The political question about the next federal budget is what the Conservative government will say about jobs.
We know that it'll make a show of balancing the budget. But Finance Minister Joe Oliver's first budget is not a financial document where the bottom line is all that matters. It's a big chunk of the Conservatives' political platform for the next election. The economy is the issue, and the flank they have to shore up is on job creation.
That's where their opponents, the NDP and the Liberals, will hit them in the next election campaign – arguing the Tories have let Canada's job market stagnate.
So it's a safe bet that on top of balancing the budget, and doling out benefits to parents and niche tax breaks, the Conservatives will nod at their opponents' proposals for jobs, like plunking more money into infrastructure and skills-training programs. And then they must propose ways to boost manufacturing jobs – which matter to Southern Ontario, where most of the swing ridings are located.
There are some things we know we can expect. This budget will be balanced, a political necessity for a government that has preached against deficits but ran them since 2008. There will be lots of talk about benefits for mom and dad, since the government has announced expanded payouts for parents. And there will be niche tax cuts.
Those things reinforce the Conservatives' strong suit: Canadians rate them highest on managing public finances and keeping taxes low.
Six months ago, we could have expected more tax breaks and goodies in a pre-election budget, but the fall in oil prices has cut the available sums – and heightened concerns about growth and jobs.
And that's the aspect of economics where the Conservatives don't have a political edge. A Nanos Research poll conducted March 21 to 24 found that Prime Minister Stephen Harper's Tories and Justin Trudeau's Liberals run nearly even (35 to 33 per cent) on who is best to promote economic growth (with the NDP far behind, at 15 per cent). The poll has a margin of error of 3.1 per cent, 19 times out of 20.
The Conservatives always sell their budgets as jobs plans, and could simply argue that keeping taxes down and balancing the budget will foster growth. But that might not be enough for swing voters. How interventionist will they be?
The Tories boast Canada has created more than a million jobs since the recession, but in recent years job growth has been sluggish. And the opposition is blasting them. "The reality is that the Canadian economy has flatlined and job growth is stagnant," said Liberal finance critic Scott Brison.
So why wouldn't the Conservatives do some of what the opposition promises? The Liberals stress infrastructure spending and skills training – and Mr. Harper mentioned both at a press conference Thursday.
The Federation of Canadian Municipalities has pushed for the government to spend billions more on transit, waterworks and social housing. And guess what? The Conservatives, including Mr. Oliver and his director of budget planning, David Van Hemmen, have been taking meetings with FCM officials. There's a good bet there will be more infrastructure money in the budget, though perhaps not for housing.
But there's another political target: manufacturing. The NDP and Liberals charge that Mr. Harper's focus on energy hurt the manufacturing industry. Manufacturing jobs haven't increased. The auto sector has been soft – a GM plant in Oshawa is scheduled to close next year, and others are vulnerable. Last year's budget put aside $500-million over two years to support the auto industry, but so far, big investments haven't come.
Will the government pump more money into industrial subsidies to say it will create manufacturing jobs? Certainly the opposition plans to paint it as too laissez-faire: "This government stood by while we lost hundreds of thousands of jobs," said NDP industry critic Peggy Nash.
It wouldn't be hard for Conservatives to borrow from NDP proposals for stimulating manufacturing. Some are extensions of Conservative policy, like making permanent the accelerated capital cost allowances for equipment. But it's how far they'll go to tie fiscal measures together into a jobs narrative that matters to their political fortunes – because that's the ground where their opponents will attack them.