by Tim Harper
Welcome to the era of deficits and dreams.
Some of the dreams are deferred, but the deficits seem cast in stone.
Here’s betting, however, that Canadians will not give much thought to a $29.4-billion deficit that scales down, but does not disappear, during the Liberal mandate.
Rookie Finance Minister Bill Morneau has a budget that should be an easy political sell to Canadians and will be applauded by the party’s core constituency, with its promises to the middle class, its investments in infrastructure and innovation, its employment insurance reforms, its green initiatives and First Nations investments.
If you want us to balance the budget, you’ll have to elect us again, the Liberals say, and even that is not explicitly promised.
In essence, Prime Minister Justin Trudeau and Morneau have delivered what they promised, although they may not be moving as quickly as some had expected – or the government itself had implied during the election campaign.
They have, however, demonstrated what can be done if there is a willingness to go into the red, and even then they have not gone as far as some economists had suggested they could.
The Liberals have a lot of political cover for this budget.
Opposition Conservatives will accuse them of lacking a blueprint to get out of deficit, but this will come from a party that ran much larger deficits (albeit in more perilous economic times) and would have hamstrung itself had it been re-elected with its fealty to balanced budgets and its soon-to-be-repealed phoney legislation compelling governments to balance.
Canadians who believe they are better off with the Liberal Canada Child Benefit – and Liberals claim nine in 10 families will – or have recently lost jobs but now have better access to employment insurance, will not be discussing deficits at the dinner table.
This Trudeau budget also illustrates the box in which New Democrats are living. Unelectable when promising big deficits and unbelieved when promising to balance the budget, New Democrats will look at Tuesday’s budget in frustration because this really could be delivered only byLiberals.
Cities will be happy with infrastructure spending to be delivered in two phases, with the first phase over two years featuring investments in modernizing public transit, water and waste water systems, affordable housing and green retrofit.
Key for the cities is the federal commitment to fund up to 50 per cent of eligible costs.
First Nations will be pleased with the beginning of a “historic” investment in everything from education to potable water, the lifting of caps on program spending and closing the gap on child welfare.
But this is only a beginning. Much of the spending on First Nations is deferred into what would be a second mandate including more than half of aboriginal education funding pushed into a second mandate.
The selling of budget 2016 began weeks before Tuesday’s tabling and it was another victory of Liberal craftsmanship.
The term stimulus had been supplanted by “investment” and the Liberals made sure this was understood to be a “long-term” investment.
Tuesday, Morneau was comparing his first effort to the long-term plans needed after the Great Depression and the Second World War and said Canadians were standing on the precipice of fundamental change.
Hyperbole aside, even the budget deficit at $29.4 billion avoided the sticker shock of $30 billion that the Liberals had happily let hang in media reports for weeks, akin to pricing something at $19.99 because it sounds cheaper than $20.
They also got there by using budgetary tricks used by all governments, including kicking $3.7 billion of military capital spending down the road.
They have decided that private sector economists have been overly optimistic, and they tossed aside the forecast of oil at $40 (U.S.) per barrel through 2016 and downgraded it to $25 (U.S.) per barrel.
They warned that crude prices could remain below expectations through the next election and into 2020 and also raise red flags about high household debt that could slow any consumer-fuelled rebound and say that manufacturing and exporters are slower than expected to benefit from the lower dollar.
Morneau maintains Canadians delivered a message – “help me and my family and make investments for the future.”
In the short term, peddling the Liberal mantra of dreams fulfilled by rewarding hope and hard work will be easy to sell, but it will get more expensive the deeper we get in the Trudeau mandate.
Tim Harper is a national affairs writer. His column appears Monday, Wednesday and Friday. tharper@thestar.ca Twitter:@nutgraf1
Copyright 2016 – Torstar Syndication Services
