The new centre-left alliance of Liberals and New Democrats faced its first hurdle last Thursday when Deputy Prime Minister/Finance Minister Chrystia Freeland presented her 2022 budget. The as-yet unbaptized governing entity (for some reason, it hasn’t embraced my suggestion to christen itself the New Vermilion Party of Canada) cleared the hurdle without breaking a sweat.
Freeland announced just enough new spending on causes close to NDP hearts – $5.3-billion over five years for a dental care program, $10.2-billion for housing, $10.6-billion toward reconciliation with Indigenous communities – that NDP leader Jasmeet Singh didn’t wait to hear her speech before giving the budget his measured blessing.
Freeland also offered enough restraint – a deficit half the size of the previous year’s and a projected reduction of the debt-to-GDP ratio from 46.5 per cent in this fiscal year to 16.5 per cent per cent by mid-century – to assuage the concerns of Blue Liberals about runaway spending and imploding debt. In fact, the improved numbers owe less to spending restraint than to tax revenues swollen by a post-COVID boom in economic activity, but that didn’t matter on budget day. What mattered, politically, was the economic recovery, for which Freeland went to lengths to claim credit on behalf of the Trudeau government.
She did her best to stickhandle around the issue of defence spending. According to the World Bank, military spending in Canada currently stands at 1.4 per cent of the country’s GDP. That’s well below the 2 per cent level that NATO members have committed themselves to reaching and maintaining. Freeland promised to carry out previously scheduled increases and to add another $8-billion in defence spending over five years – enough to raise the level to 1.5 or 1.6 per cent. The increase was small enough to slip past the New Democrats, who want money earmarked for defence redirected to social programs. But she won’t fool NATO. Justin Trudeau will have some ’splaing to do when he meets Canada’s impatient NATO partners, who are seized with urgency of bulking up in the face of Vladimir Putin’s territorial ambitions.
It would not be accurate to say that the budget left the Conservative opposition speechless. MPs are seldom at a loss for words – never in the case of opposition members when handed a golden opportunity like a budget debate to declaim against flaws, real or imagined, in government offerings.
It would be fair, though, to suggest that Chrystia Freeland left the Conservatives at sixes and sevens. They found themselves accusing the Liberal-New Democrats of not taking inflation seriously – a reasonable critique – while simultaneously demanding that the government immediately cut taxes on middle-class families – a move that in a time of supply shortages might do more to increase inflation than to reduce it.
Perhaps none of this matters. There was a time, not a million years ago, when a federal budget, if not carved in stone, was taken to be a solemn commitment by the government to the governed. Back then, a finance minister who could not present a convincing explanation in next year’s budget for her or his failure to meet goals set in this year’s budget might find themselves redeployed as postmaster general.
These days, with a proliferation of mini-budgets, fiscal updates and economic revisions, the annual budget is anchored on shifting sand. Kevin Page, a former parliamentary budget officer who is now president of the University of Ottawa’s Institute of Fiscal Studies and Democracy, got it right when he called last week’s effort “a modest budget for the really uncertain times, knowing that we can be back, you know, three months, six months from now, probably by default, with a very different vision of where things are headed.”
In other words, the maiden Liberal-NDP budget is real until it isn’t.
Cambridge resident Geoffrey Stevens is a former Ottawa columnist and managing editor of the Globe and Mail. His new book, Flora! A Woman in a Man’s World, co-authored with the late Flora MacDonald, is short-listed for the 2022 Writers’ Trust Shaughnessy Cohen Prize for Political Writing. He welcomes comments at geoffstevens40@gmail.com