. Jean Swanson, for example, is running on a housing platform that requires provincial legislation for every headline item (rent freeze, mansion tax). If Jean Swanson wants to change the provincial laws she should run for MLA. I am looking for someone to govern the city and vote on city matters at council.

Jean Swanson has done a surprising good job at shaping the debate in this election for an independent candidate. Part of that is she has the support of the leftist COPE and the other part is solid campaigning by her and her team. The campaign appears well organized and Jean Swanson is always on message. Swanson’s signature policy is a rent freeze, which is little more than rebranded rent control. Although the policy calls for it to be in effect for four years and

Jean Swanson’s response to Coalition of Vancouver Neighborhoods questionnaire

reviewed at the end of that period, I would bet every cent I would earn in those four years that she would push for it to be extended. It is her support for rent control that is a big red line for me. Rent control has been shown time and time again decrease the quantity and the quality of available rental units. With the acute rental shortage and rock bottom vacancy rates, such a measure would only exacerbate the problems in the rental market. Jean Swanson’s rent control policies would privilege incumbent renters at the expense of new renters who must compete for the increasingly scarce rental units. Swanson also supports a neighbourhood veto over development, which ironically would further privilege the rich mansion owners she has railed against. Between rent control, opposition to denser development in single family neighborhoods and supporting further empowering NIMBYs I believe Jean Swanson’s policies would be a disaster for housing in this city.

Running on a somewhat similar progressive brand is One City’s Judy Graves. But while the progressive brand and marketing may be similar, there are major policy differences. Notably Judy Graves supports city wide zoning changes to allow apartments in all neighborhoods. This is a stand out, winning policy for me and Judy Graves gets a big kudos for it. A major contributing factor to the housing problems in this city is the atrocious land use policies of the City of Vancouver that reserve the vast majority of the land for expensive, low density, single family homes. It is literately illegal to build an apartment building in most of Vancouver. I do have some reservations about some of her policies. Expanding inclusionary zoning is major part of the platform but I am not sold on it’s effectiveness. And there is the previously mention provincial jurisdiction issue when it comes to the progressive property tax Graves is proposing. And perhaps most troubling is the One City has been less than clear on where they stand on rent control. At the West End Housing and Homelessness Forum Graves said she did not think a rent freeze would work but her response to the Vancouver Tenants Union questionnaire was more favourable to it. Over all Judy Graves has a really solid housing platform and everyone, especially those left of center should give her a serious look when deciding who to vote for.

I don’t have much to say about Diego Cardona, running for Vision. They have been running the city for nearly ten years now and have failed to adequately respond to the housing crisis. They have been slow to respond and what they have done has been too little too late. Even their much vaunted Cambie Corridor plan still reserves areas within walking distance of the Canada Line for single family houses. And that whole unambitious plan is only finally happening eight years after the Canada Line opened. I do sort of like Diego’s new six unit “Vancouver special” but there is simply no way Vision will have my vote.

Pete Fry is probably the most knowledgeable and articulate of the candidates but has the major downside of running for the Greens on the Green’s platform. The Greens are the most NIMBY friendly party out there. They opposed the Broadway subway extension over concerns it would spur too much development and they want to spend public dollars to empower neighborhood groups to throw yet another monkey wrench into the already way to difficult process of building desperately needed homes. Experience from other cities has shown these local groups rather than help plan better, help plan to exclude new housing and new residents. Seattle is getting rid of their equivalent city funded neighborhood groups, in part because of the recognition of how they privilege incumbent voices and are used to exclude new comers to the neighborhood. And Carr is by far my least favourite councilor. I once heard her complain that a project wouldn’t have enough parking. I am not sure what she was smoking to make her think more parking was green. Pete Fry seems like a smart guy, probably the smartest of all the candidates, but as long as he supports Carr and the NIMBYs there is no way I will ever vote for him.

