That’s it?

In the words of the celebrated economist Peggy Lee: Is that all there is?

Has there been a budget that was preceded by more breathless hype than this one? It was to be a budget full of “generational investments” that would “swing for the fences” and “define our next century.” On the other hand, it would also be full of “difficult choices,” even “sacrifices,” which might or might not have added up to “austerity” depending on who was speaking.

It was going to restore order to public finances, jump-start productivity, diversify trade, and get this country building again. Above all, it was going to “meet the moment” imposed on us by Donald Trump, creating a more resilient economy that could prosper and grow even in the face of double-digit American tariffs.

What, then, does the first budget of the Carney government actually contain? Lots and lots more hype, certainly: oceans of it. But as to the substance … Well…

Let’s start with the top-line numbers. The government has adopted yet another fiscal anchor, or rather anchors. You may recall the last set of anchors, dating from the dusty antiquity of two years ago: a deficit of less than 1 per cent of GDP, and a constantly declining debt-to-GDP ratio.

These no longer apply. The budget projects deficits averaging 2 per cent of GDP over the next several years, while the debt-to-GDP ratio, far from falling, is projected to steadily rise. So the new anchors are: a balanced operating budget by 2029, and a declining deficit-to-GDP ratio.

A word on that operating budget business. The government made much of distinguishing between operating and capital spending before the budget – “spend less to invest more” was the slogan – and sure enough, capital spending is projected to rise substantially, from $32-billion (on an accrual basis) last year, to nearly $60-billion by fiscal 2029.

The problem lies in the other part of that line: the “spend less” part. The “comprehensive expenditure review” (remember it?) ended up finding just $13-billion in savings annually, three years from now, from projected operating spending of about $500-billion.

It’s all very well, then, for the government to brag that, by fiscal 2029, it will only be borrowing for capital spending and not for operating spending – because the deficit in that year, at “only” $58-billion, will be less than projected capital spending.

But it’s equally true that all of the deficit that year will be to pay for interest on the accumulated debt: debt charges by then having grown to $71-billion, or 13 cents out of every dollar in revenues. As recently as fiscal 2022, interest was only consuming 6 cents on the dollar.

Whether you call it capital spending or operating spending, in other words, it still has to be paid for, one way or another. And total spending, capital and operating combined, has been put on a substantially higher track – yes, even from late Trudeauvian levels.

Just because you call it capital spending, moreover, doesn’t mean it is; nor is all capital spending necessarily the kind that leads to higher economic growth and more government revenues. Experience suggests that little of what the government proposes to “invest” will pay these sorts of dividends.

What might? Tax reform, for one. Again, pre-budget speculation had the government going in for radical pro-investment tax reforms, sweeping away special preferences and deductions and cutting rates sharply across the board. Instead, we are reduced to what the government insists on calling the “productivity super-deduction”: a clutch of previously announced accelerated expensing measures, plus a couple of new ones, all targeted toward favoured industries and adding up, in total, to about $2.7-billion -annually (about a tenth of it new money).

Every little bit helps, I suppose, but this is far from the sort of “transformative” measure expected, or required. Likewise for the package of feeble measures that are supposed to spur competition in the notoriously uncompetitive telecom and banking sectors. They’ll probably make some difference to some people, but not enough to move the overall productivity needle to any discernible degree.

That’s sort of the story of the budget. There’s more good than bad in it – allowing more private investment in airports, for example, or scrapping the emissions cap (in exchange for a tightened industrial carbon-pricing regime). But to borrow a line from that noted 18th-century economist, the Reverend Martin Sherlock, too little of what is good is new, and too little of what is new is any good.