Finance Minister Bill Morneau is promising a federal budget with a heavy focus on long-term issues such as science, education and innovation as the new Liberal government moves to play down expectations that its overarching goal is short-term stimulus.
In a half-hour interview with The Globe and Mail in his Parliament Hill office ahead of releasing his first budget, Mr. Morneau provided a broad outline of the plan he hopes will shake up a Canadian economy that is on pace for years of slow growth.
He said a large part of the plan is based on providing Canadians with “some hope and a sense of optimism” – particularly among students and families with young children – that Canada can overcome the major economic upheaval taking place around the world as entire sectors are transformed by technology.
“We are making a very clear statement that we want to improve the lives of Canadians,” he said, with a rumpled draft of the budget covered in yellow sticky notes tucked nearby in his briefcase. “Yes, we are going to get people working today, but our objective is squarely on making a difference for the economy over the long term.”
The government is expected to deliver on the broad pledges from last year’s campaign: There will be billions announced for cities and municipalities for projects such as social housing and public transit, measures to enhance employment insurance, support for low-income single seniors and an overhaul of payments to families via the launch of a new Canada Child Benefit.
Expectations for economic growth have been significantly reduced since the Liberals released their platform, leading Mr. Morneau to warn ahead of time that he faces an $18.4-billion deficit before adding new promises. The cost of those platform pledges are expected to bring the projected deficit closer to $30-billion.
Mr. Morneau makes it clear he has no intention of using these lower growth forecasts as an excuse to back away from campaign spending promises, even though they will lead to a larger deficit than the $10-billion-a-year cap the Liberals promised.
“People elected us on the basis of the things we put forward, which we believe are the right policy prescriptions for our economic situation,” he said. “What we’ve said is that our platform, what we ran on, helping the middle class and focusing on the long term, those are the things we should be doing in the budget, so I don’t intend on surprising you.”
Since the election, Mr. Morneau has heard hundreds of new proposals from interest groups across the country, but only a few have made it into the budget.
“I can think of at least a couple of measures in the budget that are as a result of our prebudget consultations,” he said.
A millionaire many times over, Mr. Morneau inherited his father’s actuarial and benefit consulting firm and built it into the human resources giant Morneau Shepell. He’s married to Nancy McCain, a member of New Brunswick’s French fry conglomerate.
Despite his wealth, Mr. Morneau is no hard-nosed capitalist. He wears his social conscience on his sleeve. He and his wife sponsored and welcomed into their family Grace Acan, a Grade 9 girl originally from northern Uganda, and they fund a school for refugee girls from South Sudan and Somalia.
“It’s a point of real pride. There will be 62 girls who will graduate next February,” he said.
One Bay Street executive who has known Mr. Morneau during his business career says he’s a very nice man, but he questions whether Mr. Morneau will be able to say no to the mountain of requests that cross his desk from mayors, premiers and cabinet colleagues.
Treasury Board President Scott Brison, who sits next to Mr. Morneau in cabinet and in the House of Commons, insists that’s not the case.
“I’ve heard Bill argue effectively for fiscal discipline … Bill’s not afraid to say no,” he said. “Bill has a clear sense of mission as to what we’ve got to get done as a government and it’s guided by the plan we were elected on. And for us to do that, we’ve got to be disciplined, and he gets that totally.”
While he declined to reveal specifics on the content of the budget, Mr. Morneau said he kept two goals in mind when signing off on new spending.
“For every request I have had, the first screen is: ‘Is this going to help the broad cross section of Canadians that we identify as the middle class, the people who are facing real challenges?” he said. “The second screen is: ‘Is this going to have an impact on our long-term growth?’ If we don’t meet those two conditions, then I am very comfortable saying no.”
Given that Prime Minister Justin Trudeau is also the youth minister, the budget is almost certain to fulfill the Liberal election pledge to exempt graduates from repaying student loans until they’ve earned $25,000 a year, with interest paid by the federal government. The Liberals also promised to boost student loans.
In New York on Thursday, Mr. Trudeau announced that the budget would rescind the former Conservative government’s plan to raise the age of eligibility for Old Age Security from 65 to 67 – a change that was to come into effect in 2023.
Mr. Trudeau also confirmed that the promised $60-billion, 10-year injection of new infrastructure money will roll out in two phases. The first two years will focus on social housing and repairing existing infrastructure. During that time, Ottawa and the provinces will work out the details on how to fund new, larger infrastructure projects.
The budget also is likely to include a new seniors price index to make sure Old Age Security and guaranteed income benefits keep up with rising costs and a 10-per-cent boost to the guaranteed supplement for single low-income seniors.
Before his transition to politics, Mr. Morneau was chair of the C.D. Howe Institute and sat on the board at Toronto’s St. Michael’s Hospital.
As a policy wonk and corporate executive, he advocated for pension reform but was not among the more alarmist voices in the debate. After the budget, his next big deadline will be to come up with a draft plan to enhance the Canada Pension Plan reform for provincial finance ministers to consider when they next meet with Mr. Morneau, likely in June.
His business career in the human-resources sector also saw him speak frequently about the importance of productivity, while cautioning business leaders that it shouldn’t be a code word for job cuts or added employee stress.
That theme from his pre-politics days has clearly re-emerged as he prepares to sell his first budget.
“We believe that by investing first and foremost in education, in students of today, investing in research and universities and in science and in thinking about how we put an approach to innovation at the forefront, that what we’re going to do is we’re going to enhance our capacity to be effective in all sectors of the economy,” he said. “That’s certainly the goal.”Report Typo/Error
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