Budget

Tuesday April 20, 2021

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday April 20, 2021

Liberals promise $30B over 5 years to create national child-care system

December 7, 2005

After decades of broken promises and half measures on child care, Finance Minister Chrystia Freeland announced today the federal government will invest roughly $30 billion over five years to help offset the cost of early learning and child care services.

This federal investment — the single largest line item in the massive 739-page budget document tabled today — is designed to significantly reduce what parents pay for care in the coming years. The government’s stated goal is to make life more affordable and to drive economic growth by drawing more women into the workforce.

The federal government estimates the COVID-19 pandemic has driven at least 16,000 women out of the job market altogether, while the male labour force has grown by 91,000 over the same period.

Another recent analysis by RBC found that almost half a million Canadian women who lost their jobs during the pandemic still hadn’t returned to work as of January. Employment among women in Canada who earned less than $800 a week has fallen almost 30 per cent, the bank reported.

May 4, 2019

Freeland said this child care investment will help counter some of the gender disparities fuelled by the pandemic crisis.

Freeland said that, as result of the new spending, the next 18 months could see a reduction of up to 50 per cent in the average child care fees paid by parents. With child care expenses running nearly as high as rent or mortgage payments in some cities, the household savings could be significant.

But to get average fees down to that lower level, the provinces and territories would have to kick in more funding as well. The promise of additional federal money could be used as a bargaining chip to convince provinces and territories to boost their own spending in this area.

Freeland said such an affordable child care system could increase the overall size of the economy — as measured by the gross domestic product (GDP) — by some 1.2 per cent.

“It’s expensive, but it’s an investment worth making,” she said.

July 9, 2020

Of the $30 billion promised today, $27.2 billion will be used to “bring the federal government to a 50/50 share of child care costs with provincial and territorial governments,” says the budget document. 

The government’s stated goal is to drive down child-minding costs within five years to just $10 a day per child, nationwide — significantly less than what most working parents pay now in all jurisdictions outside Quebec.

The budget earmarks another $2.5 billion for the Indigenous early learning and child care system — to create new spaces, to build or renovate existing centres and to support after-school care programs on-reserve.

The budget also sets aside money to make over 400 existing child care centres nationwide more accessible for children with disabilities.(CBC) 

 

Friday March 26, 2021

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday March 26, 2021

Ontario has no clue how to get to fiscal sustainability

Somewhere in the bowels of Ottawa, officials are quietly preparing contingency plans for a fiscal bailout of Newfoundland, should that become necessary. They may wish to add Ontario to their plans.

April 16, 2020

Ontario’s fiscal situation was dire before the pandemic; it has grown much worse because of the pandemic; and it is going to get still worse after the pandemic is long past. That, mind, is the optimistic scenario – which is to say, the scenario on which the Ontario government has chosen to base its latest budget.

It shows the province’s net debt-to-GDP ratio rising, not falling, from the astronomic levels it has already reached, for as many years as the government can credibly project. From 47 per cent in the year just ended – more than three times what it was 30 years ago, and second-highest in the country after Newfoundland – it is forecast to continue to increase, to more than 50 per cent.

Only in the last years of this decade does it begin to recede, and then only on some heroically optimistic assumptions, a mix of the usual complacency about interest rates, fond hopes about economic growth and some truly herculean reductions in spending. We’ll come back to these in a minute. For now let us consider whether the government of Doug Ford even appreciates the gravity of the situation it is in.

May 16, 2020

The most the budget will allow is that the government “remains committed to developing a path back to sustainable public finances.” Not that public finances aresustainable; nor that they are on track to get there; nor even that the government has a plan to get us on that track; only that it is “committed to developing” such a plan.

Well, all right, there’s a pandemic on, and the government is focused on spending whatever it takes to get the province through it. First things first. But longer term? Does it even know what sustainable public finances look like, let alone how to get there?

The government’s choice of targets – not rules, or anchors, but targets – does not fill one with hope. It has three. First, it hopes to limit the debt-to-GDP ratio “to not exceed 50.5 per cent” over the medium term. Why 50.5? Because, one suspects, that is where the debt-to-GDP ratio was headed anyway – though if growth comes in below projections, the target will prove no obstacle.

