Budgets are matter of timing and viewpoint
A glance at the Canadian and Ontario economic statements highlights fundamental differences
A tale of two economic statements was revealed last week.
And while neither statement was written by Charles Dickens, they tell the story of the best of times or the worst of times, depending on which one you read.
Last week, Doug Ford’s new government in Ontario talked of gloomy deficits and cuts to come in the province - the tough prices to be paid to get finances back in the black after years of Liberal rule.
On Wednesday, Justin Trudeau’s federal government bathed its economic forecast in tones of sunny optimism about the state of the Canadian economy - both now and heading into the 2019 election year. This is a Liberal government that has deliberately chosen not to go down the austerity trail that Ford and his ministers were mapping out last week for Ontario.
Federal Finance Minister Bill Morneau summed it up this way when asked why Ottawa had decided not to build its annual fall economic statement around deficit reduction and tax cuts.
“We would have to have more of an austerity approach, which we think would actually have the negative (effect) from what we’re trying to achieve, which is a continuation of growth and a continuation of jobs,” Morneau told reporters. “That’s why we’re choosing the optimistic approach that frankly has worked and we think will continue to work for Canada.”
The stark differences between the Ford and Trudeau governments are going to be an ongoing theme in Canadian politics in 2019 - a new chapter in Conservative-Liberal tension in this country. A glance at the two economic statements highlights some fundamental differences.
“The Ontario fiscal statement was making the case for why austerity was needed, so you would expect the economic narrative to be more negative,” said Craig Alexander, chief economist for Deloitte Canada, when asked what he saw as the tone differences between the two statements.
“In the case of the federal fiscal statement, it is upbeat and the national economy is doing well,” said Alexander. So what Ottawa has done, he went on to explain, was focus on incentives to business rather than cuts.
Kevin Page, the former parliamentary budget officer and now the head of the Institute of Fiscal Studies and Democracy at the University of Ottawa, also noted the difference in tone, which he saw as a simple reflection of how long the two governments have been in power.
Ford’s government is still new, while Trudeau’s government has been around for three years. Ford’s government can still blame its predecessor for all the gloomy talk it inserts in its economic message, while that tactic has kind of grown old in Ottawa.
“Obviously they’re at completely different stages of the political cycle,” Page said. The Trudeau government “is one year away from an election, so it owns the fiscal track, and it’s taking credit for the economy.”
In other words, Trudeau and Morneau can’t afford to be downbeat. They have an election they want to win in less than a year. Nor do they mind being seen as the polar opposite of the new Ford government in Ontario.
Morneau’s economic update speech to the Commons, in fact, contained a couple of veiled shots at Ontario, or what certainly seemed like them. The finance minister referred to those who want to “bury their heads in the sand” when it comes to climate change and he pointedly talked up the importance of francophone culture - a contentious issue in Ontario since the service cuts in the economic statement.
The federal economic statement is also laced with the idea that governments can fix problems, rather than merely getting out of the way, as the Ontario statement kept insisting. That’s a classic Liberal-Conservative distinction - expect to hear more about it in the coming months.
There are, however, some tiny areas of common cause in the two economic statements. They’re both trying to be businessfriendly, of course, and while Ottawa hasn’t made any elaborate promises about buck-abeer or extending liquor-store hours, there was a mention in Wednesday’s statement about giving beer makers more flexibility in their ingredients and processes.
Page said he noticed that both statements are intent on regulatory reform and cutting red tape. True enough - federal Intergovernmental Affairs Minister Dominic LeBlanc told me a couple of months ago that this was an area where the Ford and Trudeau governments might see eye to eye.
But in one week, the two economic statements have generally told very different stories. The endings to those tales, happy or otherwise, won’t be written until next year.
“Obviously they’re at completely different stages of the political cycle.”
Kevin Page