By David Coletto

On Tuesday, Finance Minister Chrystia Freeland will table the federal government’s budget, and the stakes could not be higher for the government.

Public assessments of the government’s performance and how they feel about the Prime Minister haven’t been much lower than they are today. Despite this, the Liberals and Conservatives are statistically tied in our latest measure of vote intention.

In our most recent national omnibus survey conducted from March 17 to 21, I asked 1,963 adults a few questions to gauge their economic outlook and how they feel about the government’s performance on a series of economic, fiscal, and pocketbook issues. The results suggest a very challenging opinion environment – one that I think the government and the Prime Minister desperately need to shift.

Here’s what I’m seeing:

The overall economic outlook isn’t that bad right now, but it’s not great either. When we ask Canadians to estimate whether the economy will improve, get worse, or stay about the same over the next 12 months, almost half think it is going to get worse but only 15% say it will get a lot worse. About 1 in 4 are optimistic things will improve over that time period.

Government Strengths and Weaknesses?

When we ask Canadians to evaluate the performance of the federal government and the Prime Minister in several areas, the government gets fairly good grades for its handling of Russia’s invasion of Ukraine, for representing the country internationally, and for working with the provinces. In each of those, half or more feel the government’s performance is at least acceptable.

It gets what I feel are middling grades for running an ethical government, managing the economy, and responding to the crisis in healthcare. On these, about 4 in 10 feel the government is doing at least an acceptable job.

But on two items in particular, the government is seen as severely underperforming – addressing the rising cost of living and making housing more affordable and accessible. On both, about 1 in 4 think the government is doing ok or better while two-thirds think it’s doing a poor or terrible job.

Even among 2021 Liberal voters, the cost of living and housing are challenging issues for the government. 4 in 10 past Liberal voters say the government isn’t doing even acceptably on those issues.

Part of the problem facing the government right now is its lack of narrative – especially an economic one. Case in point, when we ask Canadians whether they agree or disagree that “the federal government has a clear economic plan to grow the economy” only 23% agree, including 4% who strongly agree. In contrast, 42% disagree, 22% neither agree nor disagree and 13% are unsure.

I wish I had comparable data from previous years or previous governments, but these numbers feel low. If I was advising the Finance Minister, having only 1 in 4 people inclined to think you have a clear plan to grow the economy is a problem, and a serious liability, especially when people are feeling anxious and uncertain about the economy right now.

But the crosstabs provide even more concern. For example, those in vote-rich Ontario and Quebec are no more likely to think the government has a clear plan than those in other regions. And only 51% of Liberal supporters, those who say they would vote Liberal today, think the government has a clear economic plan.

But it gets worse for the Liberals…

When we ask all Canadians which party they feel will do best on several issues, the Liberals only have a slight advantage on one – dealing with climate change and the environment. Even when it comes to “making childcare affordable” – an issue that dominated the 2021 federal budget – the Liberals are basically tied with the NDP and only 7-points ahead of the Conservatives.

On EVERY economic and pocketbook issue, the Conservatives have a clear advantage over the Liberals. And a reminder, this is the same poll that found the Liberals only 2 points behind the Conservatives in voting intention.

The Conservatives are ahead of the Liberals by:

• 13 on managing the economy.
• 19 on keeping taxes low
• 15 on keeping interest rates as low as possible
• 11 on addressing the rising cost of living
• 7 on creating good-paying jobs
• 6 on protecting pensions and retirement security

The Upshot

These results underscore both the weakness of the Liberal government’s brand on economic issues and the opportunity it has in this budget to start to move these numbers.

One budget alone won’t fix the problem, but if the government uses it as an opportunity to start talking about pocketbook issues and the economy more, they may be able to reverse some of these numbers.

I think the problem is one of empathy and clarity. The federal government and its senior leaders aren’t connecting with people and empathizing with their day-to-day struggles. And there hasn’t been a clear economic narrative that people recall. With only 23% of Canadians believing the government has a clear economic plan, the budget presents an opportunity for the Liberal government to articulate its vision for economic growth and stability. Demonstrating a coherent strategy to address Canadians’ economic anxieties could help regain public trust.

Yes, the Conservatives have a natural advantage on economic issues. But it hasn’t always been that way. Tomorrow’s budget will either demonstrate a shift in strategy and approach, or it will reinforce what people already think.

