Federal Budget 2016

Trudeau Liberals chart a new direction

 

By John Twigg

With its new budget the Canadian federal government of Prime Minister Justin Trudeau has clearly embarked on a new direction that is sharply different from its predecessor's in many important policy areas.

While it's sometimes dangerous to rely heavily on second-hand reports, it's clear from media coverage that the Trudeau Liberals really are charting significant new changes in taxes, spending and many other areas of governance including deficits and debt but perhaps most important of all is the new style, tone and focus - such as boosting the federal share of funding infrastructure projects to 50% from 33%.

Opposition reactions to the budget were predictably negative, such as Conservative leader Rona Ambrose calling it a nightmare and NDP leader Tom Mulcair saying "it's not what they promised" [though it IS what Mulcair should have promised!] - but the gist of the budget moves seemed to have been widely welcomed by most observers and the complaints were mainly of the "more should be done sooner" variety.

Major new money for First Nations

Indeed several of the new Liberal directions were long overdue such as allocating $8.4 billion over five years to upgrade First Nations water, housing and infrastructure systems, which is one of the largest single allocations amongst a fairly long list of new initiatives in the budget and really illustrates how numerous policies of the former Conservative regime of Stephan Harper are now being completely reversed.

While some commentators such as leading columnist and pundit Andrew Coyne focussed on such things as broken election promises and dubious fiscal and economic forecasts, most people welcomed what Trudeau called "smart investments" in areas where it's most needed and can do the most good, and I for one think that is a positive and timely approach.

"My promise to middle class families, and all families working hard to join the middle class, is that I will invest now in long-term economic growth that helps you build a better future," Trudeau said in a party statement that also summarized what they seem to think are the main themes in the budget (text follows below).

Thus the boutique tax credits from Harper for child fitness and education are gone and income-splitting for parents is gone but replacing them are a new means-tested Child Benefit, higher GIS payments for seniors and all sorts of other tweaks such as reducing the waiting-time to receive Employment Insurance benefits, returning the retirement age to 65 from 67 and deferring student-loan paybacks until the payee is earning at least $25,000 a year.

There's also $11.9 billion over five years for investments in infrastructure including green energy, social and affordable housing, and transit, some of which is back-ended in the five-year plan and thus probably not of much help for B.C.'s several urgent transportation projects waiting in a queue (and that may be a blessing too because the proposed Massey Bridge and West Broadway subway are dubious in my opinion and could benefit from some better planning before shovels hit any dirt).

So though it's all only a start, it's a good start, and a lot better than what many expected.

Green leader May supportive

One of the smarter responses came from Green Party leader Elizabeth May, who welcomed the major investments in First Nations needs and was "thrilled" to see the reopening of the Kitsilano Coast Guard base but was "sad" to see the absence of green measures such as home retrofits and "heartbroken" by what she said was a weakening of the federal environmental assessment process and generally disappointed with various energy-related matters.

"We'll see how they do (in the years ahead on these and other issues)," she told GlobalTV Vancouver, noting she also had voted for the Liberals' Throne Speech because she supports the general direction of the new government.

I have a similar feeling about it all too, welcoming the many good first steps in new directions but realizing that in coming years the details will be challenging on many issues, such as the environmental review three months from now on the $36-billion Pacific NorthWest LNG project proposed near Prince Rupert, when and how recreational marijuana will be legalized and taxed (the budget was silent on it), how climate, energy and transit issues will be handled, how the restoration of science and tourism promotion efforts will work in practice, how health transfers will be handled, how the economy will perform and whether new measures will be needed next year to boost job creation, whether the tax hikes on upper incomes will spark a flight of capital, and so on. Like electoral reform, federal-provincial relations and water - especially water, which is a provincial jurisdiction seen wrongly as a national treasure.

If I had to give it all a grade I'd say high B or even low A. Pretty good, in other words, and in any case really a welcome turnaround from the bad old days of tyrant Harper.

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The summary below was circulated by the Liberal Party of Canada and appears here for information and not as a carte-blanche endorsement.

Federal Liberals summary of 2016 Budget

A LONG-TERM PLAN FOR GROWTH

Help for the middle class
A strong economy starts with a strong middle class. Budget 2016 introduces the new, fairer, tax-free Canada Child Benefit, eliminates unfair tax breaks for the wealthy and creates the student grant boost. These measures, combined with the new tax cut for the middle class and a new tax bracket for those earning more than $200,000 per year, will give Canada’s middle class the help it needs to grow and prosper.
Growth for the middle class
To strengthen the middle class and deliver more inclusive growth for more Canadians, Budget 2016 makes historic investments in infrastructure and innovation. These investments will provide both immediate help to Canada’s middle class and help expand opportunities for those working hard to join it.
Historic investments in infrastructure
Budget 2016 proposes to invest more than $120 billion in public transit, green infrastructure and social infrastructure over 10 years. These investments will transform Canadian communities and revitalize Canada’s economy. To help Canadian families and communities right away, Phase 1 of the Government’s infrastructure plan will invest $11.9 billion over five years, to modernize and upgrade public transit, improve water and wastewater systems, expand affordable housing, and protect infrastructure systems from the effects of climate change.
Help for young Canadians
Budget 2016 will ensure no student graduating from college or university has to start paying back their student loans until they make at least $25,000 in annual income. Grants to low and middle-income college and university students will be boosted by as much as $1000 per year, putting more money in the pockets of 360,000 students a year. Our plan also invests over $300 million (over three years) in the Canada Summer Jobs program, creating 35,000 additional youth jobs each year.
A better future for Indigenous peoples
It is time for a renewed relationship between Canada and Indigenous peoples, one based on trust, respect and a true spirit of cooperation. The investments in education, infrastructure, training, and other programs contained in Budget 2016 will help to secure a better quality of life for Indigenous peoples – and build a stronger, more unified, and more prosperous Canada.
A clean growth economy
A clean environment and a strong economy go hand in hand. Budget 2016 recognizes this, making strategic investments in clean technology and taking concrete steps to address the causes and effects of climate change.
An inclusive and fair Canada
Canada is at its best and most prosperous when all Canadians have a real and fair chance at success. The investments in Budget 2016 help to extend opportunities to more Canadians, and will help to build a healthier, more creative, more generous and more just Canada. Canadians understand that a country can’t cut its way to prosperity. A new approach – one that includes smart investments and fair choices – is needed.