John Delacourt: How Today’s Fiscal Update Sets the Stage for Budget 2018 and Beyond

,

[:en]Given the serialized episodes of Morneau’s trial in the press over the last month, accompanied by the mid-mandate report cards that are at pains to concede sound policy decisions by this government, what has been lost in these efforts to reframe the last two years are two salient facts that have telegraphed today’s fiscal update:

  • The turning point of the 2015 campaign did not emerge from the cumulative effect of thousands of selfies with Trudeau as he criss-crossed the country, despite what one revisionist version of events would have you believe. The numbers started to move in a favourable direction for the Liberals when Trudeau, at a campaign stop in the last week of August, announced that a Liberal government would run deficits for three straight years in order to commit funding for infrastructure and growing the economy. It firmly placed the Liberals in fiscal territory to the left of Mulcair’s campaign platform, never mind Harper’s. Canadians responded, intuiting there might be something to be said for a more expansive vision for social infrastructure and for social programs.
  • The mid-mandate report card that has ultimately mattered was issued in July of this year, when Bank of Canada President Stephen Poloz raised the bank’s benchmark lending rate from 0.5 to .75 percent. At the time, Poloz remarked upon the policy decisions from the Trudeau government that had spurred the economy and allowed for a far more positive outlook than was emerging even at the time of the last budget: “For instance, the changes to the [Canada] child benefit program has [sic] been highly stimulative: You can see that in the consumption figures. So we would not be where we are today if that had not occurred.”

And, so, a commitment to prioritize stimulative measures over taming deficits, with the new indexing of the Canada Child Benefit as the centerpiece to this fiscal update, should not be a surprise to anyone. The economy is humming along, doing better than any reliable non-partisan economist – including Poloz – would have predicted. And there is evidence of Liberal policy decisions contributing greatly to this state of affairs. One can criticize this update’s timing, of course, and mutter that this is about cushioning Morneau’s rather warm seat in the House right now, but what government, regardless of party or leader, would not be talking about what it’s getting right, and why it has mattered for the economy?

The argument about collateral damage to the Liberal brand, given how challenged this government has been on a few fronts, should not be minimized, of course. From the faltering Missing and Murdered Indigenous Women Inquiry (MMIW) to the reversal on electoral reform to the albatross of the Phoenix Pay System scandal, the Opposition benches do not lack for material to attack this government on, even without a French villa or a helicopter ride to a remote island on the horizon.

Yet for many Canadians, especially the growing number who do not pay attention to what is occurring on Parliament Hill, their perspective could be summed up by declaring you have one job, Justin Trudeau: make the economy grow and in so doing, make things a little easier for me to pay the bills and feel hopeful about my kids’ future. Two years in, this fiscal update confirms the Prime Minister’s managing to do just that.

A former director of communications for the Liberal Research Bureau, John Delacourt is Vice President of Ensight.
[:]