Federal budget 2016: 5 things to watch for today

The Liberal government will table its first budget today, a crucial spending plan that will brand the party for better or worse during a challenging economic outlook. Expect it to echo and put a price tag on key themes from the party's campaign platform.

Liberal spending plan expected to focus on middle class, strategic infrastructure spending

Finance Minister Bill Morneau will table the Trudeau government's first federal budget after 4 p.m. ET today. (Paul Chiasson/Canadian Press)

The Liberal government will table its first budget today — a crucial spending plan that will brand the party for better or worse during a challenging economic period.

Expect it to echo and put a price tag on key themes from the party's campaign platform: strategic investments for long-term economic growth, jobs and productivity; measures to boost the middle class and lift children out of poverty; and shifting to a green economy.

But all eyes will be on the fine print details of how much — and how fast — the Liberal government will deliver.

"This is very critical. It sets the stage and the tone for moving forward," Conservative MP and natural resources critic Candice Bergen told CBC News.

Topping the Conservative wish list is more tax relief for "job creators," as well as supports for provinces like Alberta hit by collapsing oil prices that need subsidies and supports for pipelines and market access, Bergen said.

NDP finance critic Guy Caron said the fiscal forecast has changed significantly in the last five months, and he'll be watching for how the Liberals adapt their priorities.

"It will be interesting to see what they promised during the campaign; what will be delivered and what will be delayed," he said. "It's all a question of priorities. We know where our priorities are; it will be interesting to see where the Liberal priorities lie."

Among the NDP's key demands are more social housing, more funding for First Nations education and enhanced supports for low-income seniors.

Here are five things to watch for in the first Liberal budget.

1. Deep deficit?

A key question swirls around the budget's bottom line — how big will the deficit be, and how long will it take to erase it?

The Liberal election campaign promise was to run "moderate" deficits of no more than $10 billion a year for three years before balancing the books again. But last month Finance Minister Bill Morneau said the deficits will be much larger than expected.

Morneau said the government will post a smaller than projected deficit of $2.3 billion for 2015-16, down from the $3-billion deficit projected in November's fall fiscal update.

But he said that deficit will balloon to $18.4 billion in 2016-17 and $15.5 billion in 2017-18 — and that is before any new budget spending. 

Aaron Wudrick, federal director of the Canadian Taxpayers' Federation, hopes the Liberals won't adapt to the revised outlook and changing circumstances by going on a massive spending spree.

"Our concern is that whenever they are faced with the choice to exercise spending restraint, or throw caution to the wind and turn on the taps, they will always be tempted to opt for the latter," he said. "The size of the deficit is a cause for concern, but so would be the absence of a clear commitment and plan to get back to balance."

During an interview with Bloomberg News this week, Trudeau said the budget will be built around the premise that now is the time for government spending, not austerity.

But Bergen warned there will be political consequences for going beyond the $10-billion deficit pledge.

"It goes to trust, it goes to a government that can keep its word and understands fiscal challenges," she said. "It's about massive deficits when we are not in a recession and concern this could turn to a structural deficit in the long term."

How big will the Liberal deficit be?

8 years ago
Duration 1:15
Federal Finance Minister Bill Morneau will table his first budget tomorrow... the first since the Liberals were elected last fall. The government has already confessed that the deficit will be larger than the $10 billion promised during the campaign. Here's how the Liberals' deficit message has changed over the past few months.

2. First Nations funding

Trudeau has been lauded for his commitment to repair relations with First Nations, especially his quick move to deliver on a promise to call an inquiry into murdered and missing indigenous women.

But the problems plaguing First Nations communities are huge — from education to housing to clean water — and will be extremely costly to fix.

Aboriginal leaders hope Trudeau's goodwill gestures translate into a new fiscal relationship with First Nations.

Prime Minister Justin Trudeau is under pressure to deliver on First Nations funding promises in the federal budget. (Adrian Wyld/Canadian Press)

The Liberals were banking on $1.7 billion in funding from the previous Conservative government to carry out an election pledge to close a $2.6-billion funding gap for First Nations education. But the money was tied to quashed Conservative legislation and is no longer available. 

Will the Liberals find the money to fulfil promises to First Nations? On the eve of the budget, Trudeau promised in the House of Commons "historic investments" for First Nations and indigenous Canadians to "begin to make it right."

3. Greening the economy

Trudeau wants Canada to see the fight against climate change as a challenge, but also as an opportunity to transform to a green economy. And he believes Canada can be a world leader in cutting greenhouse gas emissions, despite being an oil-producing country.

So how will the budget nudge the shift to a green economy?

The climate change plan includes a $2-billion trust to fund projects that reduce carbon.

The Liberals have also promised millions for sector-specific strategies that support innovation and clean technologies in forestry, fisheries, mining, energy and agriculture, as well as supports for research and development into clean technologies.

Expect more details on partnerships and incentives to make Canada's economy more environmentally friendly.

4. Eye on infrastructure

The Liberal platform promised $125 billion in new infrastructure investment, about twice the amount the Conservatives have committed, and put the focus on three priorities: public transit; social infrastructure, such as child care spaces and community centres; and green infrastructure.

The question now is how the money will flow, and to what projects.

Expect the design to be based on creating conditions for long-term growth rather than as a stimulus package.

In an interview with Bloomberg TV last week, Trudeau said the initial focus will be on "unsexy" but desperately needed projects like upgrades and maintenance, and then move into longer-term growth projects.

"What we're looking at is not so much trying to jolt the economy into life, as trying to lay the groundwork, the foundation for better productivity over the long term, and not just an influx of cash," he said.

5. Support for seniors

Trudeau tipped his hand last week on one campaign promise that he will deliver on in the budget — to return the eligibility for Old Age Security to 65 from 67

The change brought in by the Conservatives was not set to kick in until 2023, but the news was welcomed by seniors advocates.

Now they're looking to see if the Liberals will deliver on other key promises for retirement security, including a pledge to increase the guaranteed income supplement for single low-income seniors by 10 per cent. 

The platform also promised a "seniors price index" to ensure OAS and GIS benefits keep up with actual rising costs, and a more flexible compassionate care benefit so those caring for seriously ill family members — not just those who are terminally ill — have benefits for six months.

... and for young people?

The Youth Budget?

8 years ago
Duration 1:39
If you're between 15 and 24, this is why the Liberal's first budget could be important for you