If you are really lucky as a Finance Minister, you get three Budgets (during your government’s usual 4 year term). The first isn’t really yours, because it’s all about implementing promises from the Campaign. The last Budget isn’t yours either, because it’s the basis for the next election. It’s the middle Budget where you get to place your mark and do those creative things for which you want to be known. Finance Minister Chrystia Freeland gets a ‘three-in-one’: a chance to implement promises made (to spend up to $100 billion), a chance to stake her ground (around themes she cares deeply about) and the opportunity to set the stage for the next Election.
To be sure, the Covid crisis determined the necessity of the ongoing spend (and Canada is in the middle of the G7 pack on that spending), the need to re-build and provided the opportunity to think about how to “build back better”. The latter is an opportunity no government should miss. The Liberal Government is haunted by the “scarring” Covid has caused and the criticism that in dealing with the financial crisis, they didn’t sustain support long enough to really help those most impacted and to lessen inequities. This government has vowed not make that mistake.
The Budget addresses three fundamental themes: the need to deal with the Covid crisis, “to punch our way out of the Covid recession” and the challenge to build back better.
The spending is as breathtaking as the vision: not to leave anyone behind this time (seniors, students, indigenous and racialized communities), to right many wrongs and to re-engineer the Canadian economy to be more innovative and more dynamic. There is as much talk of investing in “social infrastructure” as there is in hard infrastructure.
This is a big set of goals; but (in large part) worthy ones and not bad ones to run on. There are memories of Trudeau Sr’s “Just Society” …..on steroids. However; the mission set out in the Budget also reflects one of the hard lessons from the pandemic – that in rebuilding a better Canada, we have to build a more self-reliant Canada.
The spending runs the risk or not just leaning into the recovery; but super-sizing it and perhaps not in the way hoped. All that money sloshing around risks a historic bout of inflation. But this writer is old-fashioned in that worry. While the Minister asserts that she doesn’t believe in modern monetary theory (“MMT”) this sure looks like it. There are some guard rails outlined and a pledge to ease back on Covid supports and a rosy (deficit) picture a few years down the road. But too much depends on low interest rates and growth in the economy to get those pesky ratios (debt to GDP, deficit to GDP, debt service to GDP) back down to earth.
This Budget (coming in at over 700 pages) is record breaker by all measures, ink spilled, pulp used, spending unleashed. There is something for everyone except a fiscal conservative and the Liberals can be proud that they have not let an opportunity go to do it all.
Because of the scale and scope of the measures in this Budget, we dispense with any attempt to summarize; but instead direct you to the link below and trust you to hit: “Ctrl” and “F” to find what you’re looking for. It’s there. Trust us. It’s all there-the good and the bad: https://www.budget.gc.ca/2021/home-accueil-en.html
For more information, please contact:
Barry Campbell: barry@campbellstrategies.com