Hey there, time traveller!
This article was published 23/3/2017 (1717 days ago), so information in it may no longer be current.
The federal budget last year was all about raising expectations. This year’s budget, delivered Wednesday, was all about lowering them. There wasn’t a lot of content in Finance Minister Bill Morneau’s financial document, with no new substantive money provided for new programs. Cynics have suggested it’s indicative of a government that’s out of ideas. Others have suggested it’s fears about what U.S. President Donald Trump will do. But for the most part, the budget is being characterized as one that simply shovels spending and deficit reduction forward.
The budget projects a deficit of $28.6 billion this coming fiscal year, but has a $3-billion contingency reserve. At the same time, the forecast projects that the federal debt will shrink slightly as a percentage of GDP, from 31.5 per cent this year to 30.9 per cent in 2021-22. Its spending includes $7 billion over 10 years for child care — that doesn’t begin until next year — $2.7 billion over six years for labour-market transfer agreements to modernize training and $11.2 billion over 10 years for an affordable housing strategy. This is a budget set for the future.
On the plus side, unlike governments before them, the Liberals did not introduce a series of boutique tax credits and some existing ones were even cut. Gone are the children’s fitness tax credit and the children’s art tax credit, plus the credit for buying bus passes. These small tax credits were expensive to implement and didn’t provide real benefit.
The main buzzword in this budget is "innovation." In fact, as Winnipeg Free Press parliamentary bureau chief Mia Rabson points out, the word is used 261 times in the budget’s 268 pages. But how capable the Liberals will be in developing and selling bright ideas that will shape the next industrial revolution remains to be seen. Exactly how the innovation strategy will transform the economy is not well laid out, and there’s certainly no real money attached to it.
In all of this, there is a shadow looming behind the budget documents: Mr. Trump and the possible implementation of a border adjustment tax (BAT), currently being considered by the Republicans, which would make Canadian exports more expensive and would threaten any type of economic recovery — in particular, economic recovery in the oil and gas industry. The BAT would in essence render crude produced in Canada less competitive than American crude and could further delay any type of economic recovery for the oil and gas sector in this country. Some suggest this may explain Mr. Morneau’s hesitancy to commit to bold new spending and his urge to create a contingency plan, just in case. In the face of Mr. Trump’s focus on tax cuts, it may also explain why a tax hike for Canada’s top one per cent was missing in Wednesday’s plans.
While this budget purports to be looking to secure Canada’s place in the future, it doesn’t have solid ground in the present and it puts the Liberals in a position where they will have a number of items still outstanding on their to-do list come election day. That could be problematic.