Canada

Four questions raised by budget 2014

Will the government really fix the Canada-U.S. price gap? And what about those new jets?

Samuel King Jr./U.S. Air Force/AP

Samuel King Jr./U.S. Air Force/AP

Finance Minister Jim Flaherty’s 2014 budget raises as many questions as it answers. Here are just four being asked by economists, industry experts and political operatives:

1. The budget promises to “introduce legislation to address the price gap between identical goods sold in Canada and the United States.” Government officials say that means giving new powers to the Competition Bureau, which investigates anti-competitive behavior like price-fixing. But is it a foregone conclusion that the bureau will discover wrongdoing by companies is behind prices being higher in Canada than in the U.S.?

2. The budget takes $3.1 billion in spending on new military equipment that was planned for 2014-2017 and pushes it off into the future—until sometime after 2019. It’s no secret that the government’s big defence procurements have been plagued with delays and setbacks. But is there any guarantee that major capital projects that can’t be delivered as planned now will prove more manageable much later, or does this put some buys in jeopardy of being abandoned?

3. The budget promises a range of anti-money laundering measures in some of the economy’s shadowy corners—from the rise of “virtual currencies,” such as Bitcoin, to online casinos. It also announces that the government is “working to strengthen the regulatory regime for over-the-counter derivatives and financial benchmarks,” and to regulate various electronic payment methods. Does all this attention to some fast-growing, little-understood parts of the financial system amount to significant, but so far largely unnoticed, policy thrust?

4. The budget promises the government will keep on selling off federal assets that “have the potential to generate more wealth and jobs for Canadians if they were owned by the private sector.” It forecasts reaping $500 million in 2014-15 from these sales, and $1.5 billion in 2015-16. In fact, the budget declares that these estimates are “conservative and do no reflect the full potential return from these sales.” But what exactly does the government anticipate selling off?

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