Jim Flaherty has clearly decided his budget doesn’t need much selling to the Tim Hortons crowd at home. And the Finance Minister’s annual pitch to markets is being done in Asia rather than New York.
Mr. Flaherty’s post-budget journey across the Pacific has raised a few opposition gripes that he has left his post just after a federal budget, dodging questions in the Commons with a foreign junket the week after delivering his annual fiscal blueprint.
But his trip is perhaps more remarkable for what it says about this year’s budget and Canada’s future economic priorities. Mr. Flaherty isn’t crisscrossing Canada to promote a budget that is short on major measures. And for the traditional post-budget junket to sell Canada’s fiscal story to business, he chose Hong Kong and Thailand, not Wall Street or London.
“I think it’s noteworthy,” said Peter Harder, president of the Canada China Business Council and a former deputy minister of foreign affairs. “Asia is the growth area. I suspect a significant amount of our debt is held in Asia. … It’s part of a rebalancing we will see in the years ahead because of the important role Asia is playing economically.”
The trip to sell Canada’s story there is made possible by what many budget watchers view as the least consequential budget since Stephen Harper took office – a document unlikely to move markets or polls.
Governments usually plan multi-day campaigns to sell budgets, with the finance minister leading ministers and MPs in fanning out across the country for speeches and interviews. This year, that was mostly a one-day affair – last Friday.
For most of Mr. Flaherty’s tenure, minority Parliaments made budgets, potentially putting at risk the survival of the government. Last year’s included substantial cuts to departmental budgets and the civil service.
Bank of Montreal chief economist Doug Porter pointed out there’s nothing in last week’s federal budget that Mr. Flaherty needs to sell – to financial markets or Canadians. “The country’s credit rating is not in doubt whatsoever,” Mr. Porter said.
The lack of controversy at home provides more opportunity to get away to tout Canada abroad. Finance Ministers typically do that in New York, to Wall Street audiences, although there have been forays elsewhere, notably to London. Mr. Flaherty’s spokesman, Dan Miles, said the Finance Minister often travels to promote the various budget initiatives, encourage investment in Canada and seek to increase trade.
But a post-budget trip to Hong Kong and Thailand is a milestone, not only as a symbol of Asia’s rising importance to Canada but as part of Ottawa’s deliberate efforts to court greater trade ties with those countries.
“Asia’s been growing immensely. Hong Kong makes good sense. They move markets now,” said Gordon Houlden, the former Canadian diplomat who now heads the University of Alberta’s China Institute.
The United States will always be a bigger trading partner for Canada, but Hong Kong is the financial capital where Mr. Flaherty can speak to players from China and Southeast Asia who now have large pools of “patient money” and are willing to make longer-term investments, Mr. Houlden said.
One measure in last week’s budget did remove the lower-rate preferential tariff, created to aid developing countries, from 72 emerging nations, including China and Thailand. That’s likely to be an irritant for those countries, whose exports will now have higher tariffs when entering Canada, although Mr. Houlden said it’s by no means a “game-changer” for Asian trade. Mr. Flaherty may seek to smooth the hurt.
What’s significant, Mr. Houlden said, is that Mr. Flaherty has gone out of his way to travel to Thailand, a major player in the ASEAN bloc in Southeast Asia – a symbol of the increasing time and attention Ottawa has recently begun paying to Asian nations beyond China.