Finally, is Hector “The Connector” Bremner of the NPA. He is more or less running on a YIMBY platform, calling for widespread upzoning to allow more homes in all the neighbourhoods in the city, which is music to my ears. As mentioned above the city has horrible land use patters that greatly contribute to its housing problems. Not only does zoning create housing shortages but Vision’s policy of spot upzoning adds cost, uncertainty and delays to building new homes. It fuels speculation as people rush to capitalize on spot rezonings and the discretionary nature of it hurts public trust and fuels perceptions of corruption and city hall being in the pocket of developers. Bermner’s proposal would ameliorate those issues. Permitting delays are an often-ignored problem that Bremner is also campaigning on fixing. It can take 2 or more years to get a permit to build approved, especially if rezoning is involved. Right now, if you were to be gifted an empty lot and the money to build below market housing for those in need, it would be two years before the first shovel would hit the ground, then months of construction time. That is two years of paying property taxes, and project managers to push the paperwork through the city government. All of which are real costs that add up and make new housing more expensive and squeeze out the small scale builders and less profitable projects. Supply problems are not the only factor at work in Vancouver’s increasingly out of control housing market, but they are the main one the city government has control over. Hector gets points from me for focusing entirely on what is in the city’s control.

At the same time, there are certainly things to criticize about Hector Bremner. Dodging questions during the West End Housing Forum about the BC Liberal’s record on housing, after having brought up his time in the Housing Minister’s office, was definitely a low point. And his view that if we just improved consultations, people would be on board with development, is naive at best. Time and time again people show up to consultations to complain about the most mundane and minor points, regardless of the merits of the project. That is not unexpected. The costs of a project are visible and concentrated among a small group of neighbours, who have an understandable incentive to oppose a new building next door, while the benefits are dispersed among the city in the form of lower real estate prices, and for those with a concentrated benefit, ie those who will live in the new building likely don’t even know who they are, so won’t show up to support the building. All of this creates a major status quo, anti-development bias in any consultation. The NPA has a mixed history with densification. Former Mayor Sam Sullivan proposed Eco-density before he left office but the current NPA councilors are not as pro more housing as Bremner and it remains to be seen if this is a genuine change of direction for the party or a blip before returning to old ways. And personally, there is something that rubs me the wrong way about Bremner, which I think is the slightly too polished, not entirely genuine slick politician persona. However, all things considered, the excellent platform does overcome those reservations.

The most striking aspect of this byelection, is how the debate has shifted. On one side Jean Swanson has been successful at making a rent freeze a major campaign issue. On the other almost all candidates, including the NIMBYist Greens, have at least paid lip service to upzoning and expanding the housing stock, with several going as far as to propose some of the widest spread changes since Vancouver adopted Euclidean zoning. Overall the positions taken by the candidates were good and present several options for those looking for a pro-housing candidate to vote for. Jean Swanson’s rent control and Pete Fry’s placation of NIMBYs exclude them from consideration, for who I will be voting for. Diego Cardona would be okay, if not for the massive weight around his neck that is Vision Vancouver and their lackluster record. Hector Bremner and Judy Graves both have excellent pro housing platforms. While I didn’t mention them Mary Jean Dunsdon and Damian Murphy have staked out similar positions. I would encourage anyone who cares about housing in this election to give Bremner and Graves serious consideration. For me personally, Bremner’s platform over comes my reservations about him and just barely edges out Judy Grave’s excellent, if not for the ambiguity over rent control, platform.

I am about to head out to vote, I encourage you to do the same.

My CPC Leadership Ballot

On Tuesday night at our PolitiCoast Election Night Party and Politics Pub night (which was a lot of fun and everyone reading this should definitely come out to the next one), several people asked how I was going to be voting. I have also been asked by a few people who are new members to the party and aren’t familiar with entire clown car of a candidates list, to give my thoughts on who is running and offer my suggestions on a ranking. And that is understandable, I run a politics podcast and occasional blog and I have trouble remembering everyone in the race and what their positions are. Ian and I did a full episode dedicated to this topic but if you don’t have an hour and a half to spare listening to it this post should give a brief run down.

For those who aren’t aware, the vote is done by ranked ballot. There are 14 names on the ballot (Kevin O’Leary dropped out after the ballots were mailed out) and members get to rank up to 10. The method of counting is a complicated riding allocated points system but the simple version is the last place candidate gets knock out and their votes go to their supporters’ next choice until someone gets greater than 50% of the points.

