Kelly McParland: Putin’s war is another obstacle to Liberals’ wishful budgeting – National Post

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Will the Ukraine invasion be enough to end our governments bland aversion to financial planning that includes serious allowances for the uncertainties that are a simple fact of life?

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It will be interesting to see what sort of document Finance Minister Chrystia Freeland delivers when she gets around to unveiling her 2022 budget, which would normally be in the next few weeks.

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In the early years of the second Trudeau dynasty, we were told the government had no choice but to spend heavily, because Canada was on the cusp of a social revolution that required bold new spending programs to fill the needs that were long delayed by less visionary leaders. Wham! The deficit went up, taking national debt with it.

Then COVID-19 hit and we were told there was no choice but to dramatically escalate the already-expanded level of spending because the pandemic meant we couldnt afford not to. It was an emergency! It couldnt have been foreseen. It was essential that Ottawa obey its responsibility to protect the health and livelihoods of the population. True enough. Unfortunately, that would mean even greater borrowing to levels unprecedented outside of wartime but sorry, it couldnt be helped.

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Having toiled through two years of unanticipated costs, it must have looked to Freelands Finance Department that the way was finally opening to a period of recovery and rebuilding. In January, she announced pre-budget consultations that would allow the government to hear the best ideas from Canadians about how the budget can support Canadians and businesses and ensure a strong economic recovery for everyone.

A departmental release stated: As we look to the years ahead, the governments focus will continue to be on jobs and growth and making life more affordable. Presumably, that would include getting a handle on the governments spending binge, a goal Freeland signalled when she pledged in a fiscal update late last yearthat, We remain committed to reduce the federal debt-to-GDP ratio over the medium-term and to unwind COVID-19-related deficits.

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Of course, that was before Russian President Vladimir Putin launched his invasion of Ukraine and threw the world and its economy into another pit of uncertainty. Canada has, quite rightly, joined in the international effort to inflict as much economic pain on Russia as possible, in the hope that it somehow helps bring a halt to Putins mad war. This was yet another unforeseen development, which prompted Freeland to warn usthat her previous expectations would have to be altered.

I have to be honest with Canadians that there could be some collateral damage in Canada as a result of sanctions on Moscow, she said last week. In order to really be effective, in order to really have an impact, we are going to have to be prepared for there to be some adverse consequences for our own economies.

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I think were all in favour of a maximum effort to curtail Moscow and the rain of death it has mindlessly unleashed, even at the cost of some financial discomfort to ourselves. But I have to be honest with Canadians and admit Im a bit distressed that it has taken six long years for this government to grasp the fact that the future is a very uncertain place, that unpredictability is one of the few certainties in life and that a responsible government takes that into account when it sets out to rebuild society in an image it would very much welcome if only everything goes according to schedule and nothing unexpected takes place to spoil its plans.

Indeed, as far as I understand it, a big part of government should involve protecting what we have, as well as adding to what wed like. This government has shown little if any belief in that responsibility. If it has been consistent in anything, its the prime ministers conviction that finding the money is someone elses responsibility. As long as there are entities willing to lend, and advisors willing to attestthat Canada can afford it and will continue to be able to afford it in the future, hes good with it. Spend away.

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So now its Freelands job to take all those plans shed been assembling since January, and no doubt well beforehand, and somehow make them fit with a world that looks nothing like it did at the time. The Ukraine invasion has changed assumptions at the most fundamental levels.

The notion that fossil fuels can be happily choked off in deference to green energy ran aground on the realization that most of Europe cant operate, or even keep warm, without the fuel it gets from Russia. Inflation, which was supposed to be just a passing annoyance, has become a serious and burgeoning concern.

The supply chain, which was supposed to sort itself out once COVID was corralled, has a new crisis to contend with. The greatest risk facing global supply chains has shifted from the pandemic to the Russia-Ukraine military conflict and the geopolitical and economic uncertainties it has created, wrote Moodys Analytics economist Tim Uy.

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Canadian firms, large and small, cant find workers. Wages are being hiked to lure applicants, which pushes up prices as a result. Try filling your tank without grimacing, then try again when the carbon taxincreases on April 1. Try buying a house, or even groceries.

The Ukraine war has demonstrated for all to see how depleted Canadas military capability has become thanks to many years of government neglect. Will it finally embarrass the Liberals enough to accord it the priority a serious and self-respecting country should expect?

Freeland may be uniquely suited to overcome the traditional Liberal disdain for such things: her background puts the sincerity of her support for the Ukrainian cause beyond question. Its just a guess, but the unusual intensity of the Liberal response might just possibly be the result of Freeland putting some rare heat on a prime minister whos usually satisfied with virtuous posturing.

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Will it also be enough to end this governments bland aversion to financial planning that includes serious allowances for the uncertainties that are a simple fact of life? Or will Freeland go on pretending its reasonable to make risky wagers on a future that is so easily disrupted by pandemics, wars and other crises that wont be pushed aside to please progressive aspirations?

National PostTwitter.com/kellymcparland

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Kelly McParland: Putin's war is another obstacle to Liberals' wishful budgeting - National Post