Anxious budget, anxious Canada
An editorial from the Waterloo Region Record, published March 24:
The federal budget unveiled in Ottawa last week is the product of a worried Liberal government that should leave Canadians worried about where their country is headed. It is a wait-and-see fiscal plan that casts one watchful eye on the unpredictable U.S. President Donald Trump and the other on what costly Liberal activism is doing for Canada – especially the middle class.
To a degree, that caution is wise because no one knows what Trump will do with corporate and border taxes or trade deals – or how his decisions will impact Canada.
A stand-pat budget will make it easier for the Liberals to respond nimbly and appropriately to whatever wild and woolly thing Trump does next.
Yet this sudden prudence also makes us wonder if the Liberals’ plan to borrow heavily today to buy prosperity tomorrow is paying off or if it could withstand a recession.
Although the Justin Trudeau government’s second budget provides a sprinkling of new money for job training, social housing and child care, it commits the government to relatively little new spending. It talks big but brings little new cash to the table.
At the same time, Finance Minister Bill Morneau has recoiled from hiking taxes on wealthy Canadians or selling government assets, such as airports, to pay for Liberal promises.
And strangely for a government that repeatedly professes love for the middle class, this budget increases taxes on tobacco, alcohol and ride-hailing services, while killing a tax credit that rewarded public transit users. Main Street, not Bay Street, will most feel the brunt.
While some will interpret much of this as an uncharacteristic, small-c conservatism on the part of the Liberals, it is anything but.
No one should forget how revolutionary Morneau’s first budget was a year ago when compared with the way Stephen Harper had tried to manage the country.
In contrast to the Conservatives’ obsession with smaller government and balanced books, the Liberals committed themselves to leaving a bigger government footprint and incurring massive debt to do so. It was a U-turn, executed with a foot pressing the spending gas pedal to the floor.
The Liberals’ election campaign pledge to run annual deficits of no more than $10 billion for a few years, followed by a quick return to balanced books, was quickly tossed in the recycling bin.
After a first budget written with $23 billion in red ink, this week’s budget includes a $28.5-billion deficit for 2017-18 – and no timetable for balancing the books. That’s worrisome.
Do the Liberals know what to do next? Is their plan sustainable in the coming years without either big tax hikes or major spending cuts? What about the debt? Or is that another generation’s problem?
Perhaps Harper’s approach did not deliver the economic fillip Canadians craved. But we have yet to see evidence Trudeau’s fiscal policies are doing better.
It is not enough for the Liberals to spend more on infrastructure and modernize the workforce.
Canadians need to see value and results for their money. They haven’t yet.