Conservative budget a political road map to next election
Canada's deficit effectively erased, country all but back in the black
The timing of Tuesday’s federal budget in the midst of Olympic-mania was a good clue the Harper government had either something to hide or nothing much to say in its latest economic plan for the country.
Turns out, it was some of both.
The headline Finance Minister Jim Flaherty apparently hoped Canadians wouldn’t notice between gold-medal races in Sochi is that the national deficit has effectively been erased. Gone. The country is all but back in the black.
Flaherty’s latest budget predicts a deficit of $2.9 billion by the end of the government’s fiscal year in March 2015.
But that includes a $3-billion contingency fund, without which the country is already on track to break into surplus in this budget cycle.
Ordinarily, one might have expected the Conservative government would turn such a momentous fiscal feat into a national political celebration.
Instead, Flaherty blandly told Parliament only that the government "remains committed to balancing the budget in 2015."
So, it’s official: The Harper government has tabled a next-to-nothing budget this year to hold off making The Big Announcement until just before Canadians go to the polls in October next year.
By then, this year’s austerity measures should be a big fat surplus — estimated to hit more than $6 billion — just in time to fund all manner of Conservative election promises.
Truth is, Flaherty’s latest budget is not so much a fiscal blueprint as it is a political road map for the Conservatives toward the next election.
First, the budget is clearly intended to mend some fences with the Conservative government’s own voting base.
Flaherty’s focus on fiscal prudence and promise of a balanced budget is getting rave reviews from fiscal conservatives who have long been disappointed by the Harper government’s various money management snafus.
And if the Conservative base likes the thought of returning to black ink on the books, it will likely love the Harper government’s plan to get there in large measure on the backs of federal public servants.
'A war with the bureaucracy'
The largest savings in the entire budget — an estimated $7.4 billion over seven years — will come from reducing the government’s contributions to the health plans of retired public servants.
Add to that a two-year freeze on departmental operating budgets that will force even deeper cuts to the public service, and the Conservatives may well be heading for a war with the bureaucracy.
Conservative election strategists would likely welcome the opportunity.
Some of the budget measures may not sit well with Conservatives — or with many other Canadians.
The Harper government is shelling out another $500 million to the automotive industry, a move likely to make some hard-core Conservatives break out in hives.
No matter: the automotive industry is mainly in Ontario, and Flaherty knows that’s where the next election is going to be won or lost, including his own Oshawa riding.
Then there’s National Defence. It has so botched the planned acquisitions of new helicopters, ships and other equipment that the government was able to cut $3.1 billion in spending until some future time years down the road when the department finally gets its act together.
The government that has long promised no new taxes is raising the ones on cigarettes by more than $4 a carton, saying there hasn’t been an increase in more than a decade.
While the move is supposed to generate a windfall of more than $1.2 billion over two years, the problem with raising cigarette taxes is it tends to drive young people to buy smuggled smokes unregulated by anyone.
So, the government is promising almost $100 million more in special funding to the RCMP just to combat smoke smugglers.
Details to follow
Much of Flaherty’s budget contains measures targeted at specific groups of voters who would do well to read the fine print.
For example, the government promises to introduce legislation that would deal with consumer price gaps between Canadian and American goods.
But there is nothing in the budget to indicate how, exactly, the Conservative government plans to engineer what experts say would have to be unprecedented market intervention.
“Details will be announced in the coming months,” the budget says.
Similarly, the budget promises relief from cellphone bills, saying the government will be “standing up for consumers by encouraging competition and lower prices in the telecommunications market.” Details to follow.
In total, the budget outlines more than 70 specific measures, many of which require no new money, and others that won’t get any major funding until after the next election.
There’s a lot in this budget about jobs: new funding for apprenticeships, internships, for people with disabilities, older workers, young people, and new Canadians.
Notably, the government has yet to launch its cornerstone Canada Job Grant program it announced last year.
Canadians hoping for personal tax cuts or other goodies in this budget will be disappointed.
But don’t despair: The gravy train cometh in 2015.