What a strange budget Stephen Harper’s new majority government produced. Heralded as tough on spending, it was nothing of the kind. Primed as bold, it was cautious. Expected to be clear, it wallowed in the impenetrable.
Yes, the government killed the penny, a Finance Department idea that Mr. Harper had rejected on taking office in 2006. It advanced the age to 67 from 65 for receipt of the Old Age Security benefit starting in 2023, a reasonable measure adopted by most Western countries that will draw fire, quite wrongly, from the opposition parties.
It added some money here, took some money from there, lowered gently the number of civil servants, displayed again its lack of interest in environmental protection and generally presented a budget devoid of the vision, ideas and courage that a government with a fresh mandate and a long stretch before the next election might have been expected to provide.
The government had announced it would be cutting spending on programs it delivers – not transfers to provinces or benefits to individuals. Since governments very seldom cut spending, curiosity was understandably aroused, and fears were stoked by political adversaries and interest groups that awful consequences were at hand. The government did announce cuts, all right, but they were small in the context of everything the government spends and proclaimed in a manner so opaque as to defy analysis.
If a government really wants to reduce its long-term spending, it must stop doing things. Otherwise, reductions based on “efficiency gains” are overtaken in time by new demands, programs and personnel.
The Chrétien government took hard decisions to stop doing things (direct payments to dairy farmers, the Western Grain Transportation subsidy, federal control of airports, etc.) when spending reductions occurred in 1995. It’s not what happened in this budget. The Conservatives essentially left the entire structure of the government intact and just tweaked it a bit, further evidence of the North American trend whereby conservatives talk a much better game about reducing the size of government than achieving it.
Only a handful of small programs and agencies died, whereas the rest of the “savings” remained impossible to identify, hidden as they were behind the budget’s verbal thickets of “rationalize,” “consolidate,” “integrate,” “streamline,” “refocus,” “reconfigure,” “modernize,” “realign” – jargon deliberately chosen to confuse and confound rather than clarify.
The gobbledygook seemed to suggest that the government balked when faced with the potential political outcry that would inevitably accompany the elimination of any program from the interest groups, regions or companies dependent on them. For a government with a fresh mandate, and apparently possessed of an ideological desire to see governments do less and markets do more, the decisions (or non-decisions) were curiously timid.
Clearly identified cuts were administered to the environment, the CBC and foreign aid, hardly government priorities and not terribly popular spending with many Canadians, either. It ended the National Round Table on the Environment and the Economy, an agency whose reports on climate change irritated a government largely indifferent to the issue.
The government will continue with generous transfers over four years to the provinces (up $10-billion) and to seniors (up $8-billion) as part of overall program spending increases that will be about $25-billion. At that point, the budget is supposed to be balanced, largely because of revenues that are expected to grow by $55-billion.
The government obviously decided to count more on the resumption of normal economic growth to produce new revenues to balance the budget than curtail either its own spending or transfers to people. Its fiscal situation is, and will remain, stronger than that of most provinces.
The post-recession deficit did have at least one salutary effect: It curtailed, if only temporarily, this government’s propensity to pockmark the tax system with little giveaways targeted at small slices of the electorate. There were no sweeping tax reductions, either.
The long-term effect of these Conservative choices will be to make the federal government less present in the lives of Canadians, except as a writer of cheques to provinces and people, a shift that conforms to the party’s general preference for a more decentralized country.