Morneau bud­get short on fis­cal re­spon­si­bil­i­ties


Bill Morneau is per­haps an in­flu­en­tial fig­ure in Prime Min­is­ter Justin Trudeau’s cab­i­net, but he’s no fi­nance min­is­ter. Given the bud­get he pre­sented two weeks ago, he may be more of a so­cial jus­tice en­abler.

Sup­port­ing more di­ver­sity, equal­ity and in­clu­sive­ness is crit­i­cal to the bet­ter­ment of our so­ci­ety, but most Cana­di­ans ex­pect more from a fi­nance min­is­ter.

There were no plans to bal­ance the books and few de­tails were given on the gov­ern­ment’s plan to deal with NAFTA’s pos­si­ble demise.

Wash­ing­ton’s new trade re­stric­tions, in­clud­ing a 25 per cent tar­iff on im­ported steel and a 10 per­cent duty on alu­minum, could be the be­gin­ning of a trade war.

De­spite re­cent trade deals signed by Canada, the world seems at odds with open trad­ing, and in­stead every­one wants to pro­tect their do­mes­tic mar­kets. This is a dan­ger­ous path, given that agri­cul­ture and food are of­ten con­sid­ered the most vul­ner­a­ble sec­tors when it comes to trade bar­ri­ers. Tar­iff or non-tar­iff bar­ri­ers can make a ma­jor dent in an econ­omy al­most in­stantly, and con­sumers are of­ten af­fected the most.

U.S. Pres­i­dent Don­ald Trump is opt­ing against trade. He sees it as a zero sum game and given the eco­nomics of our coun­try, Canada can­not win many trade wars, es­pe­cially not with the U.S.

We are al­ready wit­ness­ing how a trade war could af­fect the Cana­dian agri-food sec­tor, as Cana­dian pulse farm­ers brace for some ma­jor trad­ing head­winds with In­dia. Some po­lit­i­cal op­po­nents link our prime min­is­ter’s re­cent visit to In­dia with its de­ci­sion to in­crease its tar­iff on chick­peas from 44 per cent to 60 per cent. This de­ci­sion comes af­ter In­dia in­tro­duced a va­ri­ety of tar­iffs on pulse crops, in­clud­ing len­tils, peas and chick­peas. These are growth sec­tors for our econ­omy. Cana­dian pulse ex­ports to In­dia are worth over $1 bil­lion.

There is con­sid­er­able con­sen­sus around the world that trade wars can back­fire and sup­port in­ef­fi­cien­cies that even­tu­ally hurt con­sumers. Trade bar­ri­ers, which of­ten re­main sci­en­tif­i­cally un­jus­ti­fi­able but po­lit­i­cally mo­ti­vated, make economies weaker and less com­pet­i­tive. Du­ties may look like an at­trac­tive, sim­ple mech­a­nism to pro­tect do­mes­tic in­ter­ests, but they are an ex­pen­sive way to re­tain jobs.

How­ever, Canada doesn’t have an im­mac­u­late record ei­ther. Canada ap­plies heavy du­ties on many im­ports, such as dairy prod­ucts, poul­try and eggs. These du­ties are em­bed­ded into our sup­ply man­age­ment regime, which is con­sid­ered by many as one of the most pro­tec­tion­ist poli­cies in the world. In some cases, du­ties ex­ceed 300 per cent.

The awk­ward­ness of ask­ing trad­ing part­ners for ex­emp­tions is pal­pa­ble.

Yet what re­mains un­der­ap­pre­ci­ated is how in­ter­twined our economies are. Du­ties in one sec­tor will af­fect the abil­ity of other sec­tors to trade. It is dif­fi­cult to link steel and alu­minum with dairy and poul­try, but the con­nec­tion is likely there.

This could eas­ily worsen, which spells trou­ble for an open econ­omy like ours. Given our abun­dance of re­sources and knowl­edge, we have plenty to share. Al­most 60 per cent of our econ­omy is trade-driven.

Morneau short­changed Cana­dian tax­pay­ers last week with his bud­get. The gov­ern­ment’s fo­cus on equal­ity would have been bet­ter served at an­other time. We should not be shocked to see Ot­tawa un­pre­pared for Wash­ing­ton’s wrath to­ward its trad­ing part­ners.

Up­hold­ing eq­uity val­ues for our coun­try is un­doubt­edly no­ble, but the gov­ern­ment could fall short on its so­cial prom­ises if it runs out of cash. Syl­vain Charlebois is pro­fes­sor in food dis­tri­bu­tion and pol­icy, and dean of the fac­ulty of man­age­ment at Dal­housie Univer­sity.

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