The 2009 Budget - What (Not) To Look For

By Jared Wesley on Jan 26, 2009

The federal government is going to unprecedented lengths to offer Canadians a preview of Tuesday' budget.  Proponents claim the move will allow Canadians to digest all of the specific measures in manageable bites, while opponents say the government is trying to get all of the "bad news" out of the way early.   Either way, a series of weekend press conferences and television appearances have let several cats out of the bag, and we expect even more announcements today.  Here's a running list of what (not) to look for in the upcoming Throne Speech and Budget:

In

  • Infrastructure spending on "shovel-ready" and "green" projects... In a rare subject of agreement among politicians, experts, and the public, it appears everyone is in favor of ramping up infrastructure spending as a means of creating/retaining jobs and investing in the future.  (Obama's support of such initiatives south of the border doesn't hurt.)
  • Permanent, broad-based tax relief for individuals and corporations... While the Opposition will point to a lack of substantive help for low-income Canadians, the government's plan to help "the middle class" will forge ahead.  Of note, these tax cuts will not be temporary, but permanent.
  • Training and retraining programs... These will include specific initiatives for older workers and those who do not qualify for Employment Insurance.
  • Industry-specific funding... Expect huge amounts of money (in the $500M+ range) to flow to manufacturing, forestry, and agriculture.
  • Funding for social housing... The government appears prepared to invest in public and affordable housing for seniors, on-reserve Aboriginals, and Canadians with disabilities.
  • Arts and culture... Reversing its much-maligned proposal to "cut" arts and culture fuding -- a move that many feel cost the Conservatives a majority government in the last election -- the government is pledging over $100 million in new spending.  
  • Linkages to the Obama plan... In particular, look for buzzwords like "recovery" and "reinvestment" -- two pillars of the new President's package.
  • No-strings-attached funding to cities and provinces... The government appears more willing than most to send money directly to other orders of government, with few (if any) real strings attached.
  • Concrete commitments to avoid structural deficits and return to balanced budgets within 5 years... Don't rule out attempts by the government to frame this round of deficit spending as a "necessity," given both the economic crisis and the Opposition's demands.  Also, the government's public statements will be peppered with the phrase "last-in, first-out" (in reference to Canada's position in the global economic crisis). 

Out

  • Industry bailouts... Industry-specific funding will be framed in such a way -- in rhetoric, if not in practice -- so as not to offer blank checks to failing businesses and institutions. 
  • Targetted funding for women and children... At a time when all major parties are urging the protection of Canada's most vulnerable, we have heard no specifics about how any of them promise to assist those people most often burdened by the brunt of economic downturns.
  • Dramatic changes to Employment Insurance -- While the Liberals have made EI reform a pillar of their alternative budget, the Conservatives have remained relatively silent about the prospect.  (The government cites its fear that such changes would create structural deficits.)

Maybe

  • Restraint... The government may introduce restraint measures to control the size and growth of the civil service, and/or propose the sale of Crown properties.  Some combination of these may be needed to assuage fiscal conservatives, many of whom are reluctant to support drastic deficit spending.
  • Accountability measures... It's unclear whether the government will implement specific transparency guidelines to track the stimulus spending.  For what it's worth, Obama's team has committed to establish a website to track every dollar spent by his administration during the "Recovery and Reinvestment" project.
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