Federal budget long on vision, short on doling

Goodbye Canada Savings Bonds

OTTAWA—Federal Liberal Finance Minister Bill Morneau delivered his second budget on Wednesday, March 22 through a lens focussed on spurring innovation and providing Canadians with better access to jobs training and skills—but darkened by a still burgeoning (if at a lessening rate) deficit and a much longer tunnel leading to the light of its fiscal promises.

“Budget 2017 is about jobs,” said Minister Morneau in a government release on the budget. “It’s about creating good middle class jobs today, while preparing Canadians for the jobs of tomorrow. The next step in our plan for Canada’s economy is making the smart, responsible investments we need to be innovative and competitive, while improving the health of our communities, ensuring a better future for our kids and grandkids.”

The budget revises the deficit for the year just ended to $23 billion and forecasts a deficit for the coming year of $28.5 billion. Returned as part of the new deficit numbers is a $3 billion risk adjustment, something the Liberals had removed from their previous budget outing.

According to this latest plan, the deficit will gradually decline over the next five years, but will still ring in the till at $18.8 billion in 2021-22. Placed against the measure of percentage of GDP, this number falls well within the “manageable” range for western economies.

As part of the spending plan, housing will see an already budgeted boost of $7 billion over 11 years as part of the National Housing Strategy, child care will receive $7 billion over 10 years for new spaces (also already budgeted for and to begin in 2018-19).

There will be $3.4 billion in new money over five years for indigenous infrastructure, health and education. While this new funding has been welcomed, the slow pace of implementation of changes on the ground have left many First Nations leaders fuming.

US President Donald Trump may be pushing hard for NATO members to up their contributions to the first line defence to the recommended two percent of GDP, but the $8.4 billion increase this budget pushes forward to 2035 likely won’t mollify the Donald.

Caregivers will be getting a new benefit of up to 15 weeks, starting in 2018 and families will see an option to extend parental leave up to 18 months (albeit at a reduced rate). There will be a $7 billion investment in infrastructure funding for child-care spaces. With provincial buy-in, the as many as 40,000 new subsidized child care spaces will be created and more child care workers will be trained. An unspecified portion of these funds is being set aside for First Nations on and off-reserve populations.

Innovation will get a kick of $950 million over five years to support business-led “superclusters”—technology business hubs that are intended to attract anchor companies from around the world to locate operations in Canada. Startups will see some $400 million over three years to act as a venture capital catalyst initiative.

Skills development is also a big winner in this budget, with a new agency to research and measure skills development slated to start in 2018-19. There will be $50 million over two years for an initiative to teach coding to children and $125 million will help launch a pan-Canadian artificial intelligence strategy.

But getting to work will cost a bit more for urban dwellers, as the 15 percent public transit tax credit will go the way of the dodo later this year.

This budget also aims toward the government’s commitment to gender equality, with 60 measures in the budget self-identified as impacting men and women differently. Many of the measures are aimed at increasing female participation rate in the economy to a number more balanced to their numbers in the population. Currently female participation in the labour force is at 47 percent, while they make up 51 percent of the population.

Algoma Manitoulin Kapuskasing MP Carol Hughes wasn’t totally negative on the budget. “Some things are moving in a good direction,” she said, pointing to items in infrastructure and child care the NDP has advocated for many years. But the slow rate of delivery, with many items pushed beyond the next election, was very troubling to her. While the extension of the caregiver provisions in EI were positive, she noted the reduced rate of 33 percent of earnings (down from 55 percent) would put the benefit out of the reach of many.

As to federal contributions to infrastructure, the MP noted that the federal share is dropping from 50 percent to 40 percent.

“We were hoping for a budget that would invest in the economy to lift people up,” said Ms. Hughes. “This is not a budget that will do that. There is not a lot of job creation for a $23 billion deficit.”

