If we are lucky, we might get through this budget day without too many reiterations of Wayne Gretzky’s now-clichéd quote about skating to where the puck is going.
This budget, we have been told, is one for the ages, a document that will not merely tell us the fiscal outlook for the year, but will provide a blueprint for the Canada Of The Future.
Finance Minister Chrystia Freeland’s task is no longer to just do “whatever it takes” financially to get us through the pandemic. She has told us this is a rebuild job. By definition, that’s about looking ahead. This budget is supposed to include a substantial spend on industrial policy, on green technology, biomanufacturing and economic innovation. The Liberals want it to say Canada, 2030.
But then, politicians also tend to think about pleasing people now. Especially if it looks like an election year, with a vote likely in the fall. The Liberals want to campaign about the Canada of the future, but they want voters to feel that good times are already on their way.
So a good yardstick is whether this budget really looks ahead to Canada, 2030, or to late 2021 and 2022.
Will it present coherent ideas to encourage investment and research in green technology and develop that sector of the economy over the coming decades, or will it pack voter-pleasing programs for household retrofits for the next two years?
Ms. Freeland promised last November that she would deliver a recovery plan that will total $70-billion to $100-billion over three years. But it turns out that over all, the economy is not struggling as badly at this point as many expected.
Last fall, when Justin Trudeau’s Liberal government was drafting its “build back better” plans in a Throne Speech and Fall Economic Statement, the economy was 4 per cent smaller than before the pandemic. Today, it is nearly back to its previous size. If vaccines get people rushing back to restaurants and shops, there may be a little boom in the fall.
That has some economists and business groups urging Ms. Freeland to pull back from the plan to spend on the scale of $100-billion. But the Liberals are definitely going to spend.
The question for this budget is whether it will spend much of that money to encourage growth in the medium term, rather than just pump out money now.
The Canadian economy doesn’t need gazillions in stimulus for 2021 and 2022, but just about every forecast predicts lacklustre growth in the middle of the decade. A recovery plan has to focus on things that will spur productivity and economic growth down the road.
Luckily for the Liberals, one voter-pleasing program lined up for budget funding fits that bill. The budget is expected to offer billions to expand child care, asking provinces to adopt a $10-a-day system. Expanding accessible child care encourages participation in the labour force, expanding the economy’s capacity, so that budget item will tend to encourage medium-term economic growth.
But a lot of the chatter around the budget is about industrial policy and innovation in green technology and, ugh, skating to where the puck is going.
There is reason to doubt Ottawa’s ability to identify future opportunities, let alone create mechanisms to develop those sectors. But if the Liberals sell this as the budget for the economy of the future, it would be nice if it focuses money and measures, and not just rhetoric, on future growth.
Will programs to seed investment and encourage research and development be dwarfed by programs to pump money into the economy now? The traditional go-to mechanism for economic-recovery plans is spending on infrastructure and encouraging construction, but that’s a sector that’s already overheating.
Of course, there will be some short-term spending at the tail end of the pandemic. Wage supports will be extended. Hard-hit sectors such as tourism and hospitality will get bailout money. There are sectors that have been savaged while others are doing just fine. But one measure of this budget’s planning will be how much money is to be pumped out this year, and how much held back for the third year or later.
Mr. Trudeau’s Liberals would like to be ready for a fall election in a postpandemic roaring-20s boom touting a campaign platform about the Canada of the future.
But today’s budget will be the big fiscal blueprint of these times, and it should be judged by how far it looks ahead.
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