Economists and experts say they’re expecting the federal government to raise taxes in Tuesday’s budget to help offset billions of dollars in new spending already promised in the pre-budget announcements that have been landing almost daily since the end of March.
Those announcements add up to more than $38 billion in commitments over a number of years. Because $17 billion of those commitments involve loan-based programs, about $21 billion could hit the government’s bottom line directly.
And that figure doesn’t include other new budget measures that haven’t yet been announced.
Finance Minister Chrystia Freeland has said the deficit will not increase in this year’s budget. Canada’s economy has so far avoided recession, but growth is still slow. That leaves the government with no option but to increase revenues to pay for new spending while keeping the deficit steady.
“I’m pretty confident they will raise revenues because they’ve squeezed themselves on their fiscal situation and they continue to commit to spending that is not sustainable,” said Robert Asselin, senior vice president of policy at the Business Council of Canada and an adviser to Bill Morneau when he was finance minister. He is also a former adviser to Prime Minister Justin Trudeau and former prime minister Paul Martin.
Freeland has said repeatedly the government will not raise taxes on the middle class.
“The problem for them is either a surtax on big corporations or a wealth tax sounds very good, but in practice they’re terrible. They don’t work,” said Asselin.
Asselin said the government could also “reprofile” previous spending commitments by pushing the promised money further into the future, but that won’t be enough to keep the deficit in check. And it would worsen the Liberals’ spotty reputation when it comes to actually getting things done.
“Let’s be honest. They have to raise taxes. I don’t think that’s a big secret. But can they do it in a thoughtful, provocative way?” said James Thorne, chief capital market strategist for Wellington Altus Private Wealth.
“If you do it on the high-income people, they’re just going to move their money offshore.”
Making room for rate cuts
Thorne said the number one priority for the government should be to show fiscal responsibility. He said that’s the signal the Bank of Canada needs before it can lower interest rates, which would offer Canadians cost-of-living relief and lift the economy.
“Nobody is arguing about the social programs that the Liberals are putting in,” he said. “But can we do it in a fiscally responsible and non-inflationary way?”
Adding to the pressure on Ottawa is the recent trend of provincial governments spending big, notwithstanding the impact on inflation or aggregate government debt levels.
Government sources say the Liberals are very keen not to make the Bank of Canada’s job of keeping inflation in check any more difficult. They also say they know they have little chance of turning around their sagging political fortunes unless interest rates come down sooner rather than later.
Inflation numbers coming soon
Coincidentally, the latest inflation numbers from Statistics Canada will come out on Tuesday. While the consensus expectation is that core inflation will remain flat, there’s always a chance of a surprise bump, as seen in the United States’ March numbers.
“If we get anything like the U.S. surprise, it would look rather scandalous that the government is looking to push a lot of money into the economy,” said Karl Schamotta, chief market strategist with Corpay, a foreign exchange and payments company.
The three pillars of Tuesday’s budget will be housing and affordability, growing the economy and fiscal responsibility, according to senior government sources.
But some economists argue that the growth and fiscal responsibility pillars have been promised in the past, with little evidence of either follow-through or success.
Prime Minister Justin Trudeau, right, meets with carpenters before speaking about a new housing policy at the CCAT training centre in Woodbridge, Ont., on Friday, April 12, 2024. (Nathan Denette/The Canadian Press)
And with the Liberals sagging in the polls and struggling to get their message through to voters, many predict this federal budget will be less about the nation’s finances and more about measures that could turn the government’s political fortunes around.
“It will be 100 per cent absolutely a political budget, a pre-election budget,” said Asselin.
“This government has a fiscal credibility problem. They over-promise and they under-deliver.”
Tuesday’s budget is also expected to be geared toward younger Canadians, such as millennials and Generation Z — a group of voters the Liberals are actively courting, according to sources. The flurry of housing announcements over the past two weeks has hinted at that focus.
HALIFAX – The Nova Scotia legislature is set to open today for its fall sitting.
The early September return has added to speculation of a possible election call later this fall, but Premier Tim Houston will only say that he’s excited about his government’s legislative agenda.
Houston says the Progressive Conservatives still have “lots to do” on behalf of Nova Scotians, but he wasn’t specific about pending legislation when asked about his priorities on Wednesday.
In June, he cast doubt on whether he will adhere to the fixed provincial election date his party passed into law soon after coming to power, which set the date for July 15, 2025.
The Opposition Liberals and the NDP say they are ready for any scenario and remain focused on their own priorities for the sitting.
Both parties say they will highlight the need to deal with cost of living issues, including the shortage of affordable housing and the lack of access to primary health care.
This report by The Canadian Press was first published Sept. 5, 2024.
