In House Panel - Breaking down Budget 2016
How can the Liberal government sell a $30 billion deficit? And what can the opposition parties do to chip away at the Liberals' fiscal credibility?
In House panelists Emmanuelle Latraverse, parliamentary bureau chief for Radio-Canada, and CBC Senior Correspondent Terry Milewski, look at what was in the budget — and what got left behind on the cutting room floor.
Chris Hall: What are your main takeaways from the budget?
Emmanualle Latraverse: Two things. First, obviously the government is sticking to its logic of the election platform, and we made a lot of fun in the election platform about Trudeau saying he had a plan. Well, now we see the extent to which he sees this as a plan because it is kind of a canvas of what they promised to Canadians.
It's interesting in the context of the economic uncertainty right now, that they might bill this as a growth budget but it's not a stimulation budget, and so it's really a down payment on their long term plan. And there's a big gamble on this in a way because you hear Mr Morneau saying this is an investment, it's not spending. I think Canadians are willing to give them the benefit of the doubt on this for now but they haven't shown it and it'll take a while before they have results to show for this.
Terry Milewski: I'd say it's a bit of a good news, bad news budget as a political matter because the government can, of course, point to all the promises kept. We've kept lots of promises from the child benefit to the infrastructure, the spending for First Nations — these are big items that were promised and they delivered.
The problem, of course, is that they've broken, I would say, two and a half promises on the deficit. They've broken the promise to keep a ten billion dollar cap on the deficit, they've blown right through the promise to balance the budget in four years, and then there's the promise to keep the debt-to-GDP ratio going down, while actually it's going to be going up for the next couple of years and then finally it'll come down and you'll need a microscope to find the extent to which it's come down from 31.2 percent of gdp to 30.9 percent of GDP. I mean, it's really marginal. So those are going to be political liabilities, and they can say: "Hey, we've got some political assets too. We're keeping our word on the other stuff on the spending side."
CH: Where is the room here for spending to be curtailed and to be back in a balanced position, as Bill Morneau now says, in five years?
EL: I think that's where governing and tabling a budget brings the reality check, because those were issues that we raised in the campaign. What are you going to do about healthcare, about all these things? They didn't have the fiscal room when they ran and they obviously don't have it now. So, I think it's also a budget that highlights all the difficult, complex issues that this government still has to tackle — health being one of them — but climate change also.
They've been touting themselves as green, Canada's back, they're negotiating with the provinces. There's a lot of money sprinkled around this budget, a million here for this, a million for that project, but it's hard to see the real coherence in this of a government that's talking about making a big turn in the Canadian economy, to productivity, to innovation. We're still only seeing the very beginning of that, and there's a lot of question marks.
TM: Remember too that there's a lot of hope in the budget. Hope that they are wrong about their rather pessimistic estimates and projections for growth rate and for the price of oil. They're hoping that those prove wrong and that there will be growth which will erode these big deficits that they're projecting. The problem is that there are other hidden rocks underneath this ship.
You've talked about the health accord. That's billions and billions of dollars, if they reach a new health accord with the provinces, that are going to be added on and will soak up the the hoped for additional growth. There's nothing in here for a pension deal with Ontario and that could be another big item. There's nothing in here, in the budget, for home mail delivery. There's nothing in here for Bombardier. We've all got our lists that could add to the spending side, not to the revenue side, like the hoped for growth that we don't know about yet.
CH: We know what's in the budget, but what is the most significant oversight?
EL: I think a coherent strategy on climate change and the investments to make to turn the economy around. This government says we need to wean ourselves off of natural resources, to invest in a greener environment. We see the bits and pieces here, but I think they still haven't fully formulated how they're going to go about it.
TM: I agree that there are two things that really aren't there: health and the new green future. Health, as we've already said, is a potentially very large item. They did promise a new health accord, it's not in the budget — they're going to consult endlessly. If they ever get to the end of those consultations it's going to be massively expensive and will have to be budgeted for. And as I said before, it could soak up extra growth, if indeed they are so fortunate to get extra, unanticipated growth.
As for green technology, the Prime Minister gave the game away before the budget when he said we're just doing the unsexy infrastructure, so we're going to fix your municipal sewer system but we're not launching into a bright new dawn of green technology. I think Emmanuelle has it right, that that is a potential liability if they're selling a whole new bright dawn of green technology — where is it?