Imperial Measurements

There are three Empires of spending where government is concerned. First, there is the one we can see, direct government spending. In Canada, at the Federal level, that amounted to $338 billion in 2018. Taken together with the provincial governments, the spending amounts to over a trillion dollars! And this does not include municipalities and the Territories. For example, the City of Toronto spends more or as much as every province except BC, AL, PQ and ON. No wonder we celebrate "Tax Freedom" Day in July. Fed or Prov spending therefore adds up to over half of our GNP. If Canadians stood up and took notice of these numbers, they would question the sanity of politicians who said we were not spending enough.

But, if those numbers do not give you pause, there are two other opaque realms of spending that have as much impact on our people, country and economy as any program of direct spending. The second is enjoyed by all of us in one form or the other. It is called "Tax Expenditure". It simply means that, in return for indulging in a certain type of favoured activity, behaviour or identity, the government will give you a break on your taxes. These are variously called "deductions, credits, exemptions and writeoffs" and the only universal one is the so-called Basic Amount. The cost by the account of some of just the enormous Federal Income Tax Code's "Book of Favours" - about $165 billion! This spending is arbitrary and serves to impair and alter taxpayers' behaviour in a way that blunts out economy's efficiency. We are encouraged to do things we would not do because they cost too much. The signals to our economy that a free market relies on daily are muffled or garbled and resources misallocated accordingly when they could be driven by an easy, fair and low tax system that sends one clear message: "do your business as you see fit!"

The Third is particularly damaging and cruel as it actually enforces spending in Canadians, individual or local, often for marginal causes, aims and purposes that are obsolete now or were always of no use. Some of the spending it forces is worthwhile but no one has ever audited just what. It is what we call "Regulation". By at least one account, regulation in the US since the 1950's costs an American...$35000.00 per capita per year!  Obsolete? How about wool control laws from the Cold War? Complying with federal regulation is most obviously manifested for us every year by doing our tax returns. The average cost of this compliance alone per year is $500.00. But business and individuals are required to comply increasingly with rules that they do not even know exist. For instance, the cost of compliance with auto standards costs the buyer some $3000.00 for just one auto's price. But there is no line on the contract pointing that out. Dairy is regulated but you will not see the cost to you on the price tag for a bag of milk. But business, the provider of the jobs and investment we need increasingly know the burden of regulatory compliance is steep - about $32000.00 per year on average in Ontario (!)  - and make their decisions about involvement in our economy accordingly. "Compliance" with regulation is a euphemism for the confiscation of purchasing power, that is, income, from us to pay for the elite's protection and ideological predilections.

What does this mean? Despite the propaganda about our being relatively more fiscally responsible than the Americans, we are still spending too much. Worse, we are spending on two great empires of government intrusion into the economy that are both arbitrary in their effects on Canadians and distort the economy but also opaque and therefore relatively intractable to reform or change. How can you "reform" something that people do not see? On top of that, tax expenditures and regulations that benefit certain special interests are jealously guarded by them. Look at the vicious putdowns that have occurred if anyone tries to suggest that the Supply Management system needs to go? Politicians are too lazy to study these areas as they are too obscure or too hard to explain to voters and/or they are too afraid to tackle them for fear of reprisal from the interests that guard them and/or they are themselves invested in preserving these fiefdoms of rules and tax breaks.

In other words, not only do we not have a mature, sophisticated debate over the conventional direct spending we do, we are only having a third of a third of the full national debate we should be having over the hidden but massive spending that goes on regulatorily and that is making us poorer, unproductive and corrupt. We need to have a comprehensive discussion about all three areas if we are to truly get control again of public spending in this country and replace the damaged, deranged and hobbled economy it is giving us with one that allows Canadians to realize their potential and prosper without hope of government reward or fear of government punishment