The Throne Speech by the Numbers

Kevin Page

September 24, 2020

The ancient Greek philosopher Pythagoras said “Numbers rule the universe.” Typically, you do not see a lot of numbers in a Speech from the Throne (SFT). Who would want to listen to a Governor General talk numbers (besides me)? Still, it is possible to deconstruct what was in the speech — and not in the speech — with a focus on numbers.

On Wednesday, September 23, 2020 the Governor General of Canada delivered the Speech from the Throne to open the 2nd session of the 43rd Parliament. It is the 2nd session in part because the government chose to prorogue after a finance minister resigned in the midst of a scandal. The 43rd Parliament reminds us that Canada has been around for a long time. The country has experienced ups and downs. It was the 150th Speech from the Throne in the history of Canada.

To be frank, it was a good time to reset the agenda of Parliament. COVID19 is a change maker. It could be argued that this SFT is one of the most important in our history. We have lost more than 9,000 people due to the virus. The economy could shrink some 7 percent in 2020. Notwithstanding some rebound in the labour market with the re-opening of the economy, we still have more than a million fewer Canadians employed since February. With some $250 billion in direct fiscal supports, Canada will record a record budgetary deficit in 2020-21 — something in the range of $350 to $400 billion.

The 2020 SFT is a substantive policy document. It weighs in at 7000 words — which is about the size of the two previous SFTs (2015 and 2019) combined. Similar to the previous SFTs by this government, there were a handful of priorities. In 2020 there are four priorities — protecting Canadians from COVID19; helping Canadians through the pandemic; build back better; and stand up for values.

In a minority parliament, all opposition parties could work with the government on these priorities. They will, of course, disagree on specific initiatives. As a former Parliamentary Budget Officer, I would like to see a fifth priority that addresses fiscal responsibility.

The 2020 SFT makes two specific policy commitments. One, to create a million jobs (presumably to return to pre-COVID19 employment levels over the Parliamentary session). Two, to bring forward a plan to exceed Canada’s climate goal. Both commitments are reasonable and achievable. In retrospect, it would have been nice to see more policy commitments (economy, environment, inequality, health) and a desire to work with other political parties, governments, and First Nations peoples to achieve these outcomes.

The 2020 SFT makes about 45 spending commitments across the four policy priorities where additional (deficit financed) resources are likely required. There are a couple of references (but no timelines) to higher taxes for wealthy people and digital companies that can be linked back to the 2019 election platform. A few of the spending commitments could come with a large price tag — a Canada-wide early learning and child care strategy; a training agenda; and infrastructure (e.g., clean power fund).

In the 7000-word SFT, only 200 (plus or minus) words can be linked to fiscal sustainability. There are important commitments to do whatever it takes to support households and businesses while the pandemic carries on and a commitment to address fiscal sustainability in a post-COVID19 recovery (that is not defined). We are told there will be a fiscal update in the fall which will include updated projections and measures.

It is my hope the opposition parties will put pressure on the government to release a fiscal plan (not just an update). What is missing in the speech are reasonable budgetary constraints that will shape the government’s post-COVID19 economic recovery plans.

My guess is that the government would like to continue in 2020 to provide fiscal supports to households and businesses during the pandemic without a fiscal plan. This will set up a winter 2021 budget that will outline plans for economic recovery.

We need a medium-term fiscal plan. Current low interest rates do not mean there are no future costs to higher government debt. We can support Canadians during the pandemic and plan to return debt-to-GDP ratios to prudent levels over the medium term. If we wind the clocks back to the mid 1990s, we can remind ourselves that we cut our debt-to-GDP ratio in half over a decade with responsible fiscal policy and economic growth.

Contributing Writer Kevin Page, formerly Canada’s first Parliamentary Budget Officer, is founding President and CEO of the Institute for Fiscal Studies and Democracy (IFSD) at University of Ottawa.