In its upcoming budget, the Trudeau government needs to avoid unfocused, scatter-shot activism, writes Sean Speer. Instead, it should bring greater focus to its activism and tackle some of the bigger policy questions facing the country.
By Sean Speer, March 21, 2017
Speculation has reached a fever pitch about tomorrow’s federal budget. The message out of Ottawa in recent days has been conflicting to say the least. It’s difficult to make heads or tails about what to expect.
Fortunately we won’t have to wait much longer to learn what’s in this year’s budget. Finance Minister Morneau will clear up the uncertainty when he stands in Parliament to deliver his second budget speech at 4 pm on Wednesday.
It should be a critical moment for the minister and his government. A second budget in a majority mandate is often the peak of a government’s policy-making ambitions. It has had time to develop its medium- and long-term priorities. Distance from the next election is far enough to assume more political risk. And the finance minister has settled in and grown comfortable with his ministerial brief.
Yet the incongruous reports leading up to the budget suggest that the government is having challenges finding its voice and determining its agenda. It is nostalgic or forward-looking? Does it support higher or lower taxes? Will it revamp innovation and science policies or maintain the status quo? Is it pro-resource development or in favour of phasing it out? The list of outstanding questions is long.
There are nascent signs that Ottawa is becoming paralyzed by competing tensions and contradictory positions. Large-scale spending increases – basically more for everything – have helped to paper over some of these issues to date. But this is not a sustainable plan. Ultimately Ottawa must make some choices.
The government’s 2016 budget was forgiven for limited ambition because of its proximity to the previous election and the small number of clear deliverables it had prioritized early on. “So far so good” was a reasonable slogan for the first four or five months.
But such an excuse runs thin – especially since so little has happened in the intervening time. The result has been to inflate previous actions. Listen to a government spokesperson and one is led to believe that the reduction in the marginal tax rate from 22 percent to 20.5 percent and the creation of the Canada Child Benefit are the most important policy ideas in recent memory.
Both policies are laudable but they shouldn’t be overstated. The income tax reduction has a maximum saving of $860, which is more than offset by payroll tax hikes and the elimination of income splitting for families. The Canada Child Benefit rests on a foundation established by the Chrétien and Harper governments with some incremental funding and a new means-testing formula added. Good stuff for sure but there’s a risk of overdoing it.
Tomorrow’s budget is supposed to finally give Liberal spokespeople something new to talk about. But it may be more notable for what’s excluded than what’s included.
Trial balloons on rationalizing the tax code, reshaping science policy, and privatizing airports have seemingly hit the ground with a thud. Plans to reform veterans’s pensions and Indigenous programming also seem likely to receive more lip service than substantive action. “Modest” seems to be the byword of the day.
This is a far cry from the government’s election promise of “real change.” Its ability to translate this sentiment into a clear, credible governing agenda was always how it was to be judged. And there are signs that Ottawa’s activist streak needs greater focus.
One might think that a former Conservative advisor, like myself, would be pleased that the government’s activist rhetoric hasn’t quite been matched by its actions or deeds. But government activism isn’t necessarily bad so long as it’s channeled and directed for constructive purposes.
An activist agenda to reconceptualise the role and structure of government to strengthen federalism and localism would be a positive step. So would an activism that led to better, more market-oriented programming and services for Indigenous communities. Or an activism that modernized federal policies related to work, training, and family leave. Or one that eliminated corporate subsidies and strengthened intellectual property rights to enable more entrepreneurship and innovation. And so on.
The biggest worry then is not government activism but unfocused, scattered-shot activism that comes to measure effectiveness by inputs rather than outputs. Deficits are no longer seen as a fiscal challenge to tackle but a metric of compassion and commitment.
How much does the government care about affordable housing? Roughly $11 billion worth. What about green infrastructure? Just over $26 billion. And don’t even get started on clean technology and other signs of our so-called “resourcefulness.” This is how we will end up with budgetary deficits until 2050 and have little to show for it. It’s cheque-book activism.
A big part of the Liberal Party’s appeal in the 2015 election was its ambition and confidence. It proffered a different path than its predecessor that was to be less transactional and more visionary. People responded to this positive message, including new and young voters. Yet, on the eve of its second budget, we have had plenty of transactions but far less vision.
A bit of friendly advice: while it’s easy to defer decisions or choose the path of least resistance in government, the outcome is almost always regret and disappointment. Don’t listen to the pundits who caution against risk and encourage down-the-middle compromise. Don’t pass up your opportunity to do big things and make a difference. Draw on the talented people in Cabinet and among the staff, and tackle some of the big questions facing the country.
Tomorrow’s budget may be a missed opportunity to focus the government’s activist streak. It won’t just mean its spokespeople have little of substance to say. It will also mean that we’re one day closer to the next election – and the window for activism and progress is slowly closing.
Here’s hoping this speculation is wrong. We’ll know soon enough.
Sean Speer is a Munk Senior Fellow at the Macdonald-Laurier Institute.