In a move that sent shockwaves through British Columbia’s political landscape, B.C. United leader Kevin Falcon announced on Wednesday that his party would suspend its campaign for the upcoming provincial election and throw its support behind John Rustad’s resurgent B.C. Conservatives. This unprecedented decision has left political watchers and analysts scrambling to make sense of the ramifications for the province’s political future.
Kevin Falcon, who took the reins of the B.C. Liberals—now rebranded as B.C. United—in February 2022, delivered the stunning news at a press conference that left many in disbelief. The former cabinet minister, known for his confidence and assertiveness, appeared uncharacteristically somber and introspective as he explained the rationale behind his decision.
Shachi Kurl, president of the Angus Reid Institute, observed the stark contrast in Falcon’s demeanor. “This is a man who has always exuded confidence, even cockiness, throughout his political career. But today, he seemed on the brink of tears, visibly struggling with the weight of this decision,” Kurl noted. The emotional toll of Falcon’s announcement was evident, underscoring the gravity of the situation both personally and professionally for the B.C. United leader.
The roots of B.C. United’s collapse can be traced back to two key decisions made by Falcon: the expulsion of John Rustad from the party and the controversial rebranding from the B.C. Liberals to B.C. United. Rustad, who was removed from the party in February 2023 for questioning climate change science, quickly capitalized on his dismissal by revitalizing the dormant B.C. Conservative Party. Since then, Rustad has attracted a growing number of former B.C. United MLAs and candidates to his cause, turning the B.C. Conservatives into a formidable political force.
The decision to rebrand the B.C. Liberals as B.C. United, which was meant to signal a fresh start for the party, has been widely criticized as poorly timed and poorly executed. Bill Bennett, a former Liberal cabinet minister, lamented the lack of public understanding of the new brand. “There was no real effort to rebrand and help the public grasp who B.C. United was. The entire process lacked sufficient resources, which ultimately led to its failure,” Bennett said.
Political scientists have been quick to analyze the implications of Falcon’s decision to suspend B.C. United’s campaign. Stewart Prest, a political science lecturer at the University of British Columbia (UBC), expressed shock at the sudden turn of events. “This was a party that, just moments ago, was preparing to compete in this election. To suddenly wave the white flag and step aside in favor of another party is unprecedented. We haven’t seen anything quite like this before,” Prest remarked.
The move has also raised questions about Falcon’s leadership and the future of B.C. United. Gerald Baier, an associate professor of political science at UBC, suggested that Falcon’s decision to expel Rustad may be viewed as the pivotal moment in his leadership. “If Falcon could go back and change one decision, it would likely be the expulsion of Rustad. That move set off a chain reaction that ultimately led to the party’s collapse,” Baier explained.
With B.C. United stepping aside, the B.C. Conservatives are now positioned to become the main opposition to the ruling B.C. NDP in the upcoming election, scheduled for October 19. However, the transition will not be without its challenges. The Conservatives will need to decide which B.C. United candidates to include on their slate, a process that could leave some candidates and voters in a state of uncertainty.
As the political landscape in British Columbia shifts dramatically, the upcoming election promises to be one of the most closely watched and hotly contested in recent memory. The decision by Falcon to back the B.C. Conservatives has not only upended the election but has also reshaped the future of politics in the province. As the dust settles, all eyes will be on John Rustad and his ability to capitalize on this newfound momentum.
In conclusion, Kevin Falcon’s decision to suspend B.C. United’s campaign and endorse the B.C. Conservatives marks a pivotal moment in British Columbia’s political history. The move has raised numerous questions about the future of B.C. United, the leadership of the B.C. Conservatives, and the upcoming election itself. As the province braces for what promises to be a highly volatile election season, one thing is clear: British Columbia’s political landscape will never be the same.
VICTORIA – British Columbia’s auditor general says his office has found no evidence of a conflict of interest in the handling of provincial grants for the zero-emission vehicle sector, after an accusation by a truck maker earlier this year.
Michael Pickup says in a statement the investigation looked into accounting firm MNP’s handling of Advanced Research and Commercialization grant applications, reviewing “a significant amount of information” from the company, the government and all applicants.
Pickup says the results show no evidence MNP wrote grant applications for clients, influenced the evaluation process to benefit clients or used its administering of the program to “recruit” clients for the company’s other services.
In April, the provincial legislature unanimously directed Pickup’s office to examine allegations by electric-hybrid truck maker Edison Motors that MNP was both administering the grants and offering services to help businesses with applications.
The Office of the Auditor General says the allegations from Edison, which is based in Merritt, B.C., suggested MNP “was offering to write grant applications in exchange for a success fee while also deciding who received grant funding.”
MNP said at the time that the allegations were “false and misleading.”
This report by The Canadian Press was first published Aug. 28, 2024.
