OTTAWA — When the Liberals release the last budget of their mandate Tuesday, Canadians can expect to hear arguments that years of deficit spending have put the economy on stronger footing.
Finance Minister Bill Morneau has promised the budget will contain help for workers in need of skills training, young people looking to buy their first homes, seniors worried about their own finances, and patients with high drug costs.
“It’s an election budget … There’s been a tendency to use these as important communications vehicles — almost platform-launching vehicles,” Kevin Page, Canada’s former parliamentary budget officer, said in reference to recent budgets from federal and multiple provincial governments.
The likelihood that the Liberals will use the budget to sell their own record raises a question: who deserves credit for Canada’s strong economic run?
Job-creation numbers have been solid and the unemployment rate has fallen close to a 40-year low. A recent Statistics Canada report said in 2017 fewer Canadians were living under the official poverty line than at any time in the last decade. The agency credited the drop to a mix of a stronger economy and the Liberals’ enhancement of child benefits.
Canada rode a long stretch of impressive economic growth until the final three months of 2018 before it abruptly decelerated — and nearly stalled — along with a drop in oil prices. Experts predict the economy will regain its momentum over the coming months.
But even with a surprisingly weak end to 2018, Ottawa’s financial situation is better than last November’s fall fiscal update projected.
Experts say the federal treasury pulled in more tax revenues than anticipated. Many fully expect the Liberals to dedicate the bulk of the extra money to new promises, as they’ve done with windfalls in past budgets and economic statements.
Over the last few years, the Liberals have spent billions more than they promised in their 2015 election platform.
They vowed to post annual deficits of no more than $10 billion and to return to balance by 2019. Instead, they’ve posted shortfalls of more than $18 billion in each of the last two years and have offered no timeline to balance the budget. In their November update, the Liberals projected annual deficits of between $18.1 billion and $19 billion over the next three years.
Morneau has regularly argued that the Liberal plan is working.
“Our government has made smart and responsible investments in the middle class, and Canadians are seeing concrete results,” Morneau told the House of Commons last month as he announced the budget date.
Morneau has argued the bigger-ticket commitments, in areas such as child benefits and infrastructure, have been necessary to juice the economy for years to come. He’s also insisted the deficits remain small enough that they’re fiscally prudent.
Page expects the Liberals to take credit for the economic improvements and he thinks they deserve some recognition — particularly for enhancing child benefits and an ambitious, expensive infrastructure plan, despite its slow start.
But he added Canada’s prospects have also been lifted by strong economic performances in the United States and the world as a whole.
Page said it’s difficult to know whether the Liberal deficits will actually raise Canada’s long-term growth or if they’ve mostly created a big, temporary bump in consumer spending, as the government has borrowed money and put it into Canadians pockets.
“You don’t have to be at balance. There’s nothing perfect about a zero (deficit) number in this environment,” said Page, who now heads the Institute of Fiscal Studies and Democracy think-tank at the University of Ottawa. “Having said that, we are adding to the stock of debt and that creates potential instability down the road and we’ll have less room to manoeuvre — and future generations, definitely, are going to pay higher interest costs on the public debt.”
The Opposition Conservatives, some economists and leaders in corporate Canada have criticized the Liberal deficits, especially because they’ve come during good economic times that are traditionally thought to be when governments should pay debt off.
“My concern is, and I’ve said this to him … privately and publicly, it’s not that you’re spending, it’s where you’re spending,” Goldy Hyder, CEO of the Business Council of Canada, said of his exchanges with Morneau. “You’re spending a lot on things that no one can really point to and can say (there’s a) direct line back to helping the economy.”
Hyder said he supported Morneau’s move last fall to use some fiscal space for new accelerated investment write-offs for businesses. He also applauds the Liberals’ commitment to invest in worker training in Tuesday’s budget and their earlier efforts on trade, immigration and child benefits.
But he insists there’s an urgent need for Canada to be more competitive on regulations and taxes if it hopes to avoid falling behind the rest of the world.
Andy Blatchford, The Canadian Press
Trans Mountain puts contractors on notice to get ready for pipeline restart
OTTAWA — Construction on the Trans Mountain pipeline expansion project is set to restart in the next month, just in time for the official kick-off of the federal election.
Trans Mountain Corp., the federal crown agency that owns and operates the pipeline, said Wednesday that work on the terminals in Burnaby, B.C. is set to restart immediately, while work laying pipe on the route in parts of Alberta are on track to start within the next month. Construction contractors were told they have 30 days to hire workers, prepare detailed construction plans and mobilize equipment.
“This is a major milestone,” said Natural Resources Minister Amarjeet Sohi.
Getting construction underway likely leaves many Liberals breathing a sigh of relief, including Sohi, whose riding is just a few kilometres from the Edmonton terminal where the pipeline begins. His already shaky re-election prospects would be even tougher if the pipeline remained stalled.
The federal campaign has to begin no later than Sept. 15 for an Oct. 21 vote, but Sohi said getting shovels in the ground on Trans Mountain has nothing to do with politics.
“I know people want to link this to elections,” he said. “I have never linked it to elections. I always tell that we owe it to Albertans, we owe it to Canadians, energy sector workers and communities who rely on middle class jobs that we get the process right.”
