National Column: Big hopes, but is the money really there?

by Tim Harper

It seemed like a political master stroke last July when Justin Trudeau and his inner circle decided to turn political convention upside down and run “modest” budget deficits.

The pledge helped Trudeau break from the pack and in hindsight it was not only a smart political move but a prudent fiscal decision.

But modesty is not this government’s strong suit.

As Finance Minister Bill Morneau prepares a budget expected late next month it is clear that the $10-billion deficit pledge for three years is long gone.

The issue here is not necessarily the size of this year’s deficit. It is far more troubling that Trudeau and Morneau have backed away from a pledge to balance the budget at the end of this mandate.

The maiden budget of a fledgling government is always a time of testing, but the importance of this Liberal budget is growing along with the potential deficit.

This is a product of promises and raised expectations, the psychology of deficits that seems to imply open spending spigots in some minds, external forces beyond this government’s control, a rookie finance minister and shaky Canadian consumer confidence.

The parliamentary finance committee sounded the starting gun on some 90 pre-budget submissions Tuesday and the Assembly of First Nations immediately reminded it of Liberal promises on education, potable water and welfare gaps that will cost billions in new spending.

Big city mayors have big city hopes for infrastructure spending. The AFN wants a targeted First Nations infrastructure program.

Bombardier is knocking at Ottawa’s door and if the Trudeau cabinet has not already decided to float the company $1 billion (U.S), Economic Development Minister Navdeep Bains set the stage for that Tuesday,
reminding us the aerospace sector employs 180,000 people and adds $29 billion to our gross domestic product.

Tax changes aimed at helping the middle class did not come in revenue-neutral and are costing the treasury up to $8.9 billion over the next six years.

The cost of the Syrian refugee resettlement program will top $1.2 billion over six years, according to one estimate, there is $1 billion allocated for humanitarian aid for refugees in the region and Ottawa pledged $15 million to the United Nations High Commission on Human Rights this week.

Alberta has already been promised some $700 million in a special fund, and Saskatchewan and Newfoundland and Labrador could also be eligible for such help. The CBC has been promised $150 million annually in new funding. The Canadian Association of University Teachers wants an investment of $1.1 billion over three years to support scientific research and access to post-secondary education.

Some of these expenditures are admittedly small change in a $2-trillion budget. Others are not. Most are laudable. But how many are doable?

The Liberal government is clearly looking at a four-year horizon and beyond. Morneau told the Commons Tuesday he is looking at investments that will get the country back into balanced budgets in
the “long term.”

Trudeau’s government was headed for deficit regardless of its promise. But the deficits cannot be too deep and the timeline for balance too long, because they are dealing with a skittish electorate.

We are not in recession as a country, but there is a jack-o-lantern effect across the land. British Columbia is looking at 3 per cent growth, but Alberta will remain in recession throughout this year, said Glen Hodgson, of the Conference Board of Canada, who provided pre-budget advice to Morneau.

Overall Canadian growth is “feeble,” he says.

We have an aging demographic increasingly worried about retirement.

A study released Tuesday by the Broadbent Institute reminded us starkly, again, that Canada’s aging population is not ready.

Half of Canadians between the ages of 55 to 64 have no company pension plan, but only one in five of those has enough saved to properly supplement government pensions over five years. The study found
half of those that age have enough money saved for only a year of retirement.

Another study found nervousness among Canadian investors not seen since the financial crisis last decade.

The housing market, outside Toronto and Vancouver, is not seen as quite the safe investment of a few years ago and household debt is at record high level.

There’s no use in debating what kind of ledger the Conservatives left Trudeau, or whether Stephen Harper would have balanced this budget. He wouldn’t.

But somehow an image of an animated Harper on the campaign trail, his finger and thumb barely apart, mocking Trudeau’s “three, modest tiny deficits” has come back to play on a continuous loop in my head.

Tim Harper is a national affairs writer. His column appears Monday, Wednesday, and Friday. Twitter:@nuitgraf1

Copyright 2016 – Torstar Syndication Services

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