How much will Harper cut?

Some progressives worry that the new Conservative majority will dismantle the Canadian state. Hard-nosed economic conservatives like Andrew Coyne and Terry Corcoran worry that the Conservatives will not actually cut government spending. I have suggested that the Harper Conservatives will cut, but not as much as the Chretien Liberals.

This debate would benefit from some numbers. Chretien slashed federal program spending, as a share of GDP, from 16.8% in 1993-94 (when he took office) to 12.7% in 2003-04 (when he resigned).

From peak to trough, it plummeted from 17.4% in 1992-93 to 12.1% in 1999-00 and 2000-01. Depending on which comparison one prefers, the Liberal majority slashed federal program spending by 4.1% or 5.3% of GDP.

The last Conservative budget (see Table 5.6), which Harper will now enact, projects cuts from 14.4% this fiscal year to 12.9% in 2015-16. The recent stimulus-boosted peak was 16.0% in 2009-10. The same two comparisons indicate that the Conservative majority is poised to cut federal program spending by 1.5% or 3.1% of GDP.

Of course, the Conservatives are free to cut more in future budgets. However, they would have to go much further to match the depth of Liberal cuts. Indeed, it is an open question whether Harper will even touch the minimum level of federal program spending reached by Chretien (12.1% of GDP).

None of this is good news for those of us who believe that the federal government should invest more in health care, education, social welfare, infrastructure and economic development. And the Conservatives could do substantial damage to democratic institutions that would not show up in budget numbers. But in fiscal terms, Harper's majority is looking like the lame sequel to a movie that Canadians have seen before.

This article was first posted on The Progressive Economics Forum.