METHODOLOGY

The survey was conducted with 1,963 Canadian adults from March 17 to 21, 2023. A random sample of panelists were invited to complete the survey from a set of partner panels based on the Lucid exchange platform. These partners are typically double opt-in survey panels, blended to manage out potential skews in the data from a single source.

The margin of error for a comparable probability-based random sample of the same size is +/- 2.3%, 19 times out of 20.

The data were weighted according to census data to ensure that the sample matched Canada’s population according to age, gender, educational attainment, and region. Totals may not add up to 100 due to rounding.

This survey was paid for by Abacus Data Inc.

Abacus Data follows the CRIC Public Opinion Research Standards and Disclosure Requirements that can be found here:  https://canadianresearchinsightscouncil.ca/standards/

ABOUT ABACUS DATA

We are the only research and strategy firm that helps organizations respond to the disruptive risks and opportunities in a world where demographics and technology are changing more quickly than ever.

We are an innovative, fast-growing public opinion and marketing research consultancy. We use the latest technology, sound science, and deep experience to generate top-flight research-based advice to our clients. We offer global research capacity with a strong focus on customer service, attention to detail, and exceptional value.

We were one of the most accurate pollsters conducting research during the 2021 Canadian election following up on our outstanding record in 2019.

Contact us with any questions.

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Finance Minister Chrystia Freeland’s 2023 budget will announce plans to save about $7-billion over five years through cuts to federal travel and reduced outsourcing, with a particular focus on using fewer management consultants, according to a senior government official.

The Globe is not identifying the official, because they were not authorized to be named when discussing the contents of the budget. The savings represent one side of what will be a challenging political balancing act for the government as it presents this year’s spending plan on Tuesday.

Ms. Freeland’s budget will aim to show that the government is focused on fiscal responsibility after posting massive deficits during the pandemic. At the same time, the plan will promote billions in increased spending in areas such as dental care, direct support for low-income Canadians, and a major package of new programs to boost the clean economy.

The government’s decision to cut back on outsourcing follows a series of reports by The Globe and Mail that highlighted how federal spending in this area – officially called professional and special services – has spiked under the Liberals, from $8.4-billion in 2015-16 to an estimated $21.4-billion this current fiscal year.

Parliamentary Budget Officer Yves Giroux recently reported that while federal spending on management consultants is only 5 per cent of that total, it is a category that has grown by 95 per cent under the Trudeau government.

Mr. Giroux has questioned why spending on outsourcing has increased while the size of the federal public service has jumped by 28 per cent since 2017.

The government operations committee is currently engaged in three separate studies of the growth in federal outsourcing, including one on management consulting firms such as McKinsey & Co. and another on the ArriveCan app, which is on pace to cost over $54-million and was built through extensive use of outside contractors.

2023 federal budget: What Canadians can expect from Freeland on Tuesday

The savings on outsourcing and travel will be worth about $7-billion over five years and $1.7-billion for each year after that, the official said. The plan is meant to show that Ottawa will exceed last year’s target of finding $6-billion in internal savings over five years.

Another item that will be in the budget, according to the official, is an announcement that the government will move ahead with reforms to the alternative minimum tax. The AMT, which is intended to prevent excessive use of deductions by providing an alternative way for wealthy taxpayers to calculate their obligations, has been in place since 1986. The 2021 Liberal campaign platform and 2022 fall economic statement both said it needs to be updated to ensure wealthy people can’t excessively lower their overall tax bills.

The budget will also announce a clean technology manufacturing tax credit worth more than $3-billion over five years.

Companies will be able to use the 30-per-cent tax credit to offset the cost of equipment for mining and processing critical minerals, which are in high demand as the global economy seeks to expand the use of renewable energy and electric vehicles.

The budget will also include an extension of the six-month increase to the GST rebate, which temporarily doubled the amount sent to recipients starting in the fall. The GST rebate is a payment targeted toward lower-income Canadians. It is meant to help offset the costs of paying sales taxes.

Campbell Clark: Chrystia Freeland’s industrial-sized budget question

The government plans to promote the extension as a “grocery rebate,” even though many grocery items are exempt from sales tax. There will be no obligation on recipients to spend the money on groceries.