  1. Michael Chong: This pick isn’t going to surprise anyone. I have been supportive of him both on the podcast, on social media and in real life. I wrote a full blog post on why I believe he is the right person to lead the Conservative Party and possibly the country in the 21st century. The condensed version is Michael Chong is a smart, knowledgeable policy wonk, with a very solid platform on climate change, the economy and democratic reform. Is the only candidate to back a carbon tax, and not a small one either. Chong’s plan is an ambitious $130/tonne revenue neutral carbon tax modeled on BC’s. Not only does one have to have a lot of political courage to run in the current CPC on a pro-carbon tax platform but his goes well above and beyond what Trudeau’s or any other mainstream political leader is proposing. He also running on a major democratic reform platform to increase the independence of MPs and scale back the power of party leaders and the PMO. Electoral reform is needed in this country but it is only part of the reforms needed to improve our democracy. Improving the selection of MPs does little good if their ability to represent their constituents is neutered when they get to Ottawa. He is socially moderate, is the only candidate not to stay level headed around the non-issue that was M-103 and wants to reach out beyond the traditional conservative base. He is only one to recognize the CPC’s deficiencies and is working to correct them.
  2. Deepak Obhrai: If I am going to be completely honest, he shouldn’t get 2nd billing but he has been incredibly entertaining to watch throughout the seemingly endless series of debates. He is likely to get knocked out round 1 so I am kind of throwing him a bone by giving him the number 2 rank on my ballot. And his emails have been AMAZING. In terms of policy he is running on expanding the party, reaching out to immigrants (like himself) expanding Canada’s nuclear power sector to reduce emissions from the energy sector.
  3. Erin O’Toole: Former Air Force veteran and Minister of Veterans Affairs. The only other candidate besides Chong with anything approaching a climate change plan, mostly using various tax incentives to incentivize carbon reduction. It is a pale copy of Chong’s but sadly in this leadership race that puts him miles ahead of everyone else. Considered to be from the Red Tory/ PC wing of the party he is a moderate. Policies include a much need reinvestment in the military, which has badly atrophied under successive government, investments/tax cuts to stimulate the economy and most interestingly a CANZUK free trade and movement agreement. O’Toole would pursue an agreement to allow citizens of Canada, Australia, the UK and New Zealand to live and work freely in each country. A little too much emphasis on policy by tax credits for my taste (one of the big flaws with the Harper Era changes to the tax code) but overall a solid middle of the road choice.
  4. Lisa Raitt: Former Transportation Minister, by all accounts a very competent administrator, but not a great campaigner. Probably better at being PM than running for PM, at least judging by the rather lackluster campaign she ran. Policy wise its a fairly boiler plate collection of modest investments in healthcare, infrastructure combined with tax cuts. Some of her policies have a little too much emphasis on the local benefits for the free trader in me but nothing that is too objectionable. I would have no problem voting for her in a general, which is more than I can say for a lot of the rest of the slate.
  5. Maxime Bernier: The Libertarian standard bearer and front runner. Running on ending supply management, corporate welfare, tax cuts, opening up air lines and telecoms to foreign competition, privatizing CBC, Canada Post and airports, ending provincial equalization payments and cutting the Canada Health Transfer by transferring tax points so provinces can raise the funds themselves. Bernier is a tough one as with him I feel like it’s one step forward, one step back. He has a lot of good policies that I really like. Ending supply management is a great idea. Its regressive, raises the cost of basic food staples, to line the pockets of a 11,000 producers and hurts Canada in trade negotiations. Likewise I am behind his call to end corporate subsidies and backed his opposition to the Bombardier bail outs. I am even sympathetic to the idea of ending the Canada Health Transfer as I see a system where the government that spends the money being the one that raises it is much more accountable to the citizens rather than the current situation where different levels blame the other ones and no one gets held to account. But at the same time a lot of that just goes a step too far and is too ideologically driven. Equalization is needed to keep such a regionally diverse country economically cohesive under one currency, otherwise you end up with a situation like Greece. And I am far from convinced ending the capital gains tax is the best use of resources. Plus there is the scandal from when he left classified documents at his Hell’s Angel’s affiliated girlfriend’s house. I am solidly ambivalent about Bernier.
  6. Rick Peterson: Businessman from Vancouver. Running on expanding immigration and shifting taxes from income to consumption (a move generally well regarded by economists). Socially moderate. Has a snowball’s chance in hell of making through the half of the eliminations during the runoff.
  7. Andrew Scheer: Former Speaker of the House, likely compromise candidate. Fairly light on policy. Kind of running on the continuation of the Harper legacy but with a kinder, gentler face. If you thought the problem with Harper was bad branding Scheer is your guy, if you think the problems were elsewhere, then he isn’t.
  8. Andrew Saxton: Vancouver businessman and former MP for North Vancouver. He lost his seat in 2015. Running on tax cuts and balanced budgets. Socially moderate but did say if economist backed an idea it would make him think twice about supporting said idea. Not big on deferring to experts. Unlikely to win the leadership and even less likely to win a general.

