HOW BIG IS TOO BIG

The purpose of this paper is to raise the question of whether or not government in Canada has become too big for the size and the unique characteristics of Canada, for its economy, and for the good of the majority of the citizens of this country.

The history of the twentieth century is replete with examples of what happened to the people of many recognizable countries when their government got too big, too expensive, too centralized, too ideological, and too intrusive to allow the people to prosper economically.

HOW BIG IS TOO BIG

A too big government leads to several inevitable consequences. They are, high taxation, excessive and oppressive regulations, high unemployment and a reduction and slow strangulation of the wealth producing capability and growth of the economy.

Above all, and most important, is that excessive government inevitably leads to the gradual loss of the individual’s personal freedom.

Is Canada in danger of succumbing inadvertently to the consequences of a governance model that has become too big for our best interests?

Unfortunately, the citizens of Canada are mostly unaware and uninformed about what is the condition and trend of our current economy.

The lack of information for the public at large, which is essential to maintain a healthy functioning democracy, is a serious problem in itself.

When we consider the future, there are some warning signs we should all be aware of:

• Productivity
Canada’s productivity, which is the principal determinant of our standard of living, has been declining since the 1970’s so much so that Canada has the poorest productivity of the O.E.C.D. peer group.
• Business Investment
is steadily declining and has fallen 18 per cent in the last decade as Canada becomes less friendly to domestic and foreign investors.
• Trade Balance
Our once robust, trade balance (exports or imports) is now negative in the billions $ and declining.
• Household Debt
The O.E.C.D.’s annual report shows Canada’s household debt is now higher than all other nations household debt including the United States and China. When you understand that family incomes have stagnated for the last ten years, is there any wonder as families struggle on a fine line from pay cheque to pay cheque.
• National Debt
Our national debt is now well over $1 Trillion and rising.
• Fiscal Balance
Statistics Canada reported this month that Canada’s deficit now stands at $18.1 Billion. This means Canada’s deficit has nearly doubled from $9.7 Million in 2008.
• Unemployment
is far too high at 10.6 per cent and is a serious problem for young graduates.
• Competitiveness
As productivity and business investment decline while taxes increase, Canada’s competitiveness in the global economy by any measure is also declining.
• Taxation
On the growing worry of higher and higher taxation of Canadian families, a recent study by the Fraser Institute shows the Federal Government’s statement that “The government of Canada cut taxes for middle class taxpayers everywhere” is simply a false statement. We remember the promise to lower middle class taxes was the government’s principal plank in the last election campaign.

But what actually has taken place is that yes, the middle-income personal tax rate was reduced from 20.25 to 20.5 per cent.
But, at the same time, the government cancelled income splitting for families and eliminated a series of tax credits including the fitness tax credit, the education tax credit, and the public transit tax credit. The result is that now the vast majority of middle class families in Canada are paying, on average, $840.00 higher taxes per year.

The bottom line is that despite this specific government promise beleaguered Canadian families as usual, will still have to pay higher taxes.

This increase does not include the coming carbon tax, the increase to the C.P.P payroll tax, the lowering of saving account limits (TFCA), and the increases taxes on small businesses.

All this in the face of the fact that median family incomes have only increased for the last ten years at the rate of 1 per cent per year. When you consider the fact that the latest Stats Can census reports the median income for a Canadian family is $70,336 per year and 42 per cent of that income goes to visible and hidden taxation, this is an excessive and unnecessary tax burden for working families.

• Business Climate
Canada’s ranking in the World Bank’s “Ease of Doing Business” report this year fell to 22nd, from 14th place in past years.

A recent survey by the Business Council of Canada found that 64 per cent of CEO’s said Canada’s investment climate has worsened in the past five years, noting the growth in the tax and regulatory burden imposed on businesses.

They add that these concerns are increased by new labour laws that reduce management’s ability to manage their enterprise, and the government’s mandatory 30 per cent increase in the minimum wage.

In the last 3 years private and public companies have quietly closed up shop and left the country for greener pastures abroad. As a result, several thousand employees have lost their jobs in Ontario alone.

Two very expensive and more visible and immediate signs of our economic state and the growing costs that can only lead to higher taxation are:

• The unsustainable government health care monopoly which is the most expensive age adjusted health care system in the world is still increasing wait times while costs are rising at 3 times the rate of inflation.

• The aboriginal crisis is becoming a major sink hole for taxpayers money. This crisis is worsening. It seems clear that throwing more and more money at a cultural problem that can only be solved by aboriginals themselves, is not going away. Apparently they are now emboldened to demand for themselves a separate sovereign state on an equal footing with the government of Canada funded of course by Canadian taxpayers.

At this point you may well ask that if this list of unfavourable trends is true, what are our politicians doing about it?

This is not a helpful question to ask because politicians are doing what they have been doing since confederation - they are working to be elected and stay elected. The important question is what are the people of Canada doing about it? The answer is - not much.

It seems that far too many are not concerned about the issues that shape the future, but instead they are concerned about how they feel about certain personalities who run for office. And if this is true, those of us who care about the future have a lot of work to do.

As we look at the ever increasing size and cost of government and the necessary taxation to pay for it is there any end to government growth, increasing government regulation, and more taxation? Is there a point where this burden has become too great and more government spending becomes a burden tax payers cannot and should not support?

Some pertinent questions in this regard are:
Since our economy is so dependent on our natural resources sector, and as other sectors such as manufacturing stagnates, do we need a government so large that it now consumes 41 per cent of our gross national product?

Do we need an ever-expanding government civil service of 3.7 million who now represent 23 per cent of the work force?

Does it make sense to pay these heavily unionized government employees 10-12 per cent more than private sector workers, for similar work who, as taxpayers, foot the bill for the civil service?

As the national debt piles up and our taxes rise, is it time to tell our politicians that we reject the theory that we can spend our way to prosperity?

In the face of the trends described above I believe strongly that the government of Canada is far too big, too intrusive and far too costly. I also believe that in the best interests of the people of Canada, the continual growth of unnecessary government and its punitive taxes must be stopped now before it is too late.

As a dedicated Canadian who loves his country and sees its great potential, I look forward to a public debate on the size, cost, and so called benefits to taxpayers of excessive government in a country such as ours.

I also look forward, if it is possible, to involving our political leaders in something more important than their next election.

George S MacDonell
November 2017
George MacDonell served seven years in the Canadian Army in World War II, as a CEO in Canadian industry, and as a
Deputy Minister of Industry Trade & Technology in The Government of Ontario