Report says lower spending and balanced budgets tied to stronger economic growth

The Fraser Institute, web image

CALGARY — A new report from the Fraser Institute says lower government spending, balanced budgets and declining debt during the government of former prime minister Jean Chrétien were linked to stronger improvements in Canadians’ living standards than those recorded during Justin Trudeau’s time in office.

The report, released Thursday by the Vancouver-based public policy think tank, compares the fiscal and economic performance of the federal governments led by Chrétien, Stephen Harper and Trudeau.

According to the study, living standards, measured by gross domestic product per person, rose 26.5 per cent during Chrétien’s time as prime minister compared with 3.4 per cent during the Trudeau government.

“If the goal is to improve the living standards and general prosperity of Canadians, the Carney government should follow a different fiscal path than the Trudeau government, and emulate the Chrétien government by lowering government spending, balancing the budget, and reducing government debt,” Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of the study, said in a statement.

The report says the Chrétien government reduced program spending, balanced the federal budget and lowered the national debt, while the Trudeau government oversaw higher levels of spending, larger deficits and increased debt accumulation.

The study compares federal spending levels, budget balances and debt growth during the three governments and examines how those fiscal policies aligned with broader economic outcomes.

Grady Munro, a senior policy analyst at the Fraser Institute and co-author of the report, said the results suggest fiscal restraint played a role in stronger economic performance.

“It’s clear from the Chrétien years that lower levels of government spending, balanced budgets and declining government debt are critical foundations for stronger economic performance in Canada’s future,” Munro said.

The Fraser Institute describes itself as an independent, non-partisan public policy think tank.