NDP Leader Jagmeet Singh, who is seeking support for lower-income Canadians in Tuesday’s budget, responded to the grocery-themed rebate plan after it was reported Monday by CBC News.

“It looks like one of the things we’ve asked for is going to be there,” he told reporters on Parliament Hill. “We still want to see confirmation of the dental-care expansion to include seniors, people living with disabilities, and kids 18 and under. We really want this budget to save money for people.”

In public comments over the past few weeks, Ms. Freeland, who is also Deputy Prime Minister, has clearly signalled the budget’s main elements.

The government will “invest aggressively” in various clean-energy programs, partly to compete with massive new tax breaks and other incentives that were announced last year in the United States through the Inflation Reduction Act and other policies. The budget will also lay out a detailed spending plan for increased health transfers to the provinces and territories, which were announced in February.

A third category of spending will be under the heading of affordability measures, partly in response to cost-of-living pressures driven by inflation. This will include the extension of the GST credit increase and an expanded dental-care plan, as called for by the NDP, which is supporting the minority Liberal government in exchange for action on a list of policy priorities.

Lana Payne, president of Unifor, which represents thousands of Canadian autoworkers, met with Prime Minister Justin Trudeau last week just ahead of the budget. She said in an interview that U.S. policies to encourage the manufacturing and purchasing of electric vehicles and other emission-reducing measures are a “game changer” that require a strong Canadian response.

“We are in a very important moment in time, I think, economically speaking,” she said. “We can’t lose track of things right now. Because we’ve had a decade or two in which we haven’t been doing that well in terms of attracting new manufacturing investment to Canada.”

The Editorial Board: Budget 2023: Canada’s indefensible military spending

Canadian Chamber of Commerce president Perrin Beatty said he hopes to see a budget with one clear theme.

“The thing that we believe the government needs to focus on is growth. Everything flows from that,” he said. “How do we create the conditions for private-sector-led economic growth in Canada? And that doesn’t mean bringing in massive new spending programs.”

On the tax front, outside experts are not expecting major changes on Tuesday. The government has already signalled that Canadians can expect more detail on tax changes that had been previously announced, but had not yet been launched or fully explained.

These include a proposed 2-per-cent tax on share buybacks for public companies, and the updated alternative minimum tax for high-net-worth individuals.

Last year’s budget said the minimum tax change is aimed at an “unfair” situation in which thousands of wealthy Canadians pay little to no personal income tax each year because of tax credits and deductions.

Brian Ernewein, a former Finance Department assistant deputy minister for tax legislation who is now a senior adviser with KPMG, said he’ll be watching to see if the proposal indirectly limits access to the capital gains exemption for some people.

Currently in Canada, only 50 per cent of a capital gain – such as the profit on a stock sale or an investment property – is taxable. There has long been a policy debate over whether that inclusion rate should be increased. Mr. Ernewein said a minimum tax could have an impact.

“There’s at least some reason I would think for speculating that effectively, maybe not directly, but effectively, they might be changing the tax burden on capital gains through the minimum tax,” he said.

While governments frequently signal a budget’s contents in advance, tax changes are generally closely guarded, given their potential to move markets.

Bruce Ball, vice-president of taxation with the Chartered Professional Accountants of Canada, said he is not expecting major changes to personal or corporate tax rates.

He does, however, expect to see a fair number of smaller tax announcements.

“The government does have a lot of unfinished business, things that they’ve talked about before,” he said, pointing to a promised reform of business tax incentives for scientific research and experimental development as an example.

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Finance Minister Chrystia Freeland is expected to deliver a budget Tuesday that will offer limited cost-of-living relief to the vulnerable and promote green investments as uncertainty continues to cloud the economic horizon.

“I don’t think people should get their hopes up too high at this being a sort of goodie bag budget,” Elliot Hughes, former deputy director of policy for former finance minister Bill Morneau, told CBC News.

“It certainly is not being spoken about in that way by both the prime minister and the finance minister and if anything, they’ve I think been … really leaning into the fiscal restraint piece for this budget.”

