Budget 2018
Welcome to our cover package on Budget 2018. Finance Minister Bill Morneau tabled the Liberal government’s third budget in the House on February 27, before setting off to sell it on tour during the two weeks of the parliamentary March break.
The budget has played to mixed reviews; as a politically astute document building Liberal support among women and progressive voters on the one hand, but one that failed to move towards budgetary balance on the other. After campaigning in 2015 on a promise of running three years of $10 billion stimulative deficits, the Trudeau government is ringing up $90 billion of deficit spending over five years, with balance nowhere in sight. And this during good times, with strong economic and employment growth, when governments normally move toward balancing the books.
As Rachel Curran notes in her appraisal of the budget, the Liberals are fulfilling political imperatives on a shaky fiscal foundation. But as the former senior policy adviser to Prime Minister Stephen Harper also writes: “Budget 2018 contains a mix of good, indifferent, and terrible policy, but it appeals to the government’s current and potential supporters while avoiding any obvious targets of attack, and thus must be counted a political success.”
From BMO Financial Group, economists Douglas Porter and Robert Kavcic observe that: “Against a backdrop of aggressive U.S. tax reform and NAFTA uncertainty, Morneau played it safe with a largely stand-pat fiscal plan, allowing recent economic strength, deferred infrastructure spending and some tax increases (yes, including a pot tax) to fund yet another spending boost.”
Former Parliamentary Budget Officer Kevin Page, now president of the Institute for Fiscal Studies and Democracy at University of Ottawa, looks at spending in a growth economy versus sustainability in a downturn.
Page’s IFSD colleague, chief economist Randall Bartlett, says the budget may look like a “nothing-burger” but not if you look closer. Also from the IFSD, infrastructure expert Azfar Ali Khan sees it as a Seinfeld moment: Yada-yada-yada, all talk and no action, with none of the budgeted infrastructure funds having been rolled out yet.
Perrin Beatty, president of the Canadian Chamber of Commerce, wonders how and when its policy and political announcements will be paid for. As he writes: “The fundamental question about how we pay for them was left high up in the air. Borrowing more and running higher deficits just punts the problem into the future.”
Economist Jack Mintz writes that the budget fails to respond to the U.S. corporate tax cuts that threaten Canada’s competitiveness.
Finally, columnist Don Newman looks at the budget as “basically NDP Light.” One of the targets was the NDP and its new leader Jagmeet Singh, seeking to reclaim voters on the left.
In Canada and the World, we begin with Robin Sears and his compeling account of the NDP policy convention in Ottawa in February.
Our lead foreign affairs writer, Jeremy Kinsman, follows up on Donald Trump’s recognition of Jerusalem as the capital of Israel and does not see it as a positive game changer. “The core issue of Jerusalem,” he concludes, “incites deeply emotional nationalist and religious passions.”
In his annual Letter from Davos, contributing writer and BMO Vice Chair Kevin Lynch, writes that “President Trump’s last-minute decision to attend and speak added political drama, celebrity interest and a deep funk among adherents of a liberal, globalist trading order.”
In her update on the NAFTA talks, Sarah Goldfeder offers an insightful analysis of where the talks stand and prospects for progress.
In a book excerpt from Master of Persuasion, Fen Osler Hampson recounts Brian Mulroney’s fight against apartheid and his role in liberating Nelson Mandela after 27 years in a South African prison.
Finally, we offer a spring list of book reviews.
Susan Delacourt has a favourable take on Shawingan Fox, Bob Plamondon’s insider narrative of Jean Chrétien’s leadership of the Liberal Party and the settling of scores with the Paul Martin Liberals.
James Baxter gives a thumbs-up to David Frum for his bestselling Trumpocracy: The Corruption of the American Republic.
Mike Coates considers Could It Happen Here? Canada in the Age of Trump and Brexit, by pollster Michael Adams. And former Foreign Affairs Minister John Baird was impressed by Master of Persuasion, Fen Osler Hampson’s authoritative account of Brian Mulroney’s foreign policy.
Enjoy.