It may be too early to judge whether the 2013 budget is a political success. But it’s a good bet this budget will be remembered as the last one for at least one – maybe more – things.
Let’s start with the tenure of Finance Minister Jim Flaherty, who now has delivered his eighth budget. Flaherty has been looking tired and has been forced to publicly acknowledge health problems.
For the record, the minister says he is going nowhere.
This budget looks like a “holding pattern” document – with some goodies for the middle class, lots of promises on infrastructure and job training but few details – while we wait for this summer’s major cabinet shuffle and other Conservative reinvention exercises. Call it “Budget Lite.”
But, most telling, the minister “don’t get no respect no more” – to borrow words from the late Rodney Dangerfield. When Flaherty used his Economic Update in October to announce that the deficit would not be gone until 2016, he was corrected by no less than the prime minister, who stated unequivocally that the books would be balanced in 2015 as promised. More recently, Flaherty was criticized by one of his cabinet colleagues for pressuring Manulife Financial Corp. into cancelling a mortgage rate decrease.
As for the budget itself, the Conservatives have been recasting this mandatory yearly document into their own customized communications product. This year, Flaherty didn’t even bother using the word “budget” when he announced at a high school – not in Parliament – when he would table the “2013 Economic Action Plan.”
Traditionally, communications strategy is cast according to policy. With this government, policy documents are adjusted to conform to communications strategy.
This is why the current government delays tabling the budget by more than a month after the main estimates so that MPs won’t have the full picture on expenditures. In the Harper years, budget documents have been getting slimmer and slimmer – to the extent there isn’t much point in continuing to use the term “budget.”
As economist Don Drummond recently noted, there is no detailed narrative about where the government wants to go, in terms of future policy directions.
If Canadians continue to accept this “need to know” approach, (as they have put up with those annoying Economic Action Plan commercials), 2013 may be the last year in which we pretend that the budget, or whatever we’ll be calling it in 2014, is really a significant fiscal and economic policy document.
On the other hand, 2013 may be the last year for the Economic Action Plan and Budget Lite. The Conservatives are sagging in the polls. Their own focus groups are indicating that people are getting fed up with those TV ads. Reaction, so far, to the budget is not exactly enthusiastic, probably because the punditry doesn’t know what to make of the document.
There seems to be a leap of faith in Ottawa’s aim to eliminate its $26-billion deficit in two years. A lot is riding on the assumption that the economy will be improving, here and globally. There also seems to be a lot riding on the additional $550 million that the Canada Revenue Agency is supposed to squeeze out of tax deadbeats.
This is high-risk territory. This year’s budget could be remembered in the same manner as junk bonds if the projections don’t hold. This year is the first time that this government’s budget was hit with a barrage of criticism before it was even tabled. In addition to Drummond’s criticism, former federal finance officials Scott Clark and Peter Devries claimed budget numbers can be believed no longer. The C.D. Howe Institute had milder, albeit similar criticisms.
It will be difficult to make this year’s budget (excuse me, Economic Action Plan) a political success when that kind of critical narrative already is entrenched in the media.
Who knows? We may have seen the last Economic Action plan because the government will return to a traditionally thick budget with lots of explanation and a long-term economic vision.
But more likely, in the event this edition of the Economic Action Plan doesn’t fly, this government will come up with a new gimmick for next year.
© 2013 Investment Executive. All rights reserved.
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