Budget 2024: Lots of Everything all at Once
Barry Campbell
There is always a political calculus behind a Budget. Where a government is in the electoral cycle is a factor in a budget’s themes and measures. With a Federal election required by the Fall of 2025, a budget now would not normally be the one the government would be running on. However; polls show that most Canadians want an election sooner than that. The unpopular Liberals most assuredly do not, hoping for a turn around in voter preferences before 2025.
In actual fact, the minority Liberals could face an election any time that their deal with the NDP falls apart. To turn their fortunes around or have something take to the electorate sooner rather than later, if need be, Budget 2024 is terribly important.
In what is likely to be the home stretch of this government’s mandate, there is no need to hire a psychic to read the cards. The things the government wanted to check off and run on are done. That includes pharmacare-already announced so that the coalition with the NDP holds giving the Liberals time to revive their support.
There have been a blizzard of announcements prior to Budget 2024 announcing a raft of housing and other affordability initiatives and bolstering defence. Budget Speeches provide an opportunity to repeat these things and Budget 2024 didn’t disappoint.
We also look for signals of what initiatives (“goodies”) are being held back for an eventual Campaign Platform ( “Elect us again and you’ll get this”). This time, not much is being held back as the government zeroed in on supporters they need and announced things to placate and attract various demographics. The Liberals will have this Budget to run on if they have to.
The Liberals make no apologies for what they see as the role of government which is: “to do big things…sometimes government needs to lead the charge”. The Minister of Finance contrasts this with a Conservative government which would “do little, then less and ultimately as close as possible to do nothing at all”. The Minister goes on: ”..austerity and shrinking the state would mean ….you’re on your own.” “That’s not the Canadian way-we take care of each other”. Budget 2024 does an awful lot of that and that spending and the Minister’s stark words will make the heads of Conservatives “talking heads” explode.
It is said that you can judge how effective a Liberal Budget is by seeing how angry it makes the Conservatives. Check that off.
You can also judge the success of a Budget by how quickly it disappears from the front page. Likely the only thing that will dominate the front pages (and online) in the days head will be the changes to the capital gains exclusion rate. Is it good policy? Is it self-defeating? Is it being brought in too fast? Is the government choosing small business winners and losers?
The Liberals don’t want the support of the NDP Party as much as they want their voters to vote Liberal next time. The tax hike on capital gains is just the ticket.
The voters governments want, depending on the particular government are: “hard working Canadians”, “families”, “the middle class”, or “ordinary Canadians”. The Liberals chose ” “younger Canadians” and “the middle class” hoping they all show up next year and remember to vote for the Liberals. The Liberals are promising “to make life cost less” and to “lift up every generation” with measures that promote “fairness for every generation”. These are nods to concerns about intergenerational equity. They heard the millennials; but are the millennials listening to politicians and Budget Speeches and will they vote? More below about the third leg of the Budget stool: “growing the economy”.
“Fiscal anchors” announced in last year’s Budget to: 1) keep the deficit for fiscal year ended March 31 below $40.1 billion; 2) lower debt to GDP ratio in 2024/2025 and keep it declining and; 3) keep annual deficit below 1per cent GDP in 2026/27 are met (barely). This is accomplished by applying a windfall in tax revenues from a softish economic landing (not so sure you can count on that one) and tax revenue anticipated to materialize from the higher inclusion rate on capital gains from the wealthiest Canadians and corporations. Those plans will likely end in tears.
Former politicians, like this author, know that raising taxes on the wealthiest is good politics. Economic purists know that policies like this are counter productive. It drives people away if they are mobile. Ask the City of New York: “Who moved to Florida?” Envy is never a good basis for policy. Higher taxes never bring in enough revenue (because actually there are not enough rich people in Canada) and higher taxes will ensure that there are fewer of them to tax down the road.
Shaming the grocery sector, the banks, airlines and telecoms, as this Budget does is good for applause lines on the Campaign trail.
There are many, many laudable measures in Budget 2024, just too many of them.
“Growing the economy” is the third leg of the stool and there is not much there. Again, attacking the Conservatives the Minister says that there are those who believe that the only way for a government to grow the economy is to get out of the way. The Liberals have never believed that. Given how they would be inclined to promote growth they would have to add more spending and grow public sector employment even more. Budget 2024 is rife with the ideological duel between a now very left of centre Liberal Party and a very right of centre Conservative Party. Stay tuned.
The link to the full Budget is below.
Liberal Desperation
Paul Brown
Over the decades when Liberals face declining poll numbers, they have a recurring economic playbook — increase spending, abandon any real effort to control the deficit, expand the public service, and pick jurisdictional fights with the provinces. They package it with nice words about caring about various parts of their voting constituency when their real concern is about their own political hide. To be clear all governments of whatever political stripes craft budgets to win elections, but Liberals seem to do it with such sanctimoniousness. And their actions often lead to national fractures as they overextend their constitutional reach and, economic malaise as they chase investment dollars outside our borders.
The Liberal political desperation is most pronounced when it comes to the housing issue; Pierre Poilievre has clearly got under their skin. Buried in the scattershot of housing announcements is a bizarre tax penalty that blames landowners for not building homes. The language around this proposal mirrors that around the increase in the capital gains tax that has an impact on the sale of small businesses, economic policy fueled by resentment. On skyrocketing housing demand the Government looks everywhere except their own culpability in destroying what was once considered the world’s best immigration system.
Alas for those frustrated with Liberal misrule, unless the NDP pull the plug we have at least another year of watching a government scramble for some kind of political redemption.
See the full Budget here.