Some of those involved with Build Canada have expressed frustration at being compared to DOGE and accusations that the tech industry is in the midst of a rightward shift.
But let’s say for a moment that several people involved with Build Canada and its Canada Spends project hadn’t invited the comparisons by posting their admiration for DOGE and Elon Musk. The reason people are raising the alarm is because they seem to be inviting more conservative economic policies.
A reasonable person could hear “fiscal responsibility in government” and think it’s a good thing. Someone could promote those ideas without intending to put a massive clown in charge of a team of clown interns that slash programs they know nothing about. But historically, the best case scenario is that austerity increases inequality in a society. Worst case, it can be a step towards oligarchy and fascism.
“We’ve done this before”: In a pitch to rebuild the government’s workforce, Build Canada holds up the example of Jean Chretien and his finance minister Paul Martin pushing “fiscal discipline” in 1993 to balance the federal budget. Departmental budgets were cut by an average of 20% through the rest of the decade, and federal spending as a share of GDP fell from 22% to 17%.
What it leaves out is the aftermath. Massive cuts to provincial health transfers put the country on the path to hallway healthcare and doctor shortages. Pulling out of social housing led provinces to do the same, helping usher in crises in homelessness, housing, and affordability. Limiting EI eligibility led to stagnanting wages.
Between 1993 and 2011, after-tax income for the top 20% of Canadians earners grew three times as quickly as it did for the bottom 20%, and nearly twice as fast as it did for everyone else.
The International Monetary Fund (a body that’s not afraid of promoting austerity) has argued that the economic benefits that Canada did get following the cuts would have happened anyway.
How government productivity works: The Build Canada memo is not advocating for cutting spending on healthcare, housing, and social programs, just trimming the workforce. But you cannot pull back on workers and expect the services they work on to continue undisrupted — government services get less effective when there’s less people working on them.
This has been a playbook for conservative governments — budget cuts reduce the quality of programs and public satisfaction drops, creating a case to privatize more services and send more money to the business sector.
Build Canada’s idea seems to be that the feds could do more with less, pointing to how productivity in the non-business sector (which includes government workers) has stagnated as productivity has risen everywhere else.
The problem is research shows productivity as an economic measure (GDP produced per hour worked) doesn’t apply well to government work. Governments provide a lot of services that can’t be measured in economic output, and ones that can are often delivered to those that need them at a lower cost to make them accessible.
Even if the productivity numbers were appropriate, maybe the feds aren’t the problem — who is to say the numbers aren’t being pulled down by provinces or municipalities?
Mirroring how DOGE cut agencies and projects already working on improving government efficiency, Ottawa already formed a working group to better measure government productivity so it can address the right causes. Build Canada’s pitch to regularly audit public workers already falls under the purview of the Auditor General.
Governments are not businesses: A business’ job is to produce a product or service while generating a profit or return for investors. A government’s job is to provide security and services to its citizens. The federal government, in particular, has even more freedom to run a deficit so long as it doesn’t contribute to inflation and debt payments don’t become too burdensome.
The most recent inflation boom had a number of factors unrelated to monetary policy, including pandemic supply chain constraints, surging energy prices, a housing shortage, and growing corporate profit margins.
As Canada Spends’ website itself shows, the government’s current interest payments are lower than were from 1982 to 2006.
To bring it back to the ‘90s, economists Lars Osberg and Pierre Fortin both argued that Canada’s debt rose ahead of Chretien’s first term not because of overspending, but a global recession that was made worse as Bank of Canada’s then-governor John Crow jacked up interest rates.
There seems to be a logical line of thinking that governments need to cut back on spending during economic challenges, as households have to, but that’s when governments should be spending more — not just because people need more social services, but because recessions typically come with lower interest rates that make deficits easier to manage.
Build Canada’s memo says that “[government] agencies cannot be considered ‘too big to fail.’” They are, though, at least as the business world would describe “failure.” They cannot go bankrupt. They fail when they don’t effectively provide services that Canadians rely on, and that happens when their resources are limited.
Dominoes: There’s a sentiment out there that people are crying fascism too often. And certainly, supporting austerity does not make someone a fascist or oligarch…but most fascists and oligarchs support some version of austerity. These movements start somewhere, and whether it’s intended or not, funneling more wealth to fewer people (and limiting social services that might help them leave poverty) is a step in that direction.
We don’t need to look that far in the past to see how cuts do not guarantee worsening inequality or far-right shifts, but do make it much easier. From the devastation that followed Greece’s cutbacks (leading to an openly far-right party taking power) to the “unforced error” that “wrecked” the U.K.’s health and social programs to the dismantling happening before our eyes south of the border. Maybe Canada can be the one to “do it right,” but history is not on our side.