The Red and Green Budget

Don Newman

April 19, 2021

Justin Trudeau and Chrystia Freeland gave us their vision of Canada Monday in the Liberal Government’s first budget since 2019.

It is a Canada that is both green and red. Green because it will accelerate spending on a variety of environmental programs and create stronger targets for reducing greenhouse gases.

Red because deficit spending to finance the many new programs for both the environment and a large variety of other areas and interests will leave Ottawa’s finances awash in red ink for years to come.

The budget promises to “conquer COVID”. It promises to spend more than $100 billion over the next three years on support for people who’ve lost their jobs because of COVID-19 and to help them get back to work.

Business leaders, bank presidents and some economists have said $100 billion is too much spending because the Canadian economy is already recovering faster than expected and too much stimulus spending will be inflationary.

Freeland said after her speech that Canada is still more than 400,000 jobs short from employment levels before the pandemic  and the spending is designed to cover that gap and then some.

Spending beyond direct COVID issues is spread over a number of areas and interest groups. But the headline and the biggest spending commitment is a national early learning and child care program that will cost $30 billion over the next five years, with Canadians paying just $10 a day for child care by 2025.

The Liberals are promoting this commitment as feminist policy, and it is. It will free up hundreds of thousands of women to join the work force with affordable, safe day care. The argument wasn’t made in the budget, but supporters of low-cost day care have made it in the past. The additional economic activity and the taxes women in the work force will pay will cover the cost of the program.

Now what will all this cost? The deficit in the fiscal year which just ended March 31st and contained all the COVID spending will come in at $354 billion. A record, but somewhat lower than predicted. In this fiscal year the deficit is predicted to be $154 billion, followed by further declining deficits over the next four years until, by fiscal year 2025-26, it will be back to $30.7 billion, about where we started before the pandemic began.

Before the third wave of the pandemic hit the country, particularly in Ontario and Quebec, it was predicted that today the Liberals would be unveiling both a budget and a platform for an election. A spring election now seems impossible, but one this fall-— if vaccinations across the country speed up, hospitalizations and deaths drop precipitously and people are feeling safer and less worried — is a possibility.

This is a people budget. A something-for-everyone budget. Whether an election is this fall or next spring it is crafted to fire up the economy, cover off most interest groups in Canada and put off paying for most of it to another day. What is a better election platform than that?

Columnist Don Newman, Executive Vice President of Rubicon Strategies in Ottawa, is a lifetime member of the Parliamentary Press Gallery and author of the bestselling memoir, Welcome to the Broadcast.