As for the other two – debt interest to revenue, and net debt to revenue – the government declines even to pretend to have a target for these, other than “to slow their rate of increase.” (Slow it by how much? From what benchmark? It doesn’t say.)

Not only has the government assigned itself a sliding, indeterminate, non-binding target for fiscal sustainability, it seems in no hurry to get there. “Our return to fiscal sustainability,” the province’s Finance Minister, Peter Bethlenfalvy, said in his budget speech, “will take many, many years.” (Continued: Globe & Mail) 

 

Thursday July 9, 2020

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday July 9, 2020

Highlights of Bill Morneau’s 2020 fiscal ‘snapshot’

November 2, 2016

Finance Minister Bill Morneau has delivered an update on federal spending and economic projections linked to the government’s response to the COVID-19 pandemic.

Morneau is calling today’s statement an “economic and fiscal snapshot” rather than the traditional economic and fiscal statement that comes between budgets.

Morneau was forced to put off his spring budget in March after the devastating economic effects of the pandemic became clearer.

October 19, 2017

The deficit for 2020-21 is expected to rise to $343.2 billion from the $34.4 billion deficit projected before the pandemic. 

A big chunk of that additional deficit can be attributed to the $212 billion in direct support measures the federal government is providing to individuals and businesses.

The snapshot says that, aside from the pandemic program spending, the economic slowdown is estimated to have added another $81.3 billion to the deficit in 2020-21.

March, 1, 2018

The Canadian economy is projected to shrink by 6.8 per cent this year before bouncing back by 5.5 per cent next year, making this crisis the worst economic contraction since the Great Depression. The economy is expected to decline in 2020-21 more than twice as much as it did in 2009-10 in response to the global financial crisis. 

Due to the the financial supports provided by the federal government, the federal debt-to-GDP ratio is expected to rise from 31 per cent in 2019-20 to 49 per cent in 2020-21.

The federal government says it’s getting a better deal on that debt through very low interest rates. “As a consequence of these developments, the government will save over $4 billion in public debt charges in 2020-21 compared to the forecast presented in the 2019 Economic and Fiscal Update in December 2019,” the snapshot said.

COVID-19 Cartoons

Between February and April, 5.5 million Canadians either lost their jobs or saw their work hours significantly reduced.  Those losses pushed the unemployment rate to 13.7 per cent in May — the highest rise on record — from a pre-crisis low of 5.5 per cent in January.

Finance Minister Bill Morneau said that without government pandemic programs, the GDP would have contracted by more than 10 per cent and unemployment would have risen by another 2 per cent. (CBC) 

 

Saturday November 9, 2019

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday November 9, 2019

Doug Ford government tries for a reboot with its latest fiscal plan

Premier Doug Ford’s government is listening and Finance Minister Rod Phillips really wants you to know that.

November 1, 2019

“We listened to Ontarians,” said Phillips in a news conference after delivering the government’s budget update on Wednesday afternoon.

“We listened to what they thought was working well in the plan that we had, and we listened to the concerns that they had,” Phillips added.

“So you can expect this is a government that has listened and is going to continue to listen, and make sure that we make adjustments as we go along.”

The fiscal tally of all that listening is found in the pages of Phillips’s fall economic statement. The document accounts for the government’s recent backtracks, updating the budget from the $163.4 billion spending plan tabled in April by Vic Fedeli, whom Ford dumped as finance minister two months later.

August 21, 2019

The fall economic statement is part of the Ford government’s attempts to portray itself as new and improved, striking a new tone, turning over a new leaf. The budget update tries to do this by highlighting the spending cuts on which the government reversed course and recasting them as spending increases.

Technically, it’s true the PCs are increasing program spending by $1.3 billion from the April budget. In reality, this is simply putting some spending cuts that didn’t happen back on the government’s books.

Does a reversal of a spending cut equal a spending increase? NDP leader Andrea Horwath doesn’t think so.  

