The steady erosion of budget secrecy as a meaningful concept continues this year as almost all of the budget details revealed today have previously appeared in the media. As forecast, this is a budget with something for almost everyone. To put it in a broader perspective, the 11.1 per cent increase in spending from this budget is the second highest spending increase in forty years. The 1981-82 budget of Alan MacEachen increased spending 13.6 per cent.

If there is one interesting and surprising element, it may be the reduction of the tax on air travel tickets from $24 to $14 for a round trip ticket. That's interesting because the announcement is included in the "Accountable Government" section of the budget speech suggesting that the government wishes to acknowledge the widespread complaint that the tax rate was excessive and a "grab" for cash under the guise of a security measure.

Here are the edited highlights:

Health

As expected, the big dollars go to the health care package that was the result of the February 5th First Ministers Meeting. The budget repeats the federal argument that its increasing support to health care by $17.3 billion over three years but included in this number is money previously committed. The provinces say the real increase in the transfer to them is 10 billion over three years with the possibility of an additional two billion if surpluses exceed projections.

In total, the federal claim is that it is increasing health care spending over five years by 34.8 billion dollars.

• 9.5 billion in transfers to provinces and territories over 5 years.
• 2.5 billion immediately to the Canada Health and Social transfer to relieve existing pressures
• 16.0 billion over five years to a Health Reform Fund for primary health care, home care and catastrophic drug coverage
• 5.5 billion over five years in for health initiatives such as diagnostic/medical equipment, health information technology etc.
• 1.3 billion over five years for First Nations and Inuit health programs.

Everything pales by comparison to the health care package, but the child care spending is also significant. There are two broad measures worth almost a billion dollars each:

• a 965 million dollar increase in the National Child Benefit supplement of the Canada Child Tax Benefit by 2007. That is said to bring the maximum annual benefit for a first child provided by the CCTB to $3,243 it is currently $2444).

• 935 million dollars over the next five years to the provinces and territories to assist in child care and early learning opportunities. This is primarily to create regulated day care spaces and will depend on the outcome of negotiations between the federal provincial and territorial governments.

There is also money for housing the homelessness and infrastructure in this part of the package. That includes $320 million over five years to add to exisiting federal/provincial affordable housing initiatives, $270 million for the fight against homelessness and another $3 billion dollars for the infrastructure program. This last bit, the $3 billion, is not quite as generous as it looks as it is spread out over ten years.

Canada in the World

This section includes money for Defence, domestic security and security of access to the United States to protect the economic relationship.

Defence is getting $270 million immediately to deal with urgent needs such as the fresh commitment for peacekeeping in Afghanistan. There will also be $800 million added to the Defence departments base budget. That means the money will become a permanent part of the budget for the department even though the budget papers describe it as $1.6 billion over two years.

This section also includes the reduction in the air travel tax mentioned above. That tax was introduced in the last budget as part of the post 9/11 security package.

Environment

The big account in the environment file is funding for the Kyoto commitment. There is $2 billion set aside for this but, because the plan is not fully formulated yet, the money is described as going to support things like sustainable development technologies , improved tax incentives for renewable energy and other measures. In other words, it's still vague but the money will be there when the details are worked out.

Native People

As was the case with the throne speech last fall, there are references to programs for Native people sprinkled throughout the budget. For instance, there is $600 million over five years to upgrade water quality on reserves, $72 million over two years for training and employment opportunities and most significant, the $1.3 billion mentioned above as part of the health care package.

Accountability

As a theme the accountability section of the budget deserves close attention. The difficulties of implementing the firearms registry and the consequent cost overruns embarrassed the government and damaged its credibility as a competent manager.

Accountability is very much about restoring that credibility.

The budget promises an ongoing examination of all non-statutory programs on a five year cycle to ensure that all of them continue to be relevant, effective and affordable. In other words they promise to make sure the money spent on these programs is well spent.

More important, the government is expecting to realize a billion dollars in savings through this process almost immediately. In fact, the billion dollars is necessary in order to fully fund the new initiatives announced in this budget over the next two years. That means that a difficult process of program review will begin immediately in order to find that billion. In other words, in spite of all this spending, program cuts are in the offing.

Other Stuff

Of course there is much more in the Budget than these details but that's a broad strokes portrait of some of the bigger spending areas. On the tax side, the headline item is an increase in the RRSP ceiling from its current $13,500 to $18,000 by 2006. Here's how it gets there:

• $14,500 for 2003
• $15,500 for 2004
• $16,500 for 2005
• $18,000 for 2006 and indexed in years beyond that

Analysis

This is a synthesis of the views of Don Drummond, TDCanadatrust, Jeff Rubin, CIBC and Eleanor Sloan a specialist in Defence policy.

Obviously the budget is a spending budget. There is an attempt to satisfy almost every constituency from business, to parents, to native people and so on to say nothing of the health care package. In that sense, the budget is last fall's throne speech with dollar commitments added.

There are some things, as always, which sound better than they are. The cut in EI premiums, for instance, is something that was scheduled to happen anyway and should be regarded as a "non-story" by our analysts. It is really only making a virtue of necessity.

The raising of the RRSP ceiling and the planned elimination of the capital tax for business were both seen as things John Manley can claim credit for in the sense that they were much discussed during the Martin years in Finance but never delivered upon. That said, other comparisons to Martin were deemed unfair because finance ministers are usually controlled by the circumstances they face rather than the other way around.

The Defence package was viewed as wholly inadequate to deal with the real problems facing the armed forces. Elinor Sloan said the money can sustain the status quo but will not allow for such things as expansion of personnel to meet the new demands of our foreign policy.

The over-riding interest among our economists, though, was the difference between program spending and revenues over time. Even with the increases outlined in this budget, program spending is significantly lower than it was in 93-94. Revenues, however, have continued without commensurate reduction and that accounts for the projection that there will continue to be significant surpluses in the years ahead.

This raises different questions depending on priorities. Those who believe taxes are un-necessarily high have a compelling argument that the government really doesn't need to collect as much money as it does. Those who think there should be even more program spending have a compelling argument for their case as well. In the latter group you might place the provincial premiers and territorial leaders who are already on record as far from satisfied with what the federal government put on the table for health care two weeks ago. As Don Drummond put it, "If you're a Premier you're going to look at this budget and feel you've been had".

Finally, Jeff Rubin made some interesting observations about how Canada's fiscal situation compares with the United States where taxes have been cut somewhat recklessly and the budget deficit is projected so set a new world record. "In the US they have a tax system they can't afford while here we have one we don't need," he said. He pointed out that by 2005-06 Ottawa is projected to have a debt to GDP ration that will be lower than Washington's. Not long ago that would have seemed fantastic.