The federal budget tabled Thursday passed at least one important test. It gave voice, and funding, to a good part of the recent pact between the governing Liberal administration and the NDP.
There was $5.3 billion to begin free dental care for children under 12. By 2025, the program will be extended to middle- and low-income families.
Child care was given a boost. Action to reduce hazardous emissions was high on the list, with $7.5 billion for various green initiatives.
And support for affordable housing was made a priority, with $10 billion in new funds.
While there was also a moderate increase in military spending, brought about by Russia’s attack on Ukraine, it had been agreed with NDP Leader Jagmeet Singh that this would not cause a parting of the ways.
In political terms, then, Prime Minister Justin Trudeau’s minority government is, for now, secure.
If there is cause for concern, it revolves around what this budget did not accomplish.
Where is the strategy for growing the economy? Finance Minister Chrystia Freeland might point to the various incentives for innovation built into her budget.
But they are dwarfed by one single statistic. Natural gas and petroleum products are by far sa国际传媒’s No. 1 export commodity. We sell more of these products than the next four export commodities put together.
Moving the business sector to net-zero emissions is good for the environment, but it must be harmful to our balance of trade, and to resource revenues.
Likewise it is difficult to understand the minister’s fiscal strategy. Freeland forecasts a massive deficit of $60 billion in the year ahead. There are no surpluses anywhere on the horizon out to 2027.
Such large increases in debt and spending risk more inflation, already at a 30-year peak. They also invite higher interest rates.
The Bank of sa国际传媒 has already announced it will raise interest rates by 50 basis points next week, a move certain to hike mortgage rates and make home ownership even more unaffordable.
Freeland attempts to justify her fiscal strategy by repeating the claim that sa国际传媒’s net debt-to-GDP ratio is the lowest among the G7 countries. She arrives at this figure by using the holdings of the sa国际传媒 Pension Plan and the Quebec Pension Plan to reduce our debt. But this is explicitly forbidden by law.
After weathering two years of the COVID epidemic, we needed a return to responsible money management, and a chance to rebuild the treasury.
Rather, by failing to focus on a few affordable initiatives, and instead spreading money far and wide, Freeland has brought the long-term sustainability of our social safety net into question.
By adding to the responsibilities already placed on our safety net programs, the minister has spread the net too thin. As it is, all of our major social services are struggling to provide respectable standards of care.
This is particularly the case in the health and education sectors. It would take almost unheralded levels of economic growth and revenue enhancement to meet even the present need.
What will happen if interest rates go through the roof, as they did the last time we had sky-high inflation? Or what if COVID makes a fighting return during the winter?
The axe will have to fall somewhere, and of necessity it will fall disproportionately on our safety net programs, because that is where the majority of government spending is concentrated.
Above all else, this budget was a missed opportunity. Yes, it speaks to many of the issues we face, the cost of housing in particular.
But in such dangerous and unpredictable times, it fails the test of prudence. When we needed the government of sa国际传媒 to take a fiscal breather and rebuild its strength, instead the finance minister threw caution to the wind.