Who I am leaving off my ballot:

  1. Brad Trost: Climate change denier and social conservative. Wants to reopen abortion and same sex marriage debate.
  2. Kellie Leitch: The alt-right anti-elite (despite being as elite as they come). Main policy plank is “Canadian values” screening for immigrants.
  3. Chris Alexander: Former Canadian Ambassador. Very well respected in the foreign service but has been a major disappointment in politics. Chanted “lock her up” at a Rebel Media organized anti-Notely rally and was party of the announcement of the “barbaric cultural practices” hotline. Pro-immigration but running hard with a fear and security campaign.
  4. Pierre Lemieux: Former Army officer, social conservative competing with Trost for the anti-abortion and LGBT vote.
  5. Steve Blaney: Former Public Safety Minister. Running on using the Notwithstanding Clause to institute a Niqab ban. Pro-values testing immigrants and an oddly passionate defender of supply management.

That is a brief overview of the candidates and where I rank them. I encourage everyone to read up on the various candidates’ platforms before casting one’s vote.

Why I am Voting for Michael Chong (And you should too)

“Elections have consequences”. It is a saying often repeated but the events of the past year have really driven it home. The leaders we collectively choice have a substantial impact on the direction of the nation and the tenor of our national and civic discourse. Had a few hundred thousand people in the American Midwest marked their ballots differently or had Republican primary voters had split in a slightly different way we would not be witnessing the unfolding disaster south of the boarder as Donald Trump vainly tries to negotiate the challenges of running a country. Who we elect matters. The people we elect will be the ones at the forefront of confronting the challenges of the 21st century.

The 21st century presents many pressing challenges we will not only have to grapple with but effectively address. The climate is warming, threating our cities, ecosystems and economy. The economic prosperity of humanity is at risk as the demographic tide sweeps the west, while anti-globalization forces threaten to undermine the global trade network that has been the most effective anti-poverty measure ever enacted. This is all happening as politics and society becomes ever more fractured. The rise of the alt right and other illiberal groups threatens to undermine our inclusive society. The increasingly troubled waters Canada and the rest of the world find itself in calls for a calm and measured approach to navigating through the storm. It is imperative that not only the Prime Minister be level headed and considered but the leaders of the opposition as well, for it is hard to steer a boat if someone is trying to rock it back and forth. Of the scores of candidates vying for party leadership only one has shown a eagerness to grapple with these issues in a thoughtful and well reasoned way; Michael Chong.

No challenge of 21st century governance is greater than the confronting anthropogenic climate change. The science is indisputable, human activity is causing rising atmospheric CO2 levels and consequently rising temperatures. The potential damage is devastating. The best time to take action was thirty years ago. But the second best time is now. Sadly of the fourteen Tory Leadership candidates 13 either ignore it, deny it or offer the most token of token gestures.  It does not have to be this way. Brian Mulroney is considered one of the greenest Prime Ministers in history. Reform Party founder and conservative elder statesman Preston Manning has repeatedly called on conservatives to conserve the environment. Fortunately there is a voice for sensible, serious climate change policy, Michael Chong. His ambitious plan calls for a $130/tonne carbon tax. Like the BC carbon tax it was modelled on, every cent goes back to the people with generous tax cuts and a low income rebate to address the potentially regressive aspects of the plan. Canadians will see lower taxes, larger GST rebates and reduce emissions at the same time. Economists love it, British Columbians love it, there is little not to like about that. And to ensure it meets its goal there will be an independent panel of experts to examine the effectiveness and makes adjustments to the price of carbon so we hit our targets. The plan is not only more ambitious than Justin Trudeau’s but it is more accountable too. I long for the day when Question Period is dominate by the Tories and NDP both holding the Liberals accountable for their lack luster $50/tonne non-revenue neutral carbon price.

