Budget 2016 includes bold social policy moves, along with considerable unraveling of the Conservative legacy.
Introducing the Sharpie marker and eraser budget: The Sharpie part is the bold, exceedingly liberal social policy planning that the new government is introducing into the fiscal plan (a direction the NDP will find very hard to pick apart). Not all of it is well spelled out. The big red Liberal eraser rubs out segments of the Conservative policy legacy.
Like the Speech from the Throne in December 2015, this budget document is a direct repudiation of the way Stephen Harper’s team did things. Style and tone are central: there’s a picture on the cover of a woman and her daughter walking in the sun (sunny ways!), and the word “hope” is sprinkled liberally throughout Finance Minister Bill Morneau’s budget speech.
But the budget document also puts flesh on the bones of what was a very thin December roadmap. What we end up with is a gamble that the spending will boost growth over the long term by focusing on innovation and raising the economic prospects of Canadians at the lower end of the ladder. It’s politically risky, because the media and opposition don’t generally have the patience to wait around to see how things pan out. Other than the fiscal prudence that is liberally worked into the budget ($6 billion annually), it’s hard to draw comparisons with the previous Liberal government, which spent many years cutting social programs.
The fact that the government is showing a $4.3 billion surplus for the first 10 months of the last fiscal year is an asterisk that will make it more difficult for Trudeau team to justify diving back into deficits without a firm date for re-emerging. The promise to keep the federal debt-to-GDP ratio falling every year has also morphed into a decrease only in 2020-21.
Let’s drill down a bit on what’s inside.
The Sharpie markers. You can imagine the folks at Finance Canada and the new crop of policy wonks inside the Prime Minister’s Office in front of a big whiteboard with big fat Sharpie markers, plotting out programs and measures they theorize will transform the way that wealth is shared and created.
Yup, this is an unabashedly social policy budget. There are echoes of the IRPP’s recently released volume on income inequality, which has been growing over the years, particularly when you look closely at what Canadians have in their pockets from paycheques and investments before the tax system does its job redistributing wealth. Andrew Heisz of Statistics Canada provides a great overview of the trends here.
The marquee measure directed at attacking inequality is the Canada Child Benefit, at a cost of about $5 billion annually. There are other measures in this vein, notably an increase in the Guaranteed Income Supplement for single seniors, and $500 million for a National Framework on Early Learning and Child Care, together with the provinces and territories.
Gone are the “boutique” tax credits such as the children’s fitness tax credit, the textbook credit and the arts tax credit. I just did my taxes, and claimed the maximum for both of these – and that’s a bit weird when you stop to think about it. My household is a fortunate one. When I look around the demographic of fellow parents in hockey, ringette, and music lessons, I have a strong suspicion that lower income Canadians aren’t the ones benefitting from the credits. The University of Alberta reached this conclusion a few years ago.
And you’ll recall that the Auditor General wasn’t too thrilled about how some of these credits were being assessed.
Overall, the Sharpie marker also splits from the Conservative budget model by going broad-tip rather than fine-tip, which is also how they ran their campaign. In Jim Flaherty budgets, there were pages of line items – small measures directed at slices of Canadian society.
The Liberals are going big, but in several cases they haven’t provided much detail as to what those big plans entail. One of the biggest examples is the $2 billion over two years to establish the Low Carbon Economic Fund to support the provinces in reducing greenhouse emissions.
The eraser. If you thought the Speech from the Throne was repudiation of the Conservative decade, take a look at the budget plan.
The document is littered with old Liberal programs that are being introduced again, years after they were axed, and Conservative measures that are being deleted.
Here are some names making a comeback: the Court Challenges Program, the Kitsilano coast guard facility, research funding for Status of Women Canada, sick leave changes for federal public servants, funding for the CBC, funding for promoting the arts abroad, the experimental lakes project in northwestern Ontario. I could go on.
In some cases, there’s a real philosophical difference at play, it’s not just about more spending versus less spending, or about pure politics. The Conservatives very specifically cut funding for advocacy and research in several areas; Status of Women was one such place. They didn’t think that the government should be helping to fund groups that lobbied or challenged the government, such as the Court Challenges Program.
And the way the budget document is laid out is also a sharp contrast with the Conservative plans. There is an entire chapter on Indigenous Affairs, and another entitled “A Clean Growth Economy.” Three years ago, the budget speech didn’t include a single mention of the word “environment.”
So there’s a lot of erasing, but the Liberals aren’t throwing away everything the Conservatives did. There’s no indication, for example, that they are going to change programs and measures like the Northern Projects Management Office, the Mineral Exploration Tax Credit, the Canadian Technology Accelerator Initiative, and the trade agreements that were already in play. As others have already pointed out, there is no immediate change to the Canadian Health Transfer. There are likely dozens and dozens of individual Tory initiatives that are living on, but then, why would the Liberals mention them?
We’ve grown accustomed to more incremental budgets for so long, it’s little wonder that the reactions to this one have been so animated. Conservatives are naturally incensed.
Without praising or condemning the Liberals’ approach right out of the gate, it’s a good thing we’re seeing a vigorous debate over fiscal policy that involves a variety of voices (including social policy researchers) and doesn’t revolve entirely around tax cuts. To give one small example, when was the last time there was a discussion around how investing in the country’s cultural industries can actually produce a healthy return?
In the past year, we’ve suddenly gone from an environment (which includes the media) where carbon taxes and deficits were two taboo words, to one where people are engaged in a no-holds barred conversation. The result can only be good when all the ideas are on the table.