Political budgets not so boring
A budget about nothing isn’t necessarily a bad budget.
While the press corps and others who seek out grand themes or headlinemaking controversies may find it boring, the success of any financial plan lies in the mundane task of ensuring that a thousand little expenditures are prudent. In that sense, one might suggest that Finance Minister Ken Krawetz’s 2013-14 budget is a success, although there are a few important caveats.
A $179.1-million drop in potash revenues from what was initially projected in March has Krawetz now taking a $135-million dip into the Growth and Financial Security Fund. While he can’t be blamed for the falling price of potash — and adjusting for such a contingency is the purpose of a rainy-day fund — his jiggery-pokery in the 2012-13 budget raises concern over an additional billion-dollars in public debt this year, and whether this budget is balanced as billed.
Still, what was clear in the third-quarter update of the 2013-14 budget Krawetz released Friday is the solid job the government has done keeping its expenses in line. Spending has only increased $40.2 million since the nearly $11.6-billion budget was tabled — a paltry amount when one considers most of that increase was for disaster relief, funding for people with disabilities, winter highway maintenance, higher flooding claims and larger than expected claims for research and development tax credits.
Moreover, such boring little initiatives are often the difference between a good budget and a bad one.
By the same token, federal Finance Minister Jim Flaherty’s unglamorous 2014-15 budget unveiled this week was so boring that reporters quickly became fixated on the political intrigue in his suggestion that the Conservative government may not proceed with income splitting — a policy that would be a big tax advantage for wealthy, one-income couples.
“I’m not sure that, overall, it benefits our society,” Flaherty said Wednesday. “I think income splitting needs a long, hard analytical look.”
This got tongues wagging over the potential split between Prime Minister Stephen Harper and Flaherty on this important campaign promise — the kind of political drama Ottawa loves.
To be fair, this policy was a centrepiece of the Conservatives’ 2011 election platform. It would be nice if the Tories stopped breaking such promises, as they did with a 2006 commitment to remove natural resource revenue from equalization calculations.
But the reality is that there are better alternatives to the $2.5 billion tax cost of income-splitting — perhaps additional income tax benefits for the working poor or increases to the Child Tax Benefit.
A budget often sees many such boring adjustments. And Flaherty’s had a lot of them: Removing the assessed value of a student’s car (that’s often needed to get to class) when assessing the value of Canada Student Loans; $200 million for a Canada First Research Excellence Fund; emphasis on vocation training; and a $305 million plan for highspeed Internet in some 280,000 rural and northern households.
Of course, these don’t hold all that much political intrigue, but budgets aren’t written to entertain us.
“Some people will say this budget is boring,” Flaherty said. “I take that as a compliment.”
But there may also be reasons to think this federal budget is less about the Conservatives quietly going about their business without overt politics than it is about the party simply becoming more subtle in its politics.
Consider Flaherty’s departure from income splitting in the context of a government that sees its re-election to be all about appealing to the middle class (i.e. cellphone contracts; credit card rates) and not pandering to the rich elite whose husband or wife can afford to stay at home with the children. Consider the politics of the budget in terms of shoring up the rural and northern base (critical in Saskatchewan ridings) or appealing to middle-income earners with a kid in college.
And consider the budget in the ceaseless pandering to Quebec, which becomes the only province allowed to keep its immigrant investor program — a legitimate reason for Premier Brad Wall to be less than happy with the federal budget.
So the issue with Flaherty’s budget isn’t so much that it is bad because it’s boring. The problem is that the Conservatives have quietly become better at being political.