The Budget

There's an election coming, so yesterday's budget was aimed at that reality. But, Alan Freeman writes, even though there is a considerable amount of spending, it's not very showy:

What we got today was an unusual pre-election budget, with few shiny baubles and lots of measures that promise a lot more in the future than deliver much in the present.

The Liberals continue to unbothered by their long-forgotten 2015 promise to balance to budget, figuring that the zero-deficit voters are all captured by the Tories and that Liberal and NDP leaners don’t give a fig whether the budget deficit is $20 billion, $10 billion or zero, provided that the economy is still growing and taxes are basically flat.

In fact, the government did better than expected in the current year, because of robust revenues, and now say the 2018-19 deficit will come in at $14.9 billion. And that’s after a year-end spending spree of $4.2 billion. That mad money includes $3.2 billion in cash going to municipalities in a one-time boost of federal gas-tax revenues and money for energy efficiency programs administered by the Canadian Federation of Municipalities.

On housing, Morneau expanded the amount of money that first-time buyers can borrow tax-free from their RRSPs to $35,000 from $25,000 — enough to say he’s done something, but hopefully not enough to threaten the future of Canadians’ future pension security, which is what RRSPs are for in the first place.

Then he introduced a First-Time Buyer Incentive, a complex financial instrument that gets the CMHC in the business of providing shared equity mortgages of up to 10 per cent of a home purchase but would not add to buyers’ monthly payments and only be repayable on resale.

Sounds like free money but there will be strict limits on eligibility, including a maximum household income of $120,000 and the requirement to fill all the other rules of insured mortgages, including a $1-million maximum. 

Still nothing for low income housing. But with the average Toronto home selling for $870,000, maybe it will make some difference.

And, as the father of three sons who are still paying off their university debt, I welcome the lower interest rates on student loans.

But, most important of all, there is the beginning  of a pharmacare plan:

On pharmaceuticals, there’s creation of a new Canadian Drug Agency, set up with the goal of cutting drug costs by $3 billion but no commitment to go through with an expensive National Pharmacare plan. That promise will have to wait until the election campaign.

Will that be another broken promise?

We'll see.

Image: FYI Music News

A Justification for Selfishness

The Conservatives' proposed budget -- which was the highlight of last week's return of Parliament  -- was a remarkable document, for several reasons. But it was most remarkable for its optimistic projections of economic growth. 

Finance Minister Jim Flaherty claimed that the economists he consulted assured him that Canada would experience "moderate growth" for the next five years. But one should remember that, the last time he consulted economists, none of them (according to Mr Flaherty) forecast the recession -- which arrived, full blown, shortly after the Conservatives were elected.





As the above clip demonstrates, Mr. Flaherty has a talent for denial -- as does his boss, the Prime Minister. After all, it was Mr. Harper who claimed during the election campaign that "The country will not go into recession next year and will lead the G7 countries." And it was Mr. Flaherty who promised that "We will not run a deficit." Yet, this week, the Finance Minister boldly asserted that -- while the country is now in hock to the tune of $55.9 billion -- it is not facing a structural deficit, despite what Parliamentary Budget Officer Kevin Page claims; and, therefore, there is no need to raise taxes.


Except the budget does raise taxes -- by increasing Employment Insurance premiums an additional fifteen cents on every $100 of insurable earnings. This tax increase is broad based. It hits everyone who brings home a pay cheque. But, as he raised taxes on every working Canadian, Mr. Flaherty reduced taxes on corporations yet again. When the Conservatives came to power, the corporate tax rate was 22.12%; they reduced it to 19.5% two years ago, then to 18% last year. The government plans to further reduce the rate to 15% by 2012. "We are staying the course," Mr. Flaherty bragged,  "to having the lowest corporate income tax rate in the G7 (group of nations) by 2012."


We are just beginning to emerge from the wreckage of the economic policies of the last thirty years. Those policies brought us to the edge of another Great Depression; and this government continues to believe that more of the same is the way to prosperity. Girded with that certitude, the Finance Minister boarded a government jet and flew off to southwestern Ontario to sell his plan. The cost of the flight was just under $9000. It would have cost just over $800 to fly commercially; but we were told that Mr. Flaherty's schedule required that he fly on government aircraft.


The latest budget lays bare this government's priorities. And it proves that John Kenneth Galbraith was right when he wrote, "The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."