Any government budget is primarily a political document.
In the case of the federal government, it lays out the primary objectives of the government and outlines how it will be dealing with provincial governments on a range of issues. If it includes important tax measures, these can provide an indication of how it may be changing its fiscal posture.
So, a budget is an important document for the government, the other parties in the House, provincial governments, the private sector and citizens whose taxes provide the largest part of the government’s revenue.
The massive 797-page document that Finance Minister Chrystia Freeland presented last week certainly was a political document.
Reverting to an earlier life as an academic, I gave it an A+ as a document aimed at securing a victorious outcome in the next federal election expected in the fall. Virtually every interest group received something and of course the centrepiece, $10-a-day childcare, was aimed squarely at young mothers.
While Freeland called the childcare program a large investment in the future that would provide a major boost in the economy because of women entering or re-entering the labour force, don’t hold your breath.
The government’s own estimate is that GDP growth will average 1.5% annually over the next 30 years, with women’s increased labour force participation contributing about .05% or about 3% of the annual increase. Hardly earth-shattering.
The government’s claim that this was “a growth budget” looking towards the future seems largely unsubstantiated.
While “growth” appears in the lengthy document many times, the real underpinnings of growth — “productivity” and “competitiveness” — get much less play.
Put bluntly, this budget focuses primarily on getting the Liberals re-elected by emphasizing the benefits to individuals and groups without offering much detail of how we can pay for them. There were only side glances at some major issues facing the nation in the next two decades.
Now, consider the inconvenient hurdles that the $10-a-day childcare program itself will face. It is projected to cost taxpayers up to $30 billion over five years and will require 50-50 sharing of costs between the federal government and the provinces and territories. This is proposed at the same time these latter governments are suffering from limits in their ability to raise funds adequate to meet the rising cost of healthcare and education. And when we commit billions to childcare, but zero to ensuring that eldercare is affordable and safe, something is wrong.
If the pandemic achieved anything it was to make clear to all of us that eldercare is seriously flawed in Canada.
Then there is a matter of deficit and debt. There is no major effort to reduce the deficit by eliminating tax expenditures (such as favourable treatment of certain forms of income) and pushing investment in areas that can stimulate growth in the economy and thus generate tax revenues. Where is the income needed to finance all the gifts announced in the budget coming from — or are the Liberals just assuming growth will somehow happen as if by magic.
So, for producing a short-term, election-focused document the Liberals get an A+, but for laying the groundwork for growth, improving the government’s fiscal posture and demonstrating they pay due attention to the responsible administration of government, I’d put them on the borderline between a D and an F.
What is equally depressing is that the other parties didn’t concentrate their criticisms on the underlying weaknesses of the programs the government proposes — nor did they provide a reasonable alternative set of programs that they would espouse were they in government. Incenting consumers to spend more on fossil fuels, not less, doesn’t count as a reasonable emissions-reduction program.
I have to hand it to Prime Minister Justin Trudeau. He has manoeuvred the opposition into concentrating on issues he selected and is using OPM (Other Peoples Money, i.e., yours and mine) to retain power. And all it will cost us is a prosperous future based on a strong economy.
David Bond is a retired bank economist who lives in Kelowna.