Editorial Small consolation

It may be of small consolation, but the mineral exploration industry is not alone in its suffering as a result of Finance Minister Michael Wilson’s recent budget. Junior mining companies may suffer the sharpest pains as a result of the budget’s elimination of the Canadian Exploration Incentive Program without warning, but all Canadians are going to feel the pinch to some degree over the next few years.

If Wilson is being overly optimistic about underlying economic assumptions — and forecasting short-term interest rates of 11.1% during 1990, 9.5% in 1991, is nothing if not optimistic — there will be far greater sting in store.

But the Tories have painted themselves into a corner by its inability to cut the deficit during five years of exceptional economic growth. The Tory government succumbed to pressure when it tried to move away from universality of old age pensions and family allowance handouts — “sacred trusts” that have become a holy mess.

The real culprits, however, are long gone. Like Pierre Trudeau, they can now sit on the sidelines writing books accusing the current government of selling Canada’s heritage for political gain. But what were those previous stewards of the public purse possibly thinking of when they spent so far beyond the nation’s means?

Wilson, in fact, deserves some credit for reducing the cost of government operations to $16.8 billion in 1990 from $17.4 billion in 1984.

Regardless of where one places blame, the result is that we are entering a period of slow growth with a deficit stuck at more than $28 billion per year and we are still paying 35 cents out of every tax dollar to cover the interest on our $350-billion debt ($13,431 per capita or more than double what it was when the Tories came to power in 1984). Nevertheless, this budget is on the right path — getting the federal deficit under control. Remember, getting the deficit under control only means controlling the rate at which the debt is growing. It doesn’t reduce the debt at all.

Part of Ottawa’s load is being passed on to the provinces through the Expenditure Control Plan (ECP), the centrepiece of Wilson’s budget. It will cut federal expenditures by $3 billion in 1990-91 and a further $3.8 billion in 1991-92.

Passing the buck to the provinces ultimately means that taxpayers will pay the bill. But the shifting of the burden is reasonable. It is an attempt to make the “have” provinces shoulder more of the burden than they do now. It’s about time Ontario, for example, paid a little more toward easing the nation’s collective woes. After all, Ontario enjoys the most vibrant economy in the country. Ontario’s spending on programs has averaged a profligate 9.5% growth from fiscal 1984-85 to 1989-90 while Ottawa has managed to keep program increases to a much more responsible but less popular 3.6%. Of every tax dollar Ontario collects, it currently pays just 10.5 cents on debt.

The budget can hardly be called welcome news, but when one considers how imperative it is that we get our national debt under control, it is difficult to argue against the direction of Wilson’s measures. No one looks forward to paying the price of previous extravagance, but it is better that we pay our own way now rather than pass on these debts to our children. The best we can hope for is that payment is extracted from each of us as fairly as possible.