Federal budget basics
Here are the highlights of the Carney government’s plan, and how they might affect your personal finances.
A Justin Trudeau budget was like one of Oprah’s giveaway shows: All of you get a car! And a pashmina! And this delicious salt-water taffy!
Those budgets would be larded with special treats designed to make every slice of the electorate feel seen, and to project the government’s values like a self-conscious bumper sticker.
Mark Carney’s first budget, delivered on Tuesday, very much did not have that goodies-for-all instinct. But it was, in its surgical brusqueness, its own sort of branding exercise – a manifesto of ‘no’ rather than ‘yes.’
This budget arrived with more significance than government spending plans normally do, after Mr. Carney swept into power on the strength of his economic credibility. He promised to draw a map for Canada to navigate a world rendered unrecognizable by Hurricane Trump, and also to repair the country’s chronic economic weaknesses.
The former central banker’s entire offering is that, as he likes to say, “plan beats no plan,” and he would give us a robust one. This budget was the end of wait and see.
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The Prime Minister had touted it in advance as a “generational investment,” while also foreshadowing sacrifices to come, warning, “We will have to do less of some of the things that we want to do, so we can do more of what we must do.”
But once the budget became a known entity on Tuesday rather than a political teaser campaign, what was actually in it seemed written on a smaller scale than the history-making sales pitch that had preceded it.
Many of the heftiest measures had already been announced, including an income-tax cut, increased defence spending and what Finance Minister François-Philippe Champagne called the government’s “flagship” project, Build Canada Homes.
The thrust of what this budget is trying to do lives in Mr. Carney’s favourite verb: catalyze. There’s a “productivity super-deduction” that will give companies back more on their capital investments; a $51-billion community infrastructure fund aimed at goosing provinces and cities to build; and a multibillion-dollar defence industrial strategy intended to boost defence procurement and business at once.
All of these measures are presented as setting a more appealing table – the budget pointedly highlights that Canada’s marginal effective tax rate will now compete with the U.S. – on the certainty that private money will show up in droves for the dinner party.
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In a press conference just before he tabled the budget, Mr. Champagne was asked whether his government was being too ambitious in counting on $500-billion of private money to pour in. He bristled in the sunniest way possible.
“I have confidence in the promise of Canada,” he said. “I have confidence that if we put the right measures in place, capital will flow, the economy will grow, people will find jobs, and we’re all going to be better off.”
The final chapter of the budget is where the government parked its credibility on fiscal rectitude, proudly touting a savings of $60-billion (it’s actually $56-billion) over five years by making the federal government leaner and more efficient.
This includes a plan to shrink the ballooning public-service work force by 10 per cent to bring it back to pre-COVID levels, as well as combing through each department in search of fat to trim.
The budget lays out three criteria to decide whether a program lives or dies: that it does what it’s meant to do, that it’s central to the government’s mandate and that it doesn’t duplicate another program that already exists.
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It will be fascinating – and almost certainly maddening – to see what melted and lint-covered things that don’t meet those tests are found stuck under the national couch cushions, but the budget doesn’t illuminate that. There is a long section that goes department by department, listing bottom-line savings for each. But while it mentions repeatedly that ineffective or redundant programs will be dropped, they aren’t identified.
Mr. Carney and his government used a lot of lofty words to pre-position this budget as an epochal document built to meet a wartime moment. But the overall effect of it is much more grounded than that: it’s making choices – a lot of them.
Deciding what can be done and what must be abandoned; what’s worthy and what’s wasteful; and – most important and most difficult of all – how to rebuild the economy when there’s a Trump-sized hole right through the middle of it.
The problem when you don’t make choices and try to say yes to all, as with the Trudeau government’s instincts, is that when everything is a priority, then nothing is.
But when you make blunt choices, as Mr. Carney has with much of this budget, there’s a clear implied bargain with the public: we are saying no to these things – we are choosing this amount of pain – because we think these other things will save us.
There’s only so much oxygen to go around, and one other thing this budget makes clear is that there’s a lot less of it now.