In order to better hold the government of the day accountable, the institutions of our parliamentary democracy need reforming. Too often MPs act merely as an extension of the party leader. And why wouldn’t they? With a system of party discipline as strong as Canada’s the MPs are much, much more accountable to their party leader than their constituents. A Party Leader’s permission is required to be nominated for election to Parliament, to sit on committees. MPs can barely wipe their nose without first getting permission from the PMO or party leadership. And in all of this the concerns of the people who the MPs are ostensibly in Ottawa to represent get forgotten. There have been many complaints over the years about the problems with our First Past the Post voting system. I have voiced many of them myself. But it is only part of the problem. Even if the MPs were selected better it does little good if they become empty suits doing echoing whatever the PMO or party leader wants. We need significant changes to the way Parliament runs. Changes like what Michael Chong advocated for in his, sadly neuter, Reform Act, that would have empowered MPs and reduced the centralized control in Parliament. With his proposed Democratic Reforms will empower MPs and ensure Canadians are better represented in Ottawa. All Canadians deserve to have their voices heard and their view and concerns represented in the halls of power.

All Canadians haven’t always been well represented by the Conservatives. Too often conservatives have fought to preserve institutions that promulgated injustices towards minority groups. The Tories lagged too far behind on LGBT issues and recently many of the other leadership candidates have been taking a page from Donald Trump’s playbook and playing up fears over immigration. Rather than unite Canadians, the Kellie Leitchs, Steve Blaneys and Kevin O’Learys of the race have been seeking to divide and play the politics of fear of the other. As we watch that mentality take root in American and Britain it is imperative Conservatives and Canadians decisively reject that divisiveness. Nothing would send a stronger message that Trump’s style of politics is not welcome in Canada. Michael is not only the son of immigrants but has run a campaign geared towards reaching out to immigrant communities. He has repudiated and condemned the subtle and not so subtle race and religion baiting that has surfaced during the campaign. And he was the only one not to give into the hysteria surrounding the inconsequential anti-Islamophobia motion M-103. A Conservative Party run by Michael Chong would focus on the substantive issues facing Canada and not play the worst sort of right wing identity politics. I am sympathetic to a lot of Conservative positions, on defense, foreign policy and free markets. I have hated every election having to go into the voting booth and weigh supporting policies I like with potentially empowering social conservatives. Finally there is a candidate, who I can vote for without having to make that tough choice.

There is a clear choice, we can have a Conservative Party and likely next Prime Minster that ignores the threat of climate change, that lets our democracy degrade and the forces of divisiveness set in. Or we can have a Conservative Party and Leader of the Opposition that has a credible and ambitious plan to tackle climate change and parliamentary dysfunction. A Conservative Party that is inclusive and wont play to the politics of fear and division. A Conservative Party and leader with substance and principles that will fight for what they believe in the market place of ideas, not the market place of 30 second attack ads. The choice is clear, Michael Chong is the right person to lead the conservatives. This May, I will be casting my ballot for Michael Chong. And if you value climate action, effective democracy and inclusive politics, you should too.

But that can not happen if you don’t get involved and vote. The membership deadline to participate is March 28th at 2pm Pacific.

Looming Fiscal Crisis? Why the Latest Finance Report is Neither a Harbinger of Doom Nor Cause for Complacency

Last week the Toronto Sun published article with the alarming, but not out of character headline Buried government report reveals looming fiscal crisis about the Update of Long-Term Economic and Fiscal Projections report from the Department of Finance Canada, which was released just prior to Christmas. The Department of Finance’s report projects the federal budget will remain in deficit until the year 2055. In a reaction that will surprise no one, the Conservatives and right of center pundits worked themselves up into a frenzy over the news. I got fundraising emails railing against Trudeau’s reckless spending from more or less the entire slate of Conservative leadership candidates. They do have a point. When the previous conservative government left office the budget deficit was around  $5 billion and projected to be balanced in the upcoming fiscal year. And even when Trudeau promised deficits they were to be small and end by 2019. Even with the new spending the debt to GDP ratio would decline every year. Going from a 4 year deficit to a 30 year deficit is understandably a cause for concern.


