The Conservative budget was not a conservative budget at all, and was never intended to be. Instead, it was craftily designed with an election in mind, to position Stephen Harper in the political centre, into Liberal territory, allowing his candidates to enter the campaign as moderates, diligently managing the economy out of recession, helping the poor, helping the elderly, helping cities, helping children take art lessons, helping the Calgary Stampede celebrate its centennial. Of course, the document is more pastiche than an economic program. Call it the phony budget.
Canada could have benefited from some leadership at this point, a confident economic agenda focused on innovation and rebuilding the public finances. This is Canada's fiscal situation: a $30-billion deficit; federal debt now equalling more than a third of national output; and interest on debt charges slated to increase by almost 10 per cent a year. A budget that sought to deal with Canada's spending problem would be a budget worth fighting an election over, one with the potential to clear the stale air in Ottawa and give Canada a majority government.
Instead, Jim Flaherty, the Finance Minister, deferred the tough choices. The budget would actually increase the deficit this year and next year, by $2.2-billion over two years, compared with the status quo. That's largely due to the panoply of electoral goodies Mr. Flaherty would distribute to taxpayers to pay for piano lessons, volunteer firefighters or home contractors who install double-glazed windows (all winners in the various targeted tax giveaways). The added-up cost of these three benefits alone was $650-million over two years; not a huge amount given the scale of Canada's deficit, but not exactly an example of fiscal rectitude either.
On top of these social-engineering efforts, another $730-million was earmarked for two big-ticket items that would help more than one million people in real need: Canada's poorest seniors (through a topped-up Guaranteed Income Supplement) and those who are caring for sick relatives (through a new tax credit). This is surely intended to hurt the Liberals and the NDP. Mr. Harper can now justifiably tell the elderly and their family caregivers that he tried to offer them some relief, but Michael Ignatieff and Jack Layton wouldn't let him.
With the immediate rejection of the budget by opposition parties, Canada is headed for an election, surely the outcome anticipated by Tory strategists. The party is in much better shape than its opponents, organizationally and financially. But the real danger to the government in the resulting campaign might not come so much from the those whom the budget is designed to defeat -- Liberals, NDP and Bloc -- but the possibility that Conservative voters might sit on their hands this time. After years now of witnessing Tory ministers sprinkle tax dollars like fairy dust, you would think there would be some pent-up frustration.
For all the machinations, the budget is not very compelling even as a political document, and is unlikely to set the narrative for the campaign. By leaving the key spending questions of the government unaddressed in the budget, they cannot be simply wished away. Information on expected cost increases in the F-35 fighter jet and prison-building programs, well documented by the Parliamentary Budget Officer, is nowhere in sight, but will not presumably be forgotten by the opposition parties, or voters. And where is the government's plan for the fiscal impact of a new health-care deal with the provinces? For that matter, where will they find, as promised, another $11-billion in savings, to be achieved over four years?
Mr. Flaherty could have chosen boldness - a path that put fiscal sustainability, tax relief and economic growth at the fore. To the extent that there were funds available, they should have been used to reduce the deficit, for imaginative, transformative economic investments, and for across-the-board tax relief (such as income-tax cuts or a slowing down of the ongoing Employment Insurance premium-rate hikes). At the end of the day, this "Low-Tax Plan for Jobs and Growth" does not actually lower taxes for most Canadians.
Does the budget justify a return to the polls? It's a question as much in the minds of Conservative voters, ultimately, as opposition party supporters. They must be longing for a conservative Conservative government.
The Opposition concerns with the government are unlikely to focus long on the shortcomings of the budget - instead, they will focus on ethics, spending priorities (read F-35) and corporate taxes, with the Bloc, as usual, looking for what's in it for Quebec.
Ultimately, a budget is not just for political parties. In a time of economic transition, Canada needs an economic vision. The Conservatives instead provided an election plan. It's worth reflecting on Mr. Flaherty's own apt words spoken in the House of Commons Tuesday, "Canada needs a principled, stable government."Report Typo/Error