TALKING TO CANADIANS — The Business Council of Canada’s GOLDY HYDERwrote to Prime Minister JUSTIN TRUDEAU ahead of this week’s Cabinet retreat asking him to prioritize spending restraint by setting a meaningful fiscal anchor, as well as moving on tax incentives and speeding up permitting reforms. The prime minister’s office has billed the retreat as focusing on affordability, economic growth and housing. ROBERT ASSELIN, senior vice president of policy at the Business Council of Canada and former adviser to BILL MORNEAU, sat down with Playbook recently for a roundtable conversation about some of the pressing concerns over Ottawa’s fiscal situation. Here are the highlights, edited for length and clarity. What was your biggest takeaway from the last fiscal monitor ? When I track the numbers, I see a bigger deficit than they forecast. Expenditures that are higher compared to last year. But revenues will probably go down because of the contraction that is coming. Even if there's not a recession, revenues will be less than forecasted, and then much higher debt-servicing costs because of interest rates. And that results in the debt-to-GDP ratio going up, most likely this year — and maybe next year, too. It looked like public debt-servicing charges had basically wiped out revenues. It is crazy. This is why we put this Dodge paper out. It is possible the government will bust [the Dodge fiscal anchor] this year. The issue is not that we're going to go back to the ’90s tomorrow, but the trend is clear. We're getting to a situation where the more you pay on debt servicing, the less you've got for other things. That's just simple math. The government’s response is always that Canada is doing better than other G-7 countries. What do you think about that? The federal government's math is pretty straightforward. So, you pay transfers to provinces, you give transfers to individuals like OAS [Old Age Security], and child benefits, then you pay for defense, a few programs and your employees. At the end of that, new spending without raising revenues needs to be deficit-financed. So they are kind of tied to this situation now where it would be really hard to cut significantly. The other question down the road is the need to raise revenue [somehow]. And this is where I'm nervous. If you were CHRYSTIA FREELAND, what would you say right now? I would first act on growth measures. Let’s put forward a 10-year plan to get to GDP per capita that is better than now. There are four things the government could immediately do: Permitting reform on big projects could have a big influence on investments. All these tax credits they promise for the energy transition — they're still not in place. That's a big problem if you’re in Alberta and all these CCUS [carbon capture, utilization and storage] projects are still not moving. Third would be to signal a clear fiscal anchor to say to the business community, “look, there was a pandemic, we spent a lot, but we won't go [past this mark].” And the fourth is the program review they've been talking about for two budgets now. How would you talk to Canadians if you were advising Freeland? I'm not saying it's easy when you have high inflation, but the government should have a progress agenda — they need to be seen as wanting to grow the economy so that living standards get better, wages get better for people — not talking GDP and so on. “I want to get to a place where Canada will enable you to have a better quality of life” is the way I would talk about it. | 
