My “Top Five” Most Outrageous Things About This Budget
With a document whose very timing, let alone content, was so transparently politicized and manipulative, it’s hard to even know where to start. Among the many galling, short-sighted, and ultimately destructive components of this federal budget, here are 5 that stand out in my view:
1. Timing. At a time of great economic uncertainty in Canada (arising from the sharp decrease in oil prices and growing evidence of serious economic trouble), the government chose to heighten the uncertainty by delaying its budget for several weeks. Turns out this was not because of uncertainty about oil prices. The delay was actually to wait until the fiscal year started, so they could sell the GM shares and use the net proceeds to help achieve the politically all-important “balance.” This gaming of the process (let alone the content) of fiscal policy-making was shameful and reckless.
2. Selling the Silverware. Speaking of the GM shares, the $2.1 billion net proceeds from the sale were indeed essential to the government’s declared small surplus ($1.4 billion). The shares fetched $3.3 billion, but the government had to deduct their “book value” (which was artificially low anyway due to the government’s ultra-cautious accounting in 2009 that they might not get much at all back from the GM rescue). The sale of the shares deprived Canadians of a seat at the GM directors’ table, and an indirect lever with which to assure this crucial company’s continuing manufacturing presence here. Indeed, the fire-sale was widely interpreted in the automotive media as a sign that Canada was “giving up” on the industry (and was accompanied by another spate of stories about the migration of auto investment to Mexico). More fundamentally, selling an asset to balance a current budget is utterly phony: the state is poorer, not richer, because it no longer has that asset. Toby Sanger at CUPE has argued that, based on consensus analyst forecasts, the government would have made an extra $1 billion or so hanging on for just another year. (Except that would be too late to help them contest another election!)
3. Phony Balance. Speaking of the “balanced budget,” it is entirely dependent on a fiscal sleight-of-hand. There is a $1.4 billion reported surplus. But that’s only because the government diverted $2 billion out of its normal $3 billion contingency reserve (apparently things are so stable in the world economy these days there’s no need anymore for so much symbolic “protection”). They siphoned $2.1 billion from the GM shares. And then perhaps most offensively of all, they raided $3.4 billion from the annual operating surplus of the EI system. (That surplus is created by the denial of benefits to over 60% of unemployed Canadians; the appropriate response, especially with growing layoffs around the country, would be to fix that problem — not raid the EI cookie jar.) That makes a total of $7.5 billion in shell game transactions. Without those three fiscal tricks, the reported balance would be a $6.1 billion deficit — not a $1.4 billion surplus. The emphasis placed on achieving balance is misplaced anyway, as many economists of all stripes have pointed out. But to attain this inappropriate “victory” in such an underhanded and misleading way sets a new low for the politicization of fiscal policy.
4. Public Transit. The opposition parties have argued that this is the moment for government to invest heavily in overdue infrastructure; this view is fully and loudly endorsed by economists around the world, who correctly identify secular stagnation (not public debt) as the greatest threat to prosperity and stability. The argument must be having some effect on public opinion (a recent poll indicated Canadians preferred infrastructure spending over tax cuts by more than 2-to-1 as the top priority for budget policy), so the government has responded with some mostly token infrastructure initiatives. The most token of all is its ballyhooed “Public Transit Fund.” This “innovative” measure merits several pages of text in the budget plan. But you have to wade through many tables until you realize it doesn’t get any money at until 2017-18, at which point it gets all of $250 million. Given the cost of transit investments, and the desperate need for them (for economic, social, and environmental reasons), this is offensive, and I am amazed Joe Oliver could announce it with a straight face. As another trivial but telling example of the propaganda machine working overtime, nowhere does the text even mention that $250 million number; you have to inspect the Table 3.4.1 on p.194 to find the true amount. Instead, the budget plan repeatedly speaks of allocating “$750 million over the first 2 years” of the fund’s existence; it seems even Tory spin doctors realized that allocating $250 million to public transit in 2017-18 would be interpreted by most Canadians as way too little, way too late.