Fortunately politics is ever the lover of hyperbole and the damage to Canada’s fiscal health falls far short of “crisis”. Projected federal debt to GDP peaks at 31.9% in 2018-2019 FY. The trend line goes in the wrong direction but does not cross into the Danger Zone. Furthermore as Yogi Berra is alleged to have said “predictions are hard, especially about the future”. The projections are based on extrapolating current spending forward and applying demographic and economic forecasts to those extrapolations. The probability of no change in government spending beyond merely adjusting to changing demand over the next 29 years is low, its very low. Even Justin Trudeau doesn’t hope he is PM in 2055.  Long run governments do keep the same policies in place year after year, they change as circumstances and the political winds change. This is the scenario where the budget is left to balance itself, as Trudeau famously quipped. In all likelihood some Prime Minister between now and 2055 will endeavor to balance the budget.


Chart 4 – Federal Debt to GDP Ratio

Whether those efforts will be successful is another question. A lot can happen on the time span of decades [citation needed]. There is too much uncertainty to brush off the concerns with a “don’t worry everything will be alright”.  As Chart 4 in the report shows there are a wide range of possible outcomes just from moderately adjusting the variables in the model. We could pay off the whole $636 billion federal debt or have a spiraling debt that pushes debt:GDP up by more than 20 percentage points. By far the biggest factor is labour productivity. With sufficient productivity growth the deficit gets overwhelmed by economic growth. Unfortunately Canada generally has lower productivity growth than many other developed nations. Although this has been a long running concern the current government has placed little emphasis on addressing the country’s anemic productivity growth.

As with all projections the quality is only as good as the assumptions and scope. While the demographic assumptions appear to be reasonable (any demographers out there; feel free to correct me), the fiscal assumptions are less solid. Notably the Canada Health Transfer (CHT) only growing in line with nominal GDP. As the recent circus around renegotiating the CHT attests there is constant political pressure from the provinces to increase the rate well above nominal GDP growth. A factor that will only grow more pronounced as the population ages and the strain on provincial health budgets magnifies. It is well within the range of possibilities that a future government will acquiesce to the provinces’ demands and grow the CHT well above NGDP growth. The projections also fail to account for unforeseen negative economic events. And while that is quite reasonable within the context of this document, as the economics profession has yet to develop a reliable method of predicting recessions, it never the less presents a more rosy picture than actually exists. A deep recession with a resulting large deficit could blow these projections apart and leave the country in much worse fiscal shape.


Perhaps the biggest limitation of the Department of Finance’s projection is the projection is of Federal not national fiscal situation. The federal debt to GDP ratio is a healthy 31.8% thanks to multi-decade and multi-partisan governing philosophy of fiscal resistant. But the federal government is not the only government with debt in Canada. The provinces have considerable debt putting the total government debt to GDP ratio at 91.5%; up from 66.5% in 2007. While there is no hard and fast rule regarding when a country’s debt load becomes too great, the rule of thumb is that ratios over 100% are cause for concern. While most of the 25 percentage point growth in debt to GDP can be laid at the feet the recession it highlights the vulnerability of the debt to recessions. With the recession over and the economy experiencing slow but positive growth now is the time to bring the deficit and debt to GDP ratio down so we have fiscal maneuvering room should another recession hit. The many provinces, including the two largest, Ontario and Quebec, have large debts and are facing increasing budgetary pressure from bearing the brunt of the demographic related rising healthcare costs. There is precious little room to absorb another economic shock without adversely impairing the fiscal health of the country. Should a provincial bail out become necessary or a future Prime Minister decide to take on more of the load from an aging population at the federal level the health federal balance sheet could rapidly deteriorate.


There no guarantee such a scenario does happen. I certainly hope it does not. The projection gives an overall positive outlook for the federal government’s fiscal situation.  However it would be prudent to prepare for the possible negative scenarios not outlined in the report. With an uncertain global economy and a looming demographic bomb on the horizon now is the time to strengthen our fiscal position at all levels of government. Unfortunately the short term trend lines are moving in the opposite direction. Fiscal discipline and policy of only incurring debt for productivity enhancing infrastructure investments would be an excellent first step. I will be eagerly watching the course this government lays in the 2017 Budget.