It is almost 50 years ago that Finance Minister Edgar Benson took the nation into high deficits in a time of no recession. On Tuesday, Prime Minister Trudeau, following his father’s example again, returned Canada to a large deficit.
Yes, he campaigned on a stimulus deficit of $10 billion but most CEOs in private business would be turfed for tripling the debt of the company.
True to his word in the election, Trudeau has maintained his promise of infrastructure spending. Unfortunately, the time gap between announcing it and putting shovels in the ground often runs 24 months.
The good news is the infrastructure spending will immediately target existing shovel-ready municipal projects including sewer, water, road and bridge rebuilding.
The bad news is that the deficits were to disappear with a balanced budget in the 2019-20 fiscal year, but nowhere in Tuesday’s finance speech does that timetable now exist. The only ways to make that happen will be an increase in the HST.
Finance Minister Bill Morneau stated, “This budget puts people first and delivers the help Canadians need right now,” and that’s true for many.
The promises to indigenous people are being kept with this budget, with additional funding for safe drinking water, improved health care and education on First Nation reserves.
The “Just Society” budget will put considerable cash in families’ hands through the new Canada Child Benefit plan. The single elderly poor will also see a 10 percent increase in the Guaranteed Income Supplement.
On the other hand, the budget clearly showed that the Trudeau government does not believe that small business will play a significant role in developing Canada’s economy. The election promise of continuing to reduce the taxes on small businesses was squashed.
And spending on modernizing Canada’s military was postponed for four years. Those military procurements will only cost more down the road.
Tuesday’s budget will have a significant impact over the next 10 years. Many of the promises made during the election period will be put off, and future governments will have to rein in their spending.
But when all is said and done, it is a budget that will make most Canadians happy.