Liberal Budget soothes Bay Street, disses Singh

by Barry Weisleder

Ottawa’s promise to “Build Back Better” is gonzo.  In its place are billions more in military spending, billions more in subsidies for Big Oil and Gas, and a fake social housing agenda.  Liberal Deputy Prime Minister and Finance Minister Chrystia Freeland forecasts a lower deficit, which means a return to austerity — even as working people struggle to cope with an ongoing pandemic, record-high inflation, and unfolding climate catastrophe.

The 2022 federal budget presented on April 7 is perhaps the most conservative one the Justin Trudeau Liberals have ever produced, but it will survive with the blessing of the labour-based New Democratic Party.  Indeed, NDP leader Jagmeet Singh faces a tough time justifying his “Confidence and Supply” agreement with the Liberals given the meagre results it attained for the working class.

Freeland, in the context of what she calls Canada’s strong economic recovery, anticipates a $90 billion windfall from government revenues (higher than projected just last December), which is projected to continue over the next five years.

This windfall is due in part to disappearing COVID-19 emergency aid programs, and inflated commodity prices for oil, grains and fertilizer which are swelling government income streams. The Liberals are diverting billions of it into the military, energy corporations and big developers.  Freeland claims her budget will double the country’s housing supply over 10 years, encourage a speedier “green” economic transition, make a down payment on the pact with the NDP, and assure big business that the Liberal government is committed to deficit reduction (of course, at workers’ expense).

In a classic example of damning by faint praise, Singh called the budget “sufficient” for his support. He sharply criticized what he called a lack of effective measures to tackle climate change and eliminate fossil fuel subsidies.  Naturally, the same criticism could be leveled at British Columbia NDP Premier John Horgan.

Interim Conservative Leader Candice Bergen called it “an NDP budget delivered by an NDP-Liberal government” that failed to rein in spending to “control inflation,” failed to deliver tax breaks for Canadians facing “the high cost of everything,” and, she said, would not increase housing supply or boost economic growth.  Despite the histrionics and her purposeful misrepresentation of the subordinate role of the NDP in the pact, Bergen is right about the failings on housing and prosperity.

Kevin Page, a former parliamentary budget officer and now head of the Institute of Fiscal Studies and Democracy at the University of Ottawa, described it thus: “This probably looks more of a Conservative budget than a Liberal budget. There’s elements of obviously both.”

The biggest portion of the $12.4 billion new spending on climate action is devoted to an industrial tax credit for companies that invest in eligible carbon capture utilization and storage (CCUS) projects.  $2.6 billion over the next five years, and then $1.5 billion annually until 2030, will go to firms that “permanently store” green house gas emissions, for example, underground or in concrete. Storage, at best, is a temporary band aid, not a solution. Eventually all of this carbon will spew into the atmosphere.

The climate activist group pointed out that the tax credit “does little more than ensure Big Oil will continue to expand fossil fuel production,” and noted that it comes a day after the government approved a major new deep-water oil project off the Newfoundland coast. The Liberals have never met a carbon reduction goal. Carbon emission in Canada is going up, not down. All of this is purposeful fakery to enable the oil business to carry on as usual. Counting on the oil cartel to solve the climate crisis it created is patently absurd. They profit from carbon dependency, and more so from the wars of conquest they foster.

“We shouldn’t be giving public dollars to profitable companies,” exclaimed Singh.  Still, he will support doing so as part of the Liberal budget he pledged, in advance, to uphold.

The increase to Canada’s military operations spending by $8 billion over the next five years is thus also anchored to the “Confidence and Supply” pact.  Capital spending of $19 billion for F35 American fighter jets is on top of this amount, as are the planned new frigates for the RCN. 

Boosting Ottawa’s contribution to the North Atlantic Treaty Organization adds fuel (literally) to the fire in Eastern Europe that threatens to consume the world.  NATO’s thirty-year expansion eastward to Russia’s borderlands provoked the present inter-imperialist conflict in Ukraine.

Freeland’s plan provides $10.2 billion to tackle the housing crisis, $5.3 billion to create a children’s dental care program, and establishes two new agencies (one focused on “innovation and investment” and the other to manage a new “Canada Growth Fund” to lever private sector investment and government funds for climate action).  The budget falls far short of what many environmentalists and health care advocates expected.  And concerning economic growth and productivity, many details are lacking about how the new agencies will work.

Concerning housing, which is in dire under-supply, it is doubtful that the budget’s $4 billion housing accelerator fund will push municipalities to build or acquire the accommodations people need.  Robert Asselin, former budget director to finance minister Bill Morneau, now senior vice-president at the Business Council of Canada said that the new $40,000 tax-free first home savings account will mostly “benefit rich kids.” He notes that fewer than 10 per cent of Canadians currently top up their Registered Retirement Savings Plan (RRSP) and Tax-Free Saving Account (TFSA).  After World War 2, Ottawa built housing, and continued to do so until 1995.  Freeland does not propose to return to the future, despite a staggering crisis.

While there are no cuts to programs, there is an ominous pledge to review government spending towards carving off $6 billion over five years.  Overall, the budget projects a deficit of $52.8 billion for the new fiscal year. That’s less than half the $113.8-billion deficit in 2021-22 and it is projected to decline over the next five years to $8.4 billion by 2026-27.

The Trudeau-Freeland government will introduce a new tax on financial institutions, which it expects to bring in $16.5 billion. However, the new surtax at 1.5 per cent on big banks and insurance companies (on profits over $100 million) is half the level the Liberals promised in the 2021 federal election campaign. The government says it will decide by next year whether a wealth tax — that the NDP has long demanded — is “warranted”.

In all, new spending is pegged at $56.6 billion but after accounting for increased government revenues, net new spending will total $31.1 billion.

The NDP demand for dental care for low-income families will cost $5.3 billion over five years, starting this fiscal year, and $1.7 billion ongoing. There is no mention of pharma care.

Bloc Québécois Leader Yves-Francois Blanchet called it an “arrogant” budget that further centralized decisions in Ottawa, and offered “no answer to the crises” in health care, climate and the cost of living.

Economist Armine Yalnizyan, an Atkinson fellow on the future of work, said with this budget, Freeland is pitching to “Bay Street and corporate Canada” — to the business leaders who made a lot of “noise” about budget deficits.

Yalnizyan said the budget has two huge gaps: it fails to address the crisis in health care and long-term care with meaningful measures and money to entice more doctors, nurses and personal care workers into the sectors, and it fails to provide ways to allow many skilled immigrant workers to take jobs for which they are trained but lack credentials here.

The Freeland budget is tailor-made for Bay Street, as is the pact that snared Singh and the NDP caucus.  To survive, the NDP must break with the Liberals, and turn sharply to the left.