Northern Ontario Liberal MPs see things differently, of course. “I’m proud that our government is reversing the trend of over a decade of budget cuts to FedNor made by the previous Conservative government,” said Nickel Belt MP Marc Serré. “This is good news for future economic development in Northern Ontario and a prime example of how we are stronger when we work together.”

“I would like to thank all of the mayors, organizations and other stakeholders throughout Northern Ontario who met with and sent us letters highlighting FedNor as one of their top priorities for Budget 2017.” remarked Mr. Serré. “Our caucus collected these priorities throughout the year, and over the past several months, we worked hard to meet with ministers, parliamentary secretaries and departmental staff to make sure that the priorities of Northern Ontario were heard and considered by decision-makers at the highest levels of government. The fact that Budget 2017 includes an increase to FedNor’s funding demonstrates that the hard work of the Northern Ontario Liberal caucus is producing positive results for all of Northern Ontario.”

Nearby Conservative MPs on the other hand see little good in this budget. “The Liberals have run up another deficit worth tens of millions of dollars in order to spend on infrastructure and rural Canada hasn’t seen a dime of it,” said Bruce-Grey-Owne Sound MP Larry Miller in a press release response to the budget. He went on to urge the Liberal government to “stop wasting money and start giving rural Canada our fair share.”

On the green front, the David Suzuki Foundation said it “is encouraged to see the federal government following through on its commitments to invest in clean energy and transit in the 2017 budget,” but adds the caveat “the budget misses crucial protection for nature—the backbone for a healthy environment and thriving economy.”

Not surprisingly, the educational sector was more upbeat. “Colleges and institutes are very pleased to see a new federal budget focused on lifelong learning for all Canadians, signaling the government’s commitment to skills, innovation and inclusive economic growth,” notes a press release from Colleges and Institutes Canada. “This budget addresses the very real needs of the learners and employers that colleges and institutes work with every day,” said Canadian Colleges and Institutes president and CEO Denise Amyot. “Canadians count on colleges and institutes to make their communities more prosperous and provide the skills needed to adapt to the changing labour market. This budget’s new funding and support will help our members provide lifelong learning to all Canadians.”

Local First Nations leadership gave the budget a mixed review. “Sufficient, predictable and sustained funding is crucial for effective advocacy and participation in nation-to-nation relationships,” said Anishinabek Nation Grand Council Chief Patrick Madahbee. “The current system needs an overhaul from this perspective.”

Health was a key focus of the federal budget with $282 million allocated over five years to address the immediate health priorities of First Nations and the mental health component goes a long way toward filling gaps that exist there.

“Mental health is beginning to be recognized as a key priority and I am pleased to see ground being broken in this direction,” said Grand Chief Madahbee. “With $118.2 million allocated to mental health programming and $86 million to see NIHB (Non-insured Health Benefits (NIHB) Program) expanded to mental health care and traditional healers this represents a step in the right direction.” The NIHB Program is a national program that provides coverage to registered First Nations and recognized Inuit for a specified range of medically necessary items and services that are not covered by other plans and programs.

Grand Chief Madahbee added that some of the right investments have been committed to, but went on to point out that Anishinabek Nation communities are not seeing implementation on the ground. “The elimination of boil water advisories was placed front and center in the previous budget explicitly and with infrastructure improvement funds,” said Grand Chief Madahbee. “With an ambitious timeline of 2021 set on this high priority issue, we anticipated swifter, more decisive action than what we have seen. The dramatic transformation that was intended to close these socio-economic gaps has not occurred.”

Budgets tend to be viewed through the lens of the observer, and the Liberal government’s election campaign language certainly gave cause for many sectors to hope that “sunny ways” would heap largesse upon their very pressing causes, but with a deficit triple that envisioned on the election trail, the reality of governing was fated to run roughshod over many of those expectations. Whether the Liberals have found a balance between the progressive visions expressed in their campaign and that reality the electorate will accept remains to be seen.

Canada Savings Bonds will be phased out by this spring, ending its 71 year run of every grandparent’s favourite christening gift.