Big spending, big deficit, big hopes in first...
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Mar 21, 2016  |  Vote 0    0

Big spending, big deficit, big hopes in first Liberal budget: Tim Harper

Beyond Tuesday's maiden Liberal budget, another shoe will drop in an expected federal deal with Bombardier.

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Justin Trudeau is said to have hit on the idea of running deficits last July while brainstorming with aides just weeks before the election call.

The following month, in late August, he unveiled that plan and, according to Trudeau, that was the day he believed he won the election.

Tuesday, he takes a pocketful of political capital and puts his fiscal cards on the table when his finance minister Bill Morneau delivers the government’s first budget, one that will be sold as a long-term investment in the Canadian economy, deficits be damned.

Trudeau and senior government sources may now be using words such as “unsexy” and “unsurprising” to describe this effort, but maiden budgets are crucial.

Delivered and sold properly, they can provide a blueprint for a mandate. Fumbled, they can immediately darken any political honeymoon.

They can often be used to make the unpopular decisions before ramping up the good news closer to the next election. This Trudeau budget will do just the opposite. The spending taps will be open wide.

But there are special challenges here. It will have to be seen to be fair to the regions because there are provinces (Alberta, Saskatchewan, Newfoundland and Labrador) which are hurting and others (British Columbia, Ontario, Quebec) doing just fine.

There are sky-high expectations from many who feel they were starved during the Conservative years and there is another shoe to drop shortly after this budget — a package that will satisfy Bombardier’s need for $1 billion (U.S.) investment in Quebec. Help for hurting provinces is expected to come in the context of the national budget, not in targeted, specific spending.

Back in the summer, Trudeau envisioned three years of modest $10-billion deficits, with the books balanced in the final year of a four-year mandate.

Those targets have long since been abandoned and Morneau launched a pre-emptive strike in February by announcing an $18.4-billion deficit, before any of Tuesday’s spending announcements are factored into the mix.

Most economists, therefore, are forecasting a $30-35 billion deficit.

The broad strokes are largely known.

Canadians can expect to see a massive outlay in infrastructure spending, beginning with maintenance work which will not be launched with bells, whistles or ribbon-cuttings.

There will be a Liberal child benefit program which, according to their platform, would deliver more than what the previous Conservative program had delivered to 90 per cent of Canadian families.

There will likely be a program making it easier for students to repay loans, enhanced employment insurance and — already announced by Trudeau — a move to roll back the eligibility age for old age security from 67 to 65.

The Liberals have done a masterful job of preparing Canadians for years of deficit, a sales job that turned recent political orthodoxy on its head.

But they can’t control expectations.

Hopes among First Nations are sky high and they are expecting a historic investment Tuesday.

Assembly of First Nations National Chief Perry Bellegarde said no one from the government has given him so much as a wink or a nod that these expectations should be tempered.

“When you make investments in First Nations it is good for the country,’’ Bellegarde said. “I think Canadians get that.’’

There have been promises of money to provide potable water on reserves, about $200 million per year to close the gap in education spending on First Nations children, money for an inquiry into missing and murdered indigenous women ($40 million over two years) and the lifting of the two-per-cent cap for services and program spending.

Over the lifetime of this government, the First Nations price tag is in the billions.

But the Liberals now say $1.7 billion for First Nations education, which they had believed remained unspent from a failed Conservative plan, has mysteriously disappeared.

Education spending is the key, said Bellegarde. “I believe in my heart we will see significant investments (Tuesday).”

But that second shoe should be remembered because a Bombardier deal is already factored into the fiscal outlook for this government.

There will be strings, just as there was in the deal to save General Motors.

But there is no time frame for the announcement and sources say election campaigns in Saskatchewan and Manitoba will have no bearing on the timing of the announcement.

There will inevitably be disappointment Tuesday even if Morneau’s budget is generally applauded.

Expectations were just too high in too many constituencies.

But beyond Tuesday, the Bombardier deal and the anticipated political fallout could be a tougher test of Trudeau’s communications skills than any budget sales job.

Toronto Star

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