Why the federal budget is a 518-page campaign pamphlet

Why this budget is a 518-page campaign pamphlet

John Geddes parses the highlights of the 2015 federal budget and the start of the election campaign

by
Justin Tang/CP

Justin Tang/CP

To call a federal budget a political document is a cliché. What else would the annual unveiling of a set-piece plan for taxing and spending be? But in this election year, with every eye in Ottawa squinting ahead to the Oct. 19 fixed date for Canadians to go to the polls, Finance Minister Joe Oliver’s budget is even more political than usual—a 518-page campaign pamphlet.

If there was any doubt about that, Oliver quickly erased it by including in his budget speech a shoutout to every voting group Prime Minister Stephen Harper’s campaign strategists covet. Middle-class parents? Naturally. Seniors, that solid Tory demographic? Of course. Voters in the hotly contested Ontario manufacturing heartland? They get special attention. Immigrants and ethnic communities? New niche programs target them directly.

But Economic Action Plan 2015 (as Oliver’s budget will be branded in the extensive, taxpayer-funded advertising campaign the government will now roll out to sell it) is not designed only around carving Canadians into voting segments. It is also inarguably built to reinforce Conservative messaging around several familiar themes—controlling spending, cutting taxes, and upholding law-and-order and military might.

After nine years in power, though, Harper looked vulnerable on all those key messages—especially, after seven consecutive deficits, his claim to being a careful spender. And so, Oliver’s least surprising declaration of the day came early: “I am proud to announce this budget is balanced. This year, we are forecasting a $1.4 billion surplus, and growing surpluses thereafter.”

But the way he managed to write this budget in black ink wasn’t, strictly speaking, frugality. In fact, Oliver had to take the contingency reserve—the cushion built into the budget against unexpected economic woes—and shrink it from $3 billion, where it was set as recently as last fall, down to $1 billion. If he hadn’t given himself that $2 billion bonus, Oliver’s 2015 fiscal plan would have remained in the red.

Clearly, the government is hoping Canadians will be too busy tallying the benefits the budget contains for them to fret about how Oliver avoided posting another deficit.

 

    The big measures were known well in advance. Income-splitting for couples with kids will let them transfer income from the higher-earning to the lower-earning spouse for a saving of up to $2,000. A boosted universal benefit will send more money in monthly cheques directly to families with kids, starting in July. The allowed yearly contribution to Tax-Free Savings Accounts will be nearly doubled to $10,000—a popular measure among seniors. As well, the rules for seniors withdrawing savings from their Registered Retirement Income Funds will be relaxed, a substantial tax saving for retired Canadians.

    All this, and more, was packaged in the budget as part of a cumulative Harper-era boon to that adds up to $6,640 in tax cuts and benefits for a fictional couple—the unacknowledged stars of the budget show—“Henry,” who makes $84,000, and “Cathy,” who brings home $36,000. They have two daughters, and their lovely family benefits to the tune of $2,329 from child benefit hikes, $3,293 from tax relief, and $1,018 from GST cuts (that old Tory budget hit of yesteryear).

    Nowhere in the budget, however, is another case study, which officials in Oliver’s department found only by leafing through binders they carried into the budget-day lockup for journalists. An unmarried individual earning $36,000, and not eligible for any of those signature Tory breaks for parents, has benefited during the Harper years by an estimated $1,715—not bad, perhaps, but less impressive than that two-parent, two-child family’s haul.

    Beyond that complicated personal tax picture, the government targeted spending strategically. Oliver earmarked $11.8 billion for the Canadian military over a decade, although that increase won’t start until 2017. There’s also $360.3 million to extend the non-combat military mission against Islamic State terrorist forces in Iraq and Syria, and $7.1 million for military training in Ukraine. On the thematically related domestic anti-terrorism front, the budget pledges $292.6 million over five years for the RCMP, the Canadian Security Intelligence Service and the Communications Security Establishment.

    After putting checkmarks beside “supporting families” and “protecting Canadians,” Oliver needed to provide campaign platform fodder to give Conservatives a chance to pitch their vision for long-term Canadian prosperity. That matters particularly in Ontario, where the manufacturing sector was hit hard by the 2009 recession, and hopes are now high for an export-driven rebound fueled largely by the drop in the Canadian dollar since oil prices tumbled.

    So the budget injects up to $100 million over five years into a new fund for Canadian auto-parts suppliers. More broadly, Oliver extended to 10-years an incentive that lets companies write off more quickly any investments in machinery and equipment. On infrastructure spending, he pledged to establish a new permanent fund for mass transit. But that money won’t start flowing until 2017-18, with a planned yearly pool of $1 billion by 2019.

    Infrastructure happens to be one of Justin Trudeau’s key themes, and the Liberal leader can be expected to find that transit pledge too little, too slow. In fact, Trudeau’s presence crowded the margins of Oliver’s budget speech. On balancing the budget, Oliver said, “Now, this did not just happen”—a sly allusion to Trudeau’s off-hand remark that, with enough economic growth, the budget would balance itself.

    Older Liberal ghosts also haunted the budget, including even Trudeau’s father, the late prime minister Pierre Trudeau. “Their path,” Oliver said of unnamed Liberal regimes of the past, “leads to the crushing structural deficits that plagued this country for years.” Of course, Liberals have a different perspective on budget-making history, a vantage point that highlights the deficit-cutting, and then surplus-spinning, of the era of Jean Chrétien and Paul Martin.

    Budget day is a once-a-year political showcase. But Oliver’s 2015 version turned out to be a pre-election survey of the Harper legacy going back to 2006, set against that starkly contrasting version of what happened in the preceding Liberal era. That framing foreshadows an election shaping up as, not a contest merely over this year’s numbers, but about clashing visions of recent decades in Canadian political and economic history. That campaign began today.