The Bills Are Coming In!

Welcome to 2012, the year that the bills for the Great Recession of 2008 start coming in. As usual, governments took the easy way out in 2008 when the crash hit, and their revenues dropped. Rather than adopt a prudent reduction in government spending, commensurate with their falling revenues, Canadian governments simply ran deficits, and piled on the debt, or in Alberta’s case, burned through billions of dollars in hard-won savings to feed their spending addiction. The result is inescapable: deficits mean debt, and debt means debt servicing costs, and every dollar that goes to servicing a debt is a dollar that doesn’t go to essential public services.

Canada’s federal government deficit is around $50 billion, and the Province’s collective deficits total roughly $33 billion, an $83 billion hole to be backfilled. (Hats off to Premier Brad Wall in Saskatchewan, who ran balanced budgets throughout the recession, and currently posts a half billion dollar surplus). As a fragile recovery takes hold, governments across the country are variously sketching out plans for balanced budgets in the next 3 to 5 years. Where are they going to find the $83 billion? There are three obvious ways to move a government from a deficit position, to a balanced budget: cut spending, raise taxes and other revenues, or a combination of both. These choices are going to have profound effects on Canadian society. “To govern is to choose” goes the old axiom, and governments are going to have to make tough choices in the months and years ahead. But there is opportunity here as well. Now is the perfect opportunity for Canadians to engage with their elected officials in a grand debate: what is the role of government?

That leads to the larger questions:

• What are essential services?
• What programs and services should no longer be delivered by governments?
• What are logical areas for increased partnerships (and thus reduced costs) with the private sector?
• What government programs and services are candidates for privatization?

Are there opportunities for Canadians to ‘pick-and-choose’ certain services for which they are willing to pay more? Or ‘opt out’ of certain services that they no longer wish to pay for? The public consultation to address these questions must be an essential part of the road to balanced budgets. When times are good, and budgets are balanced, and a broad array of programs and services can be delivered in an affordable manner, larger questions about the role of government are less pressing. In the current environment however, (Saskatchewan excepted) governments must be courageous enough to engage the electorate in a broader ‘role of government’ debate, even if it means disruptive changes in the way they – governments – do business.

It is this engagement that will make the path clear as to where spending must be curbed, where taxes and revenues can be raised, and how governments can emerge from this process more focussed, more strategic, more nimble and responsive, and less lumbering bureaucracies where our tax dollars go to die. The bills from the 2008 recession are coming in. Lets force governments to be smart while we pay for their recession-driven misconduct.