It is a classic of the Trudeau government. Each time we get closer to a balanced budget, a new budget pushes it back further, or even postpones it indefinitely. Chrystia Freeland’s latest budget is no exception. While the fall economic update pointed to a slight surplus in 2027-2028, this prospect has completely disappeared. Instead, the deficit will rise to 45 billion for the current year, 13 billion more than expected just a few months ago, and the weight of debt relative to gross domestic product (GDP) will increase. , to decrease very gradually thereafter. Substantial new spending will fuel deficits over the next few years.
Two expenditure items emerge. The implementation of the plan of dental care continues, with a slate of 13 billion in five years, or double the sum planned last year. Then, an offensive to develop clean energy projects, at least presumed to be such, will take the form of refundable tax credits which could amount to more than 80 billion in ten years.
To look good, the budget includes cuts of 3% in departmental spending, without services being affected, it is specified, as well as a reduction in travel expenses and contracts awarded to consulting firms, which would result in savings of 15 billion in five years. This allows Chrystia Freeland to affirm that the Trudeau government remains faithful to “the tradition of fiscal responsibility” of Canada. This can be seen as normal practice, nothing more.
In addition, Ottawa is extending the doubling of the tax credit for the GST, a one-time contribution of $2.5 billion that affects 11 million low- and modest-income households. Unlike the checks that the Legault government sent to 90% of Quebecers, this measure is targeted and has a negligible financial impact for the federal state, whose spending budget will exceed $490 billion this year. It was an easy New Democratic Party (NDP) demand to fulfill. The Minister of Finance presented this measure to mitigate the effects of inflation as a “one-time reimbursement for groceries”. It is ironic that the Quebec expression “running a deficit to pay for groceries” takes on its full meaning here.
The new dental care plan, which Chrystia Freeland has called a “historic expansion” of health care in Canada, is yet another example of the federal spending power being exercised to invade provincial jurisdiction. Outside of Quebec, it seems that there are few people to be moved by it. These intrusions characterize the centralizing vision of the Trudeau government, which the NDP totally shares.
As reported The duty on Wednesday, the dental care plan, the exact terms of which are not known, will be administered by an insurance company. This is curious, since the Trudeau government thus recognizes that the federal public service would, in its eyes, be incapable of managing such a program while, on the other hand, it intends to restrict the use of private consulting firms. Outsourcing the management of public services to the private sector is a slippery slope. The Legault government is right to ask Ottawa that Quebec be exempted from the plan, with compensation.
The budget says nothing about the drug insurance plan promoted by the NDP. It may be a postponement, although such a program, a form of which is already implemented in Quebec, represents for Ottawa a disbursement of more than 20 billion per year, according to an evaluation that the Parliamentary Budget Officer produced in 2017. .
On the economic level, the flagship measure of this budget is essential as the United States has undertaken, through the Inflation Reduction Act, to invest US$378 billion over ten years mainly in energy transition. The 80 billion planned by Ottawa, all things considered, double the American bet. We must deplore, however, that part of the federal windfall goes to subsidies to the fossil industry to finance their research on carbon capture.
This budget pursues a political goal by defining the visions that will clash during the next electoral meeting. On the one hand, we find the Liberals — and their New Democrat allies — who are assuming their spendthrift character and developing public services while investing massively in the green economy. On the other, stand the Conservatives who promise tax cuts, a reduction in public spending and a rapid return to a balanced budget. The choice has the advantage of being clear.