May 23, 2019

The fiscal update reflects merely “a softening of their previous cuts, a backtracking on some of their cuts, a delaying of some of their cuts, but really the cuts are still coming,” Horwath said Wednesday on CBC’s Power and Politics.

The new finance minister hasn’t fundamentally changed the budget that the old finance minister put in place, and acknowledged as much in his news conference.

“This isn’t about grand gestures,” said Phillips. “It’s about incremental important changes that make life easier for people.”

The update shows — just as the April budget did — that nearly every ministry is undergoing spending cuts this year from 2018-19 levels. Nominal increases in spending on health and education are not increases in real-dollar terms when population growth and inflation are considered. (CBC)

 

 

Tuesday October 1, 2019

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday October 1, 2019

Promising back-to-back deficits isn’t political suicide in Canada anymore

St. Paul, 1997

The church of the balanced budget — inaugurated by Saint Paul in 1995 — has been losing power for some time now, even if it retains significant allure.

But with balance no longer universally accepted as the be-all and end-all, a more interesting choice has emerged for voters.

The first blow against balance came in January 2009 when Stephen Harper, who had once vowed never to spend into a deficit, was compelled to acknowledge that running a deficit wasn’t necessarily a bad thing — that sometimes it’s even the right thing to do.

January 26, 2009

In that case, it was the Great Recession that necessitated a quick influx of government spending. For the fiscal year of 2009-2010, the Harper government ran a deficit of $56.4 billion. Before they were done, the Conservatives ran six years of annual deficits, totalling $157.8 billion.

Still, it was considered heresy when Justin Trudeau announced in 2015 that a Liberal government would run three years of deficits to boost a sluggish economy. One newspaper described the plan as “political suicide.” Shortly thereafter, Trudeau’s Liberals won a majority.

November 2, 2016

Once in office, the Trudeau government pushed things further — first because of economic circumstances, then because of its own choices and priorities — resulting in deficits of $19 billion, $19 billion, $14 billion and $19.8 billion.

Harper’s deficits could be traced to his decisions to cut taxes — the GST in particular. Trudeau’s deficits had more to do with new spending on federal programs.

While running for the leadership of the Conservative Party in 2017, Andrew Scheer vowed to balance the budget within two years of forming government. But as the 2019 general election neared — and with budget cuts by Doug Ford’s provincial government angering voters in Ontario — Scheer lost some of his enthusiasm for swift deficit elimination. In May, he announced that a Conservative government would instead take five years to balance the budget.

April 13, 2019

The Liberal platform released on Sunday nudges the goalposts again. With promised new spending, a re-elected Liberal government would run larger deficits, starting at $27.4 billion in the first year and declining to $21 billion in the fourth.

The Conservative response was notable for what it lacked. Conservative finance critic Pierre Poilievre’s primary argument was not that the deficits were themselves immoral or fundamentally unsound. Rather, he claimed the deficits inevitably would lead a Liberal government to increase taxes — tax hikes the Conservatives claim Trudeau is concealing now.

That attack might resonate more if the Harper government’s deficits had triggered the same consequences.

Economists like Kevin Milligan argue that the current deficit is not a matter for great concern — that government debt is not like household debt, borrowing rates are low, the situation in 2019 is not what it was in 1995 and recent deficits have been relatively modest.

November 22, 2018

The debt-to-GDP ratio — the debt as measured against the entirety of the national economy — was 31.5 per cent in 2014-2015. The Liberals now project that, even after eight years of deficits, it will be 30.2 per cent of GDP in 2023-2024. (For the sake of comparison, the debt-to-GDP ratio was 66.8 per cent in 1996, when Jean Chrétien and Paul Martin were compelled to cut spending.)

In 2011, Harper’s Conservatives promised $1.6 billion in new spending, while Michael Ignatieff’s Liberals countered with a platform that included $5.5 billion in new initiatives, all of it covered by corresponding tax increases or spending cuts.

In 2019, instead of arguing within a box created by competing desires to both balance the budget and avoid broad-based tax increases, the platforms of the two main federal parties could be upwards of $20 billion apart.

That is not a small amount of money.

If the orthodoxy of the balanced budget has weakened, it has left room for a clearer choice. (CBC)