To get an image of this big Liberal budget, think of this number: $101-billion.
Finance Minister Chrystia Freeland had promised a three-year economic recovery plan that would cost between $70-billion and $100-billion. When it came down to making choices, the total was every penny right up to the upper bound, plus a little more.
That’s the feeling of the whole thing. It is the big, bold, high-spending plan for years to come that you’d expect from Justin Trudeau’s Liberals. And then more.
The deficit? The debt? Sustainability? Ssshhh. Don’t worry about it. Don’t look at it. It’ll be fine. Don’t think about it.
And the thing is, there’s a good bet that this captures the political zeitgeist.
There isn’t just a pent-up demand in the economy, but a general feeling among Canadians of being pent-up. The Liberals are clearly gambling that the overwhelming mood is to get the economy rolling, promise to fix things, hand out breaks and forget the cost for now. Who doesn’t feel we deserve it?
In fact, when Ms. Freeland was asked why she will send out a one-time, $500 payment to seniors over 75 in August, she said seniors suffered in the pandemic and they deserve it. That’s not an economic reason, but it’s an election-year reason.
The political stakes are obviously high. Mr. Trudeau’s minority government can in theory be defeated on a budget, although that won’t happen this time. More to the point, Ms. Freeland’s 2021 budget will be the backbone of the Liberal election platform.
And it was built like a dare to the opposition: we dare you to say you will take it away. It had money for small business, landmark funding for a child-care plan that will be popular with young mothers, and benefits or breaks for students, seniors and a million low-income workers.
Critics will say Ms. Freeland delivered an election budget masquerading as an economic-growth budget, But in truth, the Liberals included the economic-growth budget on top of an election budget. Why choose?
There were necessary extensions of pandemic supports, such as wage subsidies, rent subsidies, small-business loans and the expansion of employment insurance as a transition from pandemic benefits. That will take about $30-billion, most of it spent this year, of Ms. Freeland’s $101-billion plan.
There were real pro-growth initiatives: billions for training, billions more for research of various kinds, $5-billion for a “net-zero accelerator fund” to encourage green business technology, and $1.6-billion to assist small business in adapting to a digital world. It’s hard to say how effective those programs will be, but they are aimed at growth.
The real signature piece of the budget, $30-billion in funding for a national child-care plan over five years, is a social program that works as an economic-growth driver because it encourages labour-force participation among women.
But then there are huge swaths of this budget that are mostly about delivering a financial boost for various groups, many of which have noteworthy voting power.
Student grants will be doubled for two more years ($3.1-billion over that period), the tax benefit for low-income workers will be expanded so a million more people will qualify ($8.9-billion over five years) and old-age security payments will be increased for those 75 and over ($12-billion over five years.)
The key electoral demographics were all ticked: women (who vote disproportionately Liberal), young people (who helped the Liberals to a majority in 2015 but were disaffected in 2019) and seniors (whose turnout rates are higher than younger voters).
There are crowd-pleasers thrown in. Home retrofits are bad economic policy and bad environmental policy, but they’re popular, so they will be funded to the tune of $779-million over five years.
What was missing? It didn’t respond to premiers demands for massive sums to refinance the health care system for the long term. It didn’t include funding for the national pharmacare program demanded by New Democrats. The Liberals will take their chances with those critics – and they certainly don’t want it to look like the NDP delivered benefits to the public.
The Conservatives can complain about all the spending, or the debt, or the lack of singular focus on economic growth. The Liberals are daring Erin O’Toole to do that. Ms. Freeland and Mr. Trudeau are gambling that frustrated Canadians want to hear a promise that there will be another roaring 20s.
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