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
Poll suggests majority of Canadians favour limiting immigration levels
OTTAWA — Immigration Minister Ahmed Hussen says he is concerned by numbers in a new poll that suggest a majority of Canadians believe the federal government should limit the number of immigrants it accepts.
Sixty-three per cent of respondents to a recent Leger poll said the government should prioritize limiting immigration levels, while just 37 per cent said the priority should be on increasing the number of immigrants to meet economic demands.
Hussen says the result is concerning because he has heard directly from employers who are in desperate need of workers, and immigration is key to meeting those needs.
He says he understands some Canadians may be worried about the ability of communities to absorb more newcomers due to housing and other infrastructure shortages, but he says the answer is to invest more in those areas rather than cut immigration.
The poll suggests Conservative voters are far more likely to disagree with Hussen — 81 per cent of Conservative respondents said they favoured limiting immigration levels, while 41 per cent of Liberals, 44 per cent of NDP supporters and 57 per cent of Greens were in favour.
The online survey of 1,528 Canadians, randomly recruited from Leger’s online panel, was conducted between June 7 and 10 for The Canadian Press.
The Canadian Press
NDP promise to expand universal health care, starting with national drug plan
HAMILTON — The federal NDP says if it is elected this fall it will expand Canada’s health-care system, starting with fast-tracking a universal drug plan to ensure a late 2020 start date.
NDP Leader Jagmeet Singh says if his party forms government after the October federal election, it will inject $10 billion annually into a national pharmacare program.
The NDP proposal would see the pharmacare program start sooner than an expert panel recently recommended.
The panel said a national list of prescription drugs for pharmacare should be established by Jan. 1, 2022, and be expanded no later than Jan. 1, 2027.
The NDP policy comes in a new “commitments document” — dubbed A New Deal for People — unveiled today at the Ontario NDP convention in Hamilton.
In remarks provided to the media in advance of his convention speech Sunday morning, Singh says the plan would save families who already have insurance coverage $550 a year.
“For the first time, every single Canadian can count on this,” he said. “If you need medication, if someone you love needs medication, you can get it — period. Paid for with your health card, not your credit card.”
Singh said the NDP plan would also eventually expand universal coverage to dental, vision and hearing care as well.
The 109-page document also contains promises to create 500,000 more affordable housing units, expand grant programs for post-secondary education and address the cost of cellphone service and high-speed broadband.
The party is pledging to spend a billion dollars in 2020 to enhance child care across the country.
The document also promises to restore door-to-door mail delivery to all communities that have lost it — which would cost $100 million — and to establish a gasoline-price watchdog to monitor fuel prices and prevent “gouging.”
The party says it would raise government revenues to pay for its policies through a number of measures including increasing corporate taxes and by creating a so-called “wealth tax.”
Taxes on the richest Canadians — those with net worth of $20 million or more — would jump by one per cent, generating several billion dollars annually in revenue.
“The Liberals and Conservatives have been working for the people at the very top instead of working for you,” Singh said. “We are going to change that.”
The party would roll back corporate tax cuts provided by previous governments to 2010 levels, an increase from the current 15 to 18 per cent, generating billions more for government coffers a year.
Singh said the party would also institute a 15 per cent foreign buyers tax on residential purchases to prevent housing markets from overheating.
The NDP does not make a specific promise to balance the federal budget.
“In all cases, we will manage debt and deficits responsibly, borrowing when required to defend the services that Canadians and their families rely on, and moving to balance when prudent,” the document says.
Shawn Jeffords, The Canadian Press
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