Federal budget attempts to balance many priorities
April 23, 2022
Canada is at a critical stage of our evolution. The federal budget highlighted some of the challenges we face as a nation, writes Peter Watson.
The goal of a federal budget is to outline the income and expenses and how the government navigates between different priorities. I cannot remember a time where there have been more issues needing to be addressed in a budget.
Our country has too much debt. That problem is well-known. Then the pandemic hit, and federal spending increased dramatically, adding to the country’s debt. A spending strategy that was costly, but necessary.
The budget acknowledged our country’s debt and announced it would attempt to return to pre-pandemic spending and declining deficits over the coming years. There is a limit to how much debt our country should maintain and now is a time for fiscal prudence.
The intermediate term balancing objective is to control spending, while at the same maintaining current programs, plus incorporate some new initiatives. Including the Liberal child day care program, the environment, and affordable housing.
Russia’s invasion of Ukraine highlighted Canada’s failure to live up to our NATO commitment on national defence spending. Money will be directed to build up our military capabilities plus provide direct assistance to Ukraine.
The minority Liberal government recently negotiated an arrangement with the New Democrat Party, with the goal to continue to govern until 2025. Dental care is one of those negotiated spending priorities that was addressed in the budget.
The challenge is to be aware of the fiscal reality that too much overspending could greatly hinder our country for decades to come.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com