Welcome to our annual issue on the federal budget. This budget seemed to offer mixed messages, that on the one hand it was transformational, and on the other, in Finance Minister Jim Flaherty’s own words, it was “modest.” When we caught up with the Finance Minister for his annual Q&A with Policy Options, he said: “I think it is both in the sense that the larger picture is transformational.”
Relative to expectations, the operational spending cuts were modest indeed — $5.2 billion over five years, representing a 6.9 percent cut in operational spending and only 1.9 percent in overall government spending. Most of the 19,000 job losses in the public service are through attrition. As for big picture issues like moving the eligibility for Old Age Security from 65 to 67 years old, Prime Minister Stephen Harper had already signalled it was coming in his Davos speech in January, so it was already priced into the political market.
Kevin Lynch knows a thing or two about budgets. Now vice-chair of BMO Financial Group, he was Clerk of the Privy Council and deputy minister of finance. In the fast changing global economy, he writes, “fiscal planning requires a longer term lens.” Among the challenges are the demographics of aging in Western countries, global competitiveness, the information revolution, and the hangover from the 2008 financial crisis.
Bruce Carson has also seen budgets in the making, in his days as senior policy adviser to Prime Minister Harper. He considers the fiscal, political and external pressures a finance minister comes under in the making of a budget. He looks at three examples: the 2006 budget in the minority House following the election of the Conservatives; the 2009 budget in the wake of the global financial crisis; and the 2012 budget, which combines spending cuts and a forecast return to surplus in 2015.
From the University of Calgary, Jack Mintz, one of the country’s leading economists, shares his take on the budget. He see Ottawa’s raising the age for OAS from 65 to 67 as “a hallmark reform,” and perhaps the beginning of a broader review of seniors’ entitlements in an aging society.
For his part, Treasury Board President Tony Clement, who led the spending review, writes that “our government looked under the hood of every activity, program and service to make sure they are operating efficiently and effectively.”
Nobina Robinson, a member of the federal Expert Panel on Government Support to Research and Development chaired by Tom Jenkins of Open Text, analyzes the budget measures announced vis-à-vis implementation of key recommendations in the panel’s October 2011 report. Surprisingly swift action on spending directions was taken to begin to address the chronic problem in Canada’s private sector investment in R&D. She points to some underlying messages in the budget for all stakeholders in the innovation game.
Scott Reid, who was communications director to former Prime Minister Paul Martin, deconstructs the communications strategy for the budget. “The awkward and somewhat contradictory mix of messages,” he writes, “austerity on the one hand but growth on the other, was not so much reconciled by the budget’s tabling as it was formalized.”
Al Chatterjee, former head of economics at Bell Canada, concurs with Flaherty that Canada’s economy doesn’t require any further economic stimulus. “Fiscal stimulus,” he writes, “should be used for short-term macroeconomic stabilization purposes only.”
IRPP Senior Scholar Thomas Courchene and IRPP Research Director Tyler Meredith consider the impact of Budget 2012 on the provinces, which are not disinterested bystanders in federal-provincial funding outcomes, especially in transfers such as health and equalization. Their deficit and debt burdens are also part of the Canadian fiscal narrative.
On the political scene, Policy Options was at the NDP leadership convention in March, and we offer two considered views, one from the inside and one from the outside. Robin Sears, a former national director of the party and a supporter of Brian Topp for the leadership, considers some of the challenges Thomas Mulcair faces as Jack Layton’s successor. Andrew Balfour, a Liberal Party activist, tells us what he saw on the floor of the convention in Toronto.
From the University of Calgary, Margaret Clarke and colleagues Herb Emery, Ron Kneebone and David Nicholas propose a basic annual income for the neuro-developmentally disabled, such as people with autism, in Canada.
In our occasional series, The North, former Nunavut finance official Anthony Speca has some thoughts on how the northern territories can get a better resource sharing deal out of Ottawa, perhaps along the lines of what Greenland obtained from Denmark.
And from Université Laval, Jocelyn Maclure questions whether the seemingly progressive students’ movement against the university tuition fee increases in Quebec are taking the wrong direction. He proposes instead that we opt for a more nuanced approach to studying and to university education and financing.
Finally, Victor Rabinovitch, a former senior official in the federal government, offers a timely appreciation of Pierre Juneau, a giant in Canadian broadcasting and culture, who recently died at the age of 89. Among other distinctions, he was the first chair of the Canadian RadioTelevision Communications Commission, and later president of the CBC/Radio Canada. And of course the Canadian music awards, the Junos, were named for him.