Sohi won in 2015 by less than 100 votes, one of only four Liberals elected in Alberta in the last election. All four seats are considered in play in this election, and anger in Alberta about the struggling oil industry is one of the reasons why.
Sohi visited with pipeline workers on site in Sherwood Park, Alta., on Wednesday. He told them that 4,200 people should be working on the project before the end of the year and the new completion date is in 2022. When the pipeline was initially approved in 2016, construction was supposed to be done by the end of this year.
Sohi also said the construction is going ahead “despite the fearmongering of some Conservative politicians to tell Canadians minutes after we approved the Trans Mountain pipeline expansion that the construction will never happen.”
Edmonton Conservative MP Matt Jeneroux was not impressed with the news.
“Canadians have heard time and time again that Justin Trudeau wants to get pipelines built, yet in four years he has done the exact opposite,” Jeneroux said in an emailed statement.
The Conservatives say the Liberals have killed other pipelines and now have a new environmental assessment process coming in that will ensure no more pipelines are ever approved going forward.
“These decisions are all part of Justin Trudeau’s plan to phase out Canada’s oil and gas sector,” Jeneroux said.
The federal Liberals approved the Trans Mountain expansion in 2016, but the pressure to bring the project to fruition heightened in May 2018 when the government decided to buy the pipeline for $4.5 billion when Kinder Morgan Canada backed away under the uncertainty of numerous legal challenges and political fighting. The Liberals said the government would buy the pipeline, build the expansion and sell it back to a private investor.
The court decision three months later to rip up approval threw all those plans in jeopardy.
After another round of Indigenous consultations and a new review of the project’s impact on marine life off the coast of Vancouver, cabinet green-lighted the expansion for a second time in June.
Six British Columbia First Nations and at least two environment groups have filed new court challenges against the approval.
The Canadian Press
Huawei executive’s defence team alleges Canadians were ‘agents’ of the FBI
VANCOUVER — A defence team for a Chinese telecom executive is alleging Canadian officials acted as “agents” of American law enforcement while she was detained at Vancouver’s airport for three hours ahead of her arrest.
In court documents released this week, defence lawyers for Huawei chief financial officer Meng Wanzhou point to handwritten notes by Canadian officers indicating Meng’s electronics were collected in anticipation of a request from the Federal Bureau of Investigation in the United States.
The notes show the RCMP asked the FBI if the U.S. was interested in Meng’s luggage and that a Canada Border Services Agency officer wrote down Meng’s passcodes, while another questioned her about Huawei’s alleged business in Iran.
This happened before she was informed of her arrest, the defence says.
“The RCMP and/or CBSA were acting as agents of the FBI for the purpose of obtaining and preserving evidence,” alleges a memorandum of fact and law filed by the defence.
“The question that remains is to what extent and how the FBI were involved in this scheme.”
The materials collected by the defence were released ahead of an eight-day hearing scheduled for September, in which the defence is expected to argue for access to more documentation ahead of Meng’s extradition trial.
The Attorney General of Canada has yet to file a response and none of the allegations have been tested in court.
Meng’s arrest at Vancouver airport has sparked a diplomatic crisis between Canada and China and drawn international scrutiny of Canadian extradition laws.
She was arrested at the behest of the U.S., which is seeking her extradition on fraud charges in violation of sanctions with Iran.
Both Meng and Huawei have denied any wrongdoing. Meng is free on bail and is living in one of her multimillion-dollar homes in Vancouver.
The RCMP and CBSA did not immediately respond to requests for comment on the documents but have said in a response to a civil claim that border officials only examined Meng and her luggage for immigration and customs purposes.
Meng extradition trial won’t begin until Jan. 20, but the court documents shed light on her defence team’s planned arguments that her arrest was unlawful and for the benefit of the United States.
“These are allegations of a purposeful violation of a court order and the abuse of important Canadian legal norms for improper purposes, namely, to further the objectives of the requesting state,” the defence says.
They plan to argue that the U.S. committed an abuse of process by using the extradition proceedings for political and economic gain. Parts of the defence are comments by U.S. President Donald Trump that he would intervene in Meng’s case “if necessary.”
The seizure of electronics and questioning of Meng by border officials in Canada also follows a pattern of how Huawei employees have been treated at U.S. ports of entry.
“This targeting has included the apparent abuse of customs and immigration powers to search and question Huawei employees at various U.S. ports of entry,” the documents say.
The defence accuses officers of intentionally poor note keeping that obscures what exactly happened, including why the arrest plan apparently changed.
The documents suggest that Canadian officials initially planned to arrest Meng “immediately” after she landed, by boarding the plane before she got off. Instead, three CBSA officers immediately detained Meng when she disembarked the plane while two RCMP officers stood nearby and watched, despite their knowledge of the warrant calling for her “immediate” arrest, the defence says.
The defence argues spotty notes kept by the CBSA officers constitute a “strategic omission.”
“When assessed together, a clear pattern emerges from these materials: the CBSA and the RCMP have strategically drafted these documents to subvert the applicant’s ability to learn the truth regarding her detention,” the defence says.
Amy Smart, The Canadian Press
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