Federal Budget 2019 Review: 48 Hours Later

Footage from Tuesday’s parliamentary proceedings seemed more like a day at the Coliseum than a house of peace, order and good government.

Minister of Finance Bill Morneau attempted to read aloud the 2019 federal budget as he has done for the last three years. In a spectacle like no other, he was met with deafening chants of “COVER UP! COVER UP!” from opposition members. The chanting was so loud that the parliamentary services translator was unable to hear the minister’s speech.

These chants were part of an overall strategy for the Conservatives to delay and obstruct the Liberal budget – retribution for the Liberal majority-ruled Justice Committee and their handling of the SNC-Lavalin Affair early yesterday morning. A number of parliamentary and procedural ruses (“POINT OF ORDER!”) were employed in the house – chanting (“LET HER SPEAK!”) being the most notable (and audible).

Seemingly unphased, Minister Bill Morneau delivered what he believed to be a budget that would invest in the middle class, pledging $22.8 billion in new spending.

While the speech was inaudible in the house, it was available online. Here are some of the major takeaways from Budget 2019:

Home Sweet Home

Budget 2019 pledges to make home ownership within greater reach for young Canadians. The government has promised to make housing more affordable by reducing barriers to homeownership for first-time home buyers, boost supply in Canada’s housing and rental markets as well as increase fairness in the real estate sector.

The Golden Years

The government pledged $1.8 billion over four years to enhance the guaranteed income supplement for low-income seniors. It would appear that the government also took some lessons away from the Sears bankruptcy: the budget will introduce safeguards to protect pensions in the event of company bankruptcies – a consequence largely felt among seniors and older Canadians.

Over the Counter

Although the government did not announce funding for a national pharmacare program, the budget pledged to set aside $35 million to establish a Canadian Drug Agency that will enhance work already done by provinces and territories on bulk drug purchases and negotiate better prices for prescription medicine. The government additionally stated that as of 2022, $1B will be made available to help Canadians with rare diseases access the high-cost drugs they need.

Talking Turkey – The Fiscal Outlook

It appears that the budget did not, in fact, balance itself. A significant promise of the 2015 Liberal campaign was to post annual deficits of no more than $10 billion and to balance by 2019. As of yesterday, the government announced its intention to run $20B deficits for the foreseeable future. Although the budget is forecasting the deficit will shrink to $9.8 billion by 2023-24, there is little-to-no mention as to when the government intends to balance the budget. Some experts are saying Budget 2019 may have painted the government into a cornerif a recession hits.

Despite criticism the government may face for their use of deficits, it’s not all bad news for Trudeau. The Ministry of Finance confirms 850,000 more Canadians are employed today than in 2015, and the unemployment rate is near a 40-year low. If the government can maintain this trend, it’ll make for excellent campaign advertising.

Opposition Reaction

It appears Andrew Scheer has been able to consume most of the media’s attention in his response to the government’s budget. On Tuesday, Scheer delivered a speech to his caucus and the media regarding the Liberals’ budget. Jagmeet Singh chose to focus on housing as his major sticking point to the government. Singh mentioned that RRSP measures will have little-to-no impact on millennials given the fact that many millennials’ RRSPs are in fairly precarious positions.

Both opposition leaders, most notably Scheer, are trying to use the SNC-Lavalin Affair as a means to discredit Trudeau’s budget. They’re trying to broadcast the image of a government that will use unethical means to influence policy to help well-connected friends. Their strategy has potential given the fact that one could promise the moon itself, but if there is no credibility, those promises will fall on deaf ears.

It should also be noted that both the NDP and the Tories have a stake in the two demographics most targeted in the budget: millennials and baby-boomers. The Liberal strategy is to grow the tent as much as possible to bring these key voter groups into a winning coalition. However, both opposition parties will do what they can to convince their respective bases that they’re being sold fool’s gold.

Media Reaction

Much of the post-budget reporting highlighted Minister Morneau’s emphasis on the middle class – a focus that was widely anticipated going into budget day. A Globe and Mail opinion piece by Rob Carrick outlined key demographic groups affected by Budget 2019 changes including homebuyers, postsecondary students, low-income seniors, “procrastinating retirees,” and Canadians interested in longevity insurance.

Paul Wells of Maclean’s contended that Budget 2019 is “sprinkled with what money TruMorn could scrape together” with many gestures that are “strikingly modest in scope.” Wells suggested that, despite clear preoccupation with election-year concerns, the Liberals’ reticence to spend too much money has forced them to come up with novel funding solutions, such as investments by the Canada Infrastructure Bank for universal high-speed internet provision.

Andrew Coyne’s piece in The National Post argued that the Liberals’ deficits are “deficits of choice, rather than necessity,” though he argues that deficits of this size will not ruin us (as the opposition claims), but neither would eliminating them. In his eyes, the quantity of spending isn’t so much the issue as the quality: in the rush to get all that “revenue-gusher” spending out the door, he argues that little thought has been given to whether the money is being spent in the best way, or whether it should be spent at all. Coyne also called into question a past Liberal promise that one dollar in three of new spending would go to infrastructure, as he pointed out that the reality is now closer to one in eight.

The View from the Grassroots

This budget is of critical importance for Trudeau. The media beast can only chew on one ankle at a time and right now it’s slowly gnawing at Justin Trudeau and his network of advisors. As a means to reduce the media’s hyper-focus on the ongoing SNC-Lavalin Affair, the Prime Minister needed to announce what exactly his government has accomplished in their past four years and where they intend to take the country in the future. On Tuesday, they needed to let each voter know: “you’re better off today than you were before.” The power of the pulpit allows the Liberals to announce a fully-costed campaign platform that can be repeated in sound bites over time in addition to changing the channel.

It’s not uncommon to see an incumbent government lose support over time. However, Trudeau’s Liberals have experienced quite a notable drop in support and are far from their “sunny ways” narrative when first elected. 2019 has seen support for the Liberal party decrease slightly. The most recent wave of polling from different firms has shown the party obtaining ~30% support. Considering the Liberals obtained 50% support in 2016, Trudeau and the Liberals have their work cut out for them this fall.

But wait, there’s more.

Whatever electoral impact Justin Trudeau intends to make, he must take the Ontario provincial budget (to be released April 11^th) into account. Seeing as the Ford government was not exactly pleased with their federal counterparts, there is a chance that they may use their last word for reprisal. The carbon tax or other environmental policies could well be where that reprisal takes place. Both Trudeau and Ford defined much of their political capital around environmental issues. Whatever the provincial government choses to do with its last word, it will undoubtedly result in discomfort for Trudeau’s Liberals on the hustings.

Despite the media attention the SNC-Lavalin Affair is receiving, there is a chance that the electorate may be SNC-fatigued and are willing to hear what the government has in store for them. Remember: politics is “what have you done for me lately.”

As of today, it is possible for Trudeau to pull together a winning (albeit minority) government come election day, but it is doubtful as to whether Budget 2019 will make things any easier for the foreseeable future.

Tiberius was on to something when he said that ruling the Roman Empire was like “like holding a wolf by the ears.”

Adrian Macaulay, Director of Research & Polling
and Liz Gross, Campaign Support Specialist