What the finance minister forgot to tell Canadians

Finance Minister Joe Oliver already has his lines down pat for his April 21 budget. He gave Canadians a foretaste of the government's 10th "Economic Action Plan" last week on the factory floor of Canada Goose, a high-fashion coat manufacturer in Toronto.

"It will be a balanced budget just as we promised," he said.

There was never any doubt about that. For Prime Minister Stephen Harper, eliminating the deficit trumped all other national priorities. No matter what the government had to sacrifice that imperative would be achieved.

"We're not looking at a budget that will be cutting," Oliver said.

He doesn't have to cut. His colleague Tony Clement has taken care of that. The Treasury Board president handed all federal departments and agencies their marching orders on Feb. 23. Most will have to hold the line despite inflation and population growth. A couple with newly assigned tasks (including the Canadian Security Intelligence Service and Employment and Social Development) will get a slight increase; and a dozen (including Environment Canada, Canadian Heritage, the Immigration and Refugee Board, the Public Health Agency of Canada, National Research Council, Library and Archives of Canada, and Via Rail) will have to slash their payrolls or programs.

"The international recovery remains fragile," Oliver pointed out. "Growth rates in key emerging economies like China and India have lost momentum."

That is true - but it's not the whole truth. The main reason the government's manoeuvring room is so constrained is that it relinquished billions of dollars of revenue in tax credits, deductions, exemptions, shelters and loopholes. The Conservatives have created 68 new tax avoidance measures costing the government $155 billion a year in foregone revenue, according to the Fraser Institute. (Since the think-tank released its tally, Harper has added one worth $2 billion a year.)

Another drain on the federal treasury is uncollected taxes. "Are we losing $3 billion to overseas tax evasion or $30 billion?" asks Sen. Percy Downe. "I don't know, you don't know and, most importantly, the government doesn't know."

"We really needed to assess the implication of the dramatic fall in oil prices," Oliver said, explaining the delay in this year's federal budget. What he didn't explain was why he did not undertake such an assessment before Harper locked in his long-promised "family tax cut" last October. The same red light was flashing then: the price of crude had dropped by 20 per cent and no one knew where the bottom was.

Ignoring the financial risk, the prime minister went ahead with his plan to allow eligible parents to split their income at a cost of $2 billion a year. To insulate himself against accusations of catering to upper-income families, he increased the Universal Child Care Benefit at a cost of approximately $4 billion a year.

Both measures are already in effect. All parents with children up to 18 will receive their first payment - typically $520 per child - on July 1.

The budget will "encourage more job growth," Oliver assured Canadians. The line has been a staple of every budget since the 2009 recession. But the labour market is still languishing. It is true, as the minister claims, that 1.2 million new jobs have come on-stream since the downturn. But a large proportion are part time, short-term or precarious. They don't allow victims of the recession to get back on their feet. They don't allow young workers to build a career. They don't lift families out of poverty. And don't make up for the loss of well-paying jobs in the oilpatch, the public service, the banks and the communications sector. Everywhere they look, Canadians see employers shed workers, outsource jobs and cut costs. Oliver's prediction of job growth contradicts their experience and the government's record. The finance minister is saving a few details for budget day. On April 21, he will announce additional tax relief, infrastructure investments and manufacturing incentives. But the story-line is firmly set: Thanks to Harper government's prudent management, Canada remains fiscally strong in an uncertain world.

It would be a compelling narrative if there weren't so many holes in the plot.