The cliché is that pre-election budgets are jammed with goodies. The reality for Justin Trudeau is that he needs these goodies in a way he didn’t think he would.
He was exceptional in courting millennials in the 2015 election but lost their attention by doing such things as jettisoning electoral reform and sluggishly legalizing cannabis. Now he has found a way to help them buy their first homes and stay in his tent.
He was focused in his first mandate on helping lift people into the middle class, even though there are so many other ways to pick their pockets. Now he has found late-stage promises like mid-life learning support to induce their support at the polls in the fall.
He forgot entirely about seniors. Now in his budget, he is signalling his understanding of the necessary commitment to them – they, after all, vote in disproportionate numbers, and there are more and more of them and more to come. Enter the prospect of pharmacare, if still faint in nature.
He appeared at first benign about business, then ham-handed in handling small business concerns about taxation and big business concerns about competitiveness and productivity. On the former, he has generally patched things up over time, with some hard feelings remaining; on the latter, his budget Tuesday suggests he either doesn’t think it matters for his political health or doesn’t actually care. The yellowing and reform-needing tax code might outlive the lifespan of paper. You can almost hear someone saying: “Businesses don’t vote. People do.”
Some governments would look at the recent operating surplus and say it was time to prune taxes as the country is stricken with economic stagnation and heads toward the first round of uncertainty in a decade. That would leave some manoeuvrability if the storm hits shore. But the Liberals have determined in the time-honoured tradition of election cycles that it is again the moment to spend – as they have in their first term, for that matter, at a 6.5 % annual rate of growth – to improve their lately shakier odds of re-election.
For a government that has been at the helm during prosperous times, the Liberals have not demonstrated much interest in scrubbing the balance sheet. Its projections suggest the deficit for the year ending March 31 will drop to $14.9 billion from $19 billion – thanks to revenue, not prudence – then rocket again to nearly $20 billion in the following two years. Their optimism is that it is halved by 2023-24, after the second-next election.
They haven’t extensively targeted spending programs that have outlived usefulness, nor particularly enabled through some support programs the next wave of wealth generation. The extra $1.4 billion commitment to skills training will not hurt – workers 25 to 64 will accumulate credits of $250 annually to a maximum $5,000 – but will not necessarily align the needs of the labour market because they are not particularly targeted. You will need to read the budget documents and fall listlessly into a hallucination to find anything to propel investment or corporate tax competitiveness.
In riding the revenue wave and pointing to lifetime lows in unemployment, the Liberals have taken a what-me-worry? pose. They are content to sustain a debt-to-GDP ratio, maybe lower it a bit – all the while rolling out nearly $23 billion in new programs in the half-dozen years ahead.
This spendthrifty character could be a regret in a matter in a year or so, but that is a matter for a year or so. Meantime there is an election machinery that needs to fire on all cylinders, have talking points for each riding it hounds, and nothing approaching sour medicine to spoon out.
To that end, Finance Minister Bill Morneau is straight out of Central Casting in the role of using our money – and, I suppose, our childrens’ – to supply the illusion of improvement in our lives. In October we will know if Canada want a new actor and screenplay. •
Kirk LaPointe is editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.