Budget Blues and Bliss

The Tory Budget is pretty much as expected. GST cut, child care payment, a few minor credits and cuts: the Bloc is willing to support, the Liberals - likely kicking themselves that they lost and are not able to enjoy spending the surplus they were responsible for - are opposed and, of course,so is the NDP.

While there is a small corporate income tax cut there is not the much speculated about capital gains roll over provision.

This is an intensely political Budget teeing up an election in a year or, perhaps, two. What it is not is a deeply fiscally conservative document or much of a change from the Liberal agenda. Harper recognizes his minority position and knows that the time for significant change is one election away. At least I hope so.

In fact, this is a budget which Ralph Goodale or Paul Martin could have delivered in a non-election year.

Now the question becomes whether in electing the Tories Canadians have not simply elected a marginally less tired business wing of the Liberal Party.

Predictably, the Liberals are stealing the NDP’s talking points and murbling on about “working men and women” being dinged by this Budget. It would be more interesting to hear an actual Liberal counter-proposal; but that will not happen so long as the Liberals are leaderless.

It will also be interesting to hear the reaction of the more fiscally conservative folks for whom the object in electing Tories was not more Liberal spending.

The Tories seem more than willing to spend - whether on program spending or tax expenditure - while leaving the national debt to gently drift down largely as the result of projected growth in GDP. Which, of course, explains why the reduction of the debt is put in these terms in the Budget

The debt-to-GDP ratio is projected to fall to 31.7 per cent by 2007–08, on track to meet the new medium-term objective of reducing the debt-to-GDP ratio to 25 per cent by 2013–14.
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This is hardly a ringing commitment to fiscal probity; rather it is a willingness to let momentum carry the economy up while leaving plenty of room for growth in Government expenditure.

Similarily, when it comes to program spending, the Tories are quite willing to hide another rabbit in the same hat:

The Government is committed to reducing growth in spending to a rate that is sustainable. Program expenses as a share of GDP are projected to decline from 13.7 per cent in 2004–05 to 13.0 per cent in 2007–08.
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This will look brilliant if the Canadian economy continues to grow - and the Budget includes private sector forecasting suggesting that it will do just that - not so brilliant if that growth slows.

The one thing which the Budget does not do is actually reduce the levels of overall government spending. Or the size of the government. Which, implictily endorses the spending and growth in government under the Liberals.

Politically this may be very wise. Nothing makes you look scarier than reducing the size and scope of the government which Canadians have been trained to look at as a source of largesse and compassion. (Without, of course, being reminded of the costs.) But it is a political wisdom bereft of any long term vision or conservative commitment.

It looks as if Harper has learned the Mulroney lesson altogether too well.

Written by jay on May 3rd, 2006 with 4 comments.
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