• Watch and listen to live coverage of the federal budget and what it means for you: CBC’s Chief Political Correspondent Rosemary Barton hosts special coverage starting Tuesday at 4 p.m. ET on CBC TV, CBC News Network, CBC Gem, CBCNews.ca, the CBC News App and YouTube, followed by a special edition of Power & Politics with David Cochrane on CBC News Network. On CBC Radio and the CBC Listen app, Tom Harrington and Catherine Cullen bring you live coverage and analysis at 4 p.m. ET.

Freeland has warned Canadians that while the budget will offer investments in green energy to address the U.S. Inflation Reduction Act, and targeted relief for those struggling with inflation and high interest rates, the cupboard is nearly bare.

“The truth is we can’t fully compensate every single Canadian for all of the effects of inflation or for elevated interest rates. To do so would only make inflation worse and force rates higher for longer,” she said last week. 

Hughes said that while the Liberals want to use the budget to seize control of the political narrative for the coming year, that will be difficult with the economy uncertain and no federal election on the horizon.

“It is always tough to seize the narrative by saying we need to … be as boring as possible,” he said. “That said, there are going to be some good measures in here.”

Groceries and dental visits

Last year, under pressure from the NDP, the Liberal government doubled the GST tax credit for six months. Singles without children got up to $234 more from the credit, couples with children got up to $467 and seniors got an average boost of $225.

NDP Leader Jagmeet Singh has said he wants the budget to turn that one-time payment into at least a two-time payment. It looks like he’s going to get his wish.

CBC News reported Monday that while the program is being rebranded as a rebate on groceries, the Liberal government will be rolling it out again at a cost of $2 billion.

The move comes as the cost of food continues to rise year over year despite the fact that overall inflation has been easing for months now. 

The budget also is expected to expand beyond children under age 12 the national dental care plan for low-income families and individuals.

The deal between the Liberals and the NDP that guarantees New Democrat support on confidence votes in the House of Commons requires that the Liberals expand the dental care program each year.

In 2023, the program is set to expand to cover Canadians under 18, seniors and those living with a disability. The program is to be fully implemented by 2025.

The government is planning also to crack down on so-called junk fees for consumers — hidden or unexpected consumer charges that are tacked on to the initial price of a product or service, inflating the total cost.

The Inflation Reduction Act response

The limit on what students can withdraw from their registered education savings plan (RESP) for post-secondary education will also be increased.

During the first 13 weeks of schooling, students can’t withdraw more than $5,000 of the education assistance payment (EAP) portion of the RESP. The federal government will increase that limit to $8,000 to reflect the rising cost of college and university.

There is no limit on post secondary education (PSE) withdrawals, which are contributions made by the subscriber.

The budget will contain measures to offset the impact of U.S. President Joe Biden’s Inflation Reduction Act, which Finance Canada officials have said amounts to “a gravitational black hole” that will draw green capital to the U.S. at the expense of Canada and other countries.

Washington’s multi-billion-dollar program earmarks government dollars for developing low-carbon energy in a way that boosts the American manufacturing sector while taking aim at China’s dominant position in the clean energy tech supply chain.

“I think we’re going to see some pretty deep investments in the green economy space,” Hughes said. “I think they’ve [got] a mix of tax credits and other sorts of ways to lure companies to Canada. Big focus on that.”

CBC News confirmed Monday that one of the bigger tax measures in the budget will be a tax credit for clean tech manufacturing worth 30 per cent of capital investment costs in manufacturing equipment.

The budget is also expected to offer more detail on two tax credits proposed in the fall economic statement — the Clean Hydrogen Tax Credit and the Clean Tech Investment Tax Credit.

Conservative Leader Pierre Poilievre has called on Prime Minister Justin Trudeau to pledge to halt any further tax rises, or the introduction of new taxes, and to put an end to deficit spending, which he says is driving inflation.

Hughes said getting spending back to balance is not likely in the short term.

The fall economic statement projected a balanced budget by 2028 — the first time the Liberal government had made such a prediction since 2015. It remains unclear whether the Liberals still look to set a date for achieving budgetary balance. 

The cost of dealing with the pandemic, along with the additional cost-of-living supports, will make getting back to balance much more difficult than it would have been ten years ago, Hughes said. And any target date for returning to balanced budgets has to be plausible, he said.

“Whether or not people will sort of take the government at face value on that, on that outlook or on that projection, that’s a bit of a tougher one if you’re basing yourself on previous experience,” he said.

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