Welcome to our annual budget issue. And welcome, as well, to Campaign 2011. Three days after the budget was presented, the government fell on a nonconfidence motion supported by all three opposition parties. The next day, the Prime Minister visited the Governor-General, and the writ dropped on Canada’s 41st general election; the fourth in the last seven years.

In the lead-up to the budget, the questions were primarily about the size of the deficit and when Canada would return to fiscal balance. The answer is that, with the economic recovery and job creation, the deficit is shrinking quicker than forecast, giving the government the margin required to offer some kind of political accommodation with the NDP. Already boasting the lowest deficit and debt ratios in the G7, Canada is on course to return to balance by 2015.

In Ottawa, we had an extensive Q&A with Finance Minister Jim Flaherty on the day after the budget. He was very comfortable throughout the conversation, and he appeared serene about the outcome. No finance minister in history has delivered six consecutive budgets to a minority house as Flaherty has done.

The budget itself never came to a vote. But having presented it, the government gets to run on it. And the budget is not so much an economic statement as a campaign blueprint.

As IRPP Chair Janice MacKinnon notes in her piece on the budget, the Finance Minister faced a delicate balancing act, to move the fiscal framework toward balance by 2015, while creating a campaign platform for the Conservatives to run on in the event they were defeated in the House. This outcome was assured when NDP leader Jack Layton kicked the tires of the budget, but declined to take it out for a spin, sealing the government’s fate.

And as IRPP Senior Scholar Tom Courchene observes, “there is something for everyone,” in terms of benefiting “from one or more of the tax breaks, income increases and targeted provisions” of the budget. In that sense, the Finance Minister struck the needed economic and political balance.

IRPP economist Jeremy Leonard looks at the budget and finds there is little in the way of reducing the deficit by spending cuts, and that the government is counting on “economic growth to do the heavy lifting.” From Calgary, Todd Hirsch looks at the budget in his column.

On a related economic theme, David Herle walks us through his extensive polling data on what the Great Recession felt like to business leaders and consumers and their level of confidence coming out of it. He finds that business and consumers have “positive but modest expectations.”

David Boisclair and Marcelin Joanis examine Quebec’s budget and cast it in the larger light of the federal budget. CIRANO’s Jean-Pierre Aubry looks at federal spending over the period 2006-15 to determine whether, under the Conservatives, it has declined or increased as a share of the GDP.

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Then Kevin Lynch looks at the issues of productivity and innovation, which are critical to our future prosperity, and finds that “Canada is a laggard” in both. From Mount Royal University in Calgary, Peter Howie considers the possibilities of a guaranteed annual income, and concludes it would impact negatively on labour supply and economic growth.

In a Dossier, Jeremy Kinsman looks at the democracy movement that has swept North Africa and the Middle East in the first quarter of 2011, and sees very different outcomes across the region. Meanwhile, Gil Troy checks in with a view from Jerusalem, where the Israelis are hardly disinterested or indifferent to the tumultuous events unfolding.

Elsewhere this month, Robin Sears looks at Canada’s campaign finance system and finds it has been crippled by reforms that, however well intended, have hobbled legitimate political fund raising by barring corporate and union donations and capping personal donations at $1,100 per year.

In a Letter from Kabul, Nipa Banerjee reports from her last two visits to Afghanistan on the state of civil society and development aid. A former head of Canada’s aid program in Afghanistan, Banerjee’s narrative reads like something out of Kafka or Catch-22.

Canada was instrumental in the creation of the International Criminal Court, but Fulbright Scholar Prosper Bernard writes that Canada needs to re-engage with the court by investing “the kind of smart power assets that can make a positive difference in promoting retributive and restorative justice around the world.”

From the Asper School of Business at the University of Manitoba, Hari Bapuji and Kevin Morris consider the issue of consumer product safety in Canada in light of an increasing number of product recalls, from cars to cribs, from pharmaceuticals to sun glasses. They find that Health Canada’s consumer product safety budget of $27 million is only 0.73 percent of the department’s budget.

Finally, in our Book Excerpt, from his newly released The Right Balance: Canada’s Conservative Tradition, Hugh Segal writes of the continuum between Conservative leaders of the modern era, from Robert Stanfield to Brian Mulroney. In a strong review, Geoff Norquay writes that Segal’s book is “an important contribution to Canadian political literature.”

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L. Ian MacDonald
L. Ian MacDonald is a former editor-in-chief of Policy Options (2002-12) and is currently an editor and publisher of Policy Magazine.

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