Expectations high as Trudeau set to unveil first pandemic budget

Liberals skipped last year’s, citing pandemic’s economic uncertainty

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, having not done so last year due to 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 childcare 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 over time.

And opposition parties will be scrutinizing the document as they consider whether to support the fiscal blueprint, with the Liberals needing at least one major party’s support to survive a confidence vote on the budget.

Expectations on the budget are sky-high, said Elliot Hughes, a one-time adviser to former 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, I think, the breadth of policy that they cover and the depth of the spending that they commit to.”

Spending is already at historic levels after the treasury pumped out aid over the last 12 months, sending the deficit at last estimate to over $380 billion.

Next week’s budget will say how deep it is now, how far over $1 trillion the debt has gone and offer an accounting of emergency spending.

More red ink is in store for coming years 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 parliamentary budget officer recently suggested the government rethink how much stimulus it plans to spend.

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.