Going beyond the fall fiscal update
The Liberal government's fall fiscal update has some "good ideas," says former Saskatchewan finance minister Janice MacKinnon — it's just not a budget that helps people "today."
Finance Minister Bill Morneau's update delivered in the House of Commons earlier this week was an exercise in balance, just not one balancing the book.
Morneau revealed new programs including plans to focus on infrastructure spending and attract foreign investors to change the economy's path.
But he also reiterated the unavoidable news that the Canadian economy is still sluggish and while the projected deficit for 2016-17 has moved down from the $29.4 billion forecast in the spring budget, it sits at $25.1 billion. The new figure no longer has any kind of a safety cushion built in. Absent that cushion, the deficit has actually grown thanks to some $1.7 billion in new spending since last spring.
"The idea of balancing the budget places some fiscal discipline on the government. Voters can tell when a budget is balanced or not. Voters don't know the difference between a $25 billion deficit and a $29 billion deficit," MacKinnon told The House host Chris Hall.
"It really is taking away from the government the discipline of having to make choices, prioritizing."
It's a concern shared by interim Conservative leader Rona Ambrose who said the Liberals' massive spending has created no new jobs and has led to a stalled economy.
"They think this failed plan is somehow working, and they're doubling down on it," she said.
Infrastructure bank
One choice the government has decided to make is to create the Canada Infrastructure Bank, which will oversee at least $15 billion of investments from the public purse and an estimated $20 billion from private investors.
The public money is intended to fund "big transformative projects",that wouldn't normally be able to provide a return for private investors, explained Morneau.
"This is an agency, a bank that's going to develop expertise in infrastructure as pension funds look to make investments in Canada they need to know that there's the ability to contract with somebody because these are long term investments," he told The House.
Morneau pointed to the partnership between the Caisse de dépôt et placement du Québec and the Quebec government to link transit from downtown Montreal with the airport and West Island as an example.
Legislation for the fund won't be ready until next spring's federal budget, but Morneau said the Liberal government has been "canvassing" international investors since they swept into power.
"There are pension funds around the world who would be delighted to be investing in Canadian projects," he said.
NDP Leader Tom Mulcair took issue with the concept of the Canada Infrastructure Bank.
He said Trudeau had promised municipalities a "big shot in the arm" for infrastructure, but now he is delivering a "privatization bank," a characterization Morneau dismissed.
Janice MacKinnon likes the idea of the bank, but added some of the Liberals' policies, like introducing a price on carbon when the U.S. doesn't seem interested and raising income taxes for high earners, are likely to dissuade international investors instead of encouraging them.
"I think it could be an excellent idea if it's managed property," she said. "There's a good logic [to user fees] paying for it but the government will have to persuade people that's a good idea.
PBO partisanship concerns
Also nestled in the update were some significant changes to the role of the Parliamentary Budget Officer. The office will now be able to assess the cost of all major party platforms in the next election, to "ensure Canadians have a credible non-partisan way to assess a party's fiscal plans."
On The House midweek podcast Mostafa Askari, the assistant Parliamentary Budget Officer, said he worries people will accuse his office of being partisan if they are harsher on one party's spending plan than another's.
"That's a risk PBO has to manage," Askari told host Chris Hall.
He also said doing so would take more resources.
"If that's the wish of the Parliament we'll have to do it but in order to do that in an effective and credible way requires certain conditions in terms of the timing the platforms will be ready for the PBO to evaluate and examine, the kinds of resources the PBO should have in order to be able to do that, and access to the information from parties and from the government in order to do that effectively," he said.