BUDGET EXPECTATIONS SKY-HIGH.
Lack of support would topple government
OTTAWA • The Liberals will look to thread an economic needle with Monday's budget, while dealing with a minority Parliament where the document's defeat would topple the government.
It has been more than two years and two throne speeches since the Liberals delivered a federal budget, skipping last year over what the government said was economic uncertainty created by COVID-19.
The Liberals have promised to lay out a plan to green the economy, create a national child-care system and help displaced workers improve their skills.
Provinces will be looking for more health-care cash, small businesses for an extension of emergency aid, and credit-rating agencies for certainty that historic deficits and debts will be tamed.
Opposition parties will consider whether to support the fiscal blueprint, with the Liberals needing at least one major party's support to survive a confidence vote on it.
Expectations on the budget are sky-high, said Elliot Hughes, a one-time adviser to former Liberal finance minister Bill Morneau, which he added is something to be avoided in politics.
“They haven't exactly minimized expectations themselves,” said Hughes, now with Summa Strategies.
“So we should expect it to be quite the day in terms of the breadth of policy they cover and the depth of the spending they commit to.”
Spending is at historic levels after the treasury pumped out aid over the past 12 months, sending the deficit, at last estimate, to over $380 billion.
More red ink is in store as the Liberals have promised between $70 billion and $100 billion over three years in stimulus.
Since November when that promise was made, jobs figures and the economy have fared better than expected.
The change in outlook could mean the government finds between $12 billion and $15 billion in extra spending room this year, said RBC senior economist Josh Nye.
What the Liberals need to do with any spending is focus on areas and items that improve longer term growth prospects, said Robert Asselin, a former Trudeau budget adviser now with the Business Council of Canada, using the example of skills-training programs to better connect job-seekers and employers.
“This idea that just spending, spending, spending is good for everything is a false premise,” he said. “I'm worried that we're using this crisis to do all kinds of stuff that in normal circumstances we wouldn't do.”
One area of overlap appears to be child care.
Business groups have joined longtime advocates noting the economic need for child care, as mothers — in particular with young children — have lost income through the pandemic.
“I don't think we'll see the economic growth and the productivity we want until we have this program in place,” said Jennifer Reynolds, CEO of Toronto Finance International.
“We need women working. Women are over 50 per cent of the university graduates, they're highly educated, and we're not taking advantage of that talent pool in a way we should.”
Spending on child care may end up paying for itself as the labour force boost translates into more tax revenue to federal coffers, Nye said.
An online survey by Leger for The Canadian Press found that seven in 10 respondents were worried about what the deficit would mean for future spending.
The online survey of 1,504 Canadians between April 9 and April 11 cannot be assigned a margin of error because online panels are not considered random samples.
The survey also found that nearly three in 10 respondents would prefer an election this fall, a further four in 10 preferred a later vote, and only six per cent of Liberal supporters wanted an election this spring. Some 60 per cent preferred a vote after this fall.
Kathy Brock, a professor at Queen's University's school of policy studies, said the budget will have to speak to people's ongoing concerns about the pandemic, and keep enough Liberal voters happy so they don't migrate to the New Democrats or Greens should the budget fail to live up to expectations.
“It's almost inevitably going to be a disappointment to a lot of the core constituencies unless someone like Chrystia Freeland can find that magic balance point,” Brock said.
WE'RE USING THIS CRISIS TO DO ALL KINDS OF STUFF.