Federal budget ignores economic growth at expense of Canadian living standards
Prior to the 2023 federal budget tabled Tuesday, we stressed the need for the budget to focus on improving economic growth, and in particular per-person economic growth. We highlighted a 2021 study published by the Organization for Economic Cooperation and Development (OECD) estimating the growth prospects on a per-person basis for 32 advanced countries for the periods 2020-30 and 2030-60.
As we explained, the OECD forecast expects Canada to record the lowest level of growth in per-person economic growth as measured by growth in GDP in both periods. And among the 32 countries analyzed, Canada will fall from the 16th-highest per-person GDP in 2020 to an expected 25th by 2060, which means countries such as the Czech Republic, Estonia, Israel, Italy, Korea, New Zealand, Slovenia and Turkey, which currently have lower levels of average per-person GDP, are expected to leapfrog Canada by 2060 with higher per-person levels of GDP.
It's within this context that we analyzed the government’s recent budget speech to get a sense of its priorities. The budget speech is an important barometer of the government’s priorities since it’s unfiltered and provided directly by the government itself.
The speech totalled almost 2,100 words (2,066 to be exact) and the phrase “economic growth” was mentioned once, which is better than “entrepreneurship,” which wasn’t mentioned at all. This should be worrying given the dismal prospects and real likelihood that Canada will experience slow economic growth and declining living standards for the foreseeable future.
This stands in contrast to the word “clean,” which is used in reference to energy, economies and electricity, and appeared six times in the budget speech. More interesting, however, was that the word “spend” or “spending” only appeared once in the entire budget speech but the word “invest” or “investment” was included 15 times, and each time referred to active spending by the federal government on different programs. It seems the word “investment” has now permanently displaced the more accurate description of government spending.
What seems clear from the budget speech is that the government remains committed to active spending financed by borrowing and industrial intervention, particularly in the clean technology space at the expense of genuine improvements in living standards for Canadians. Budget 2023 continues on the path established by past budgets that have resulted in, and will continue to deliver, poor results with respect to economic growth and living standards, in large part because they’re simply not priorities.
Subscribe to the Fraser Institute
Get the latest news from the Fraser Institute on the latest research studies, news and events.