Graham Steele: House of Assembly sitting to be dominated by budget

The House of Assembly resumes sitting on Thursday, and will probably continue until the Victoria Day long weekend.

On the law-making front, the agenda is light. The Liberals were not elected on a policy-heavy agenda, and it shows. How quickly they have become managers.

We can expect to see three small messes cleaned up:  

• There will be some tidying up of health-care labour relations. The McNeil government made significant gains, then got bogged down in arbitration. They will be glad to put the arbitration mess behind them.
• The fall sitting ended with controversy over e-cigarettes, and what precisely would be banned. Health Minister Leo Glavine promised consultation, and new amendments.
• An earlier amendment to the Statute of Limitations concerning claims for childhood sexual abuse will be made retroactive. Justice Minister Lena Diab said it couldn’t be done, but has had a change of heart.

There will be plenty of other bills, because there are always lots of housekeeping items in a $10 billion, multi-faceted government. The just-announced university accountability legislation is an example. But these bills will be routine and are unlikely to catch the attention of regular folks outside the iron fence at Province House.

Without much of a legislative focus, attention in the fall sitting will be squarely on the budget. 

The date of the budget hasn’t been announced yet, but normally it’s delivered on the Tuesday after the House goes back. That would be March 31.

The last budget, delivered in early April 2014, was a status quo budget that didn’t change much. That’s normal for a new government. I did the same in my first budget as finance minister. This time the Liberals have been in charge over the whole budget cycle, so they really own it.

Only a fool would try to predict what’s in the budget, and so I’m happy to try.

A key question is how much of Laurel Broten’s report on taxation will be adopted. My guess: not much. Many of her recommendations are politically unpalatable. Their correctness is not so obvious as to overwhelm the negative politics. For example, Finance Minister Diana Whalen has already rejected elimination of the volunteer firefighter tax credit. Confronted during her Pictou County budget consultation by firefighters in full gear, she told them that their tax credit was safe.

Broten also recommended that the small business tax rate be raised. There’s a solid case for doing so, although explaining why is complicated. (The short version: the “small business tax rate” is a misnomer, and most small businesses get little or no benefit from it.) Nevertheless, the Canadian Federation of Independent Business has come out swinging, saying raising the rate would be “declaring war” on small business. Don’t bet on the government taking on the CFIB.

Broten also recommended a carbon tax, which would immediately raise gasoline prices, and eventually raise home heating prices. Taxing carbon emissions is an admirable policy objective, and revenue from it is supposed to be roughly offset by decreases in income tax and other taxes. But as the British Columbia government found, explaining and defending a carbon tax takes an enormous, ongoing communications effort. Don’t bet on it happening in this budget. If it does happen, then full marks to the McNeil government for political bravery.

There is one other major item which we may see in the budget, but is not mentioned in the Broten report: a health levy. It can be designed many different ways, but is likely to work out to roughly $200 per citizen per year. The government needs more money, but won’t raise sales tax or income tax. They need a new revenue source, and a health levy is one way to do it.

The alternative is significant spending cuts. As the Dexter government found, any cuts, or anything that can be portrayed as a cut, is politically damaging. The McNeil government has, over the past year, spent a great deal of time hunting for cuts. They did it all behind closed doors, so we really have no idea what was even considered for chopping, never mind what they’ve actually decided upon.

So far, the decision-making process has been largely secret. That’s why almost the whole focus of the spring sitting will be on that moment when Finance Minister Diana Whalen rises to deliver her budget speech. What she says in the ensuing half-hour will define who the Liberals are, and for what they will be remembered.