5. More Stealth Austerity. Even many critics of the government are describing the budget as a “tax cut budget” full of “election goodies.” I think this is a mischaracterization. The tax cuts are what is “new,” and hence will be reported. And costing $5 billion in just this year, they are too expensive. (Many others have written about their perverse impact on equality, labour force participation, and other variables.) But the real thrust of the budget won’t make the headlines: because it’s “more of the same,” not news. The budget confirms the path of grinding, disguised austerity that dominated fiscal policy under this majority Conservative government. The government has reduced federal public administration employment by over 50,000 positions since mid-2011. It has imposed incremental, badly-understood spending cuts that cumulate to $14 billion per year. It has underfunded veterans’ offices, Coast Guard facilities, meat and railway inspectors, EI processing, and many other services that are essential to the quality and safety of Canadians’ lives. It will unilaterally reduce health transfers to the provinces beginning in 2017, by $36 billion over a decade. It will force Canadians to work until age 67 to collect OAS.
These important, painful, and unnecessary measures are significantly undermining the quality and cohesion of Canadian society. Their silent confirmation in this budget is its dominant feature — not the pre-election goodies the government hopes we will all talk about. And they are the reason I hope Canadians will reject it forcefully in the coming election.
Indeed the shameful timing used to sell the GM shares, raiding of the EI system, the Transit bait and switch, veterans, First Nations & Inuit peoples and infrastructure abandonment and on an on ad nauseum, demonstrates a government that is both morally and fiscally bankrupt.
Jim, your analysis is spot on. It is up to Canadians to talk about the cruel and harsh reality of this Budget, on every level… and then to reject it and the party that had the hubris to present it.
NEVER in the history of this country, has a Government or its Leader dragged us so far down into the depths.
Well done, Jim. We can always count on you. Thanks.
A solid analysis and review of a sham budget.
However, the Cons will use millions of OUR dollars on major media networks to convince us (or at least those still slogging along with mainstream media) that they have done the right thing.
The NDP, Liberals and Greens MUST get their act together – quickly – to ensure that the Cons don’t steal Canada and damage more than they already have.
And THEN introduce Proportional Representation in order to save this great country.
We have 6 more months to work something out.
The clock is ticking.
Some great insights and comments!
However, or as a theologian, I would respectfully disagree that “secular stagnation” is “the greatest threat to prosperity and stability.” On the contrary, I would contend that it is “unjust weights and measures” that is “the greatest threat to prosperity and stability” (“A false balance is an abomination to the LORD, But a just weight is His delight.” Proverbs 11:1). Thus, a dishonest, global-fiat based, fractional-reserve, international, banking system (not to mention the “black hole” of the derivatives market as “financial weapons of mass destruction”)) is our greatest threat.
Accordingly, I do not believe that the power of “money creation” belongs to fallen humankind but rather to God alone. That is, only God alone is holy and righteous enough to “create” real money “ex nihilo”. Whereas, when humankind attempts to create (as false gods) so-called money “ex nihilo” (i.e. by placing themselves in the seat of God) the resultant is nothing less than an idolatrous and self-destructive, as well as counterfeit and rebellious, form of money falsely declared to be money. In other words, a lie.
Therefore, the question of where God alone has created (“ex nihilo”) real money, and for humankind’s benefit, has to do with a theological principle of “thinking God’s thoughts after Him”. That is, if God has, in truth, created real money, and with real intrinsic value, for humankind to use (i.e. as a just and righteous medium of exchange) where is it? And more importantly, how do we find it?
The answer to that all important question, is, not how do we find real money, but rather how real money, in the mind and plan of God, has been ordained to both find and keep us. “Gold” and “silver” naturally arose (i.e. within the Creation), and over time, as having all the true properties of real (i.e. righteous) money. And so the real issue here, is, not that we found gold and silver but rather that gold and silver (i.e. in the mind and plan of God) found us.
Unfortunately, because humankind has rebelled against, as well as taken themselves out from under the protection of, God’s “righteous” money, humankind has consequently placed themselves in the seat of God (i.e. by believing the devil’s lie that “thou shalt be as gods” Gen. 3:5.) by creating “unrighteous” money “ex nihilo”
Thus, we have not only strayed from the “golden” (i.e. righteous) rule of a 100% gold (divine) standard but have also brought worldwide judgement on ourselves as well: “Your wickedness will punish you; your backsliding will rebuke you. Consider then and realize how evil and bitter it is for you when you forsake the LORD your God and have no awe of me,” declares the Lord, the LORD Almighty.” (Jeremiah 2:19)
Excellent piece, Jim.
The bigger problem with the public transit funding is that comes at an additional huge cost. It is tied to PPP Canada & will undoubtedly involve P3s. This means communities and transit users will have pay much more for the public service than they would if they were publicly financed and publicly delivered services. Readers of this blog should be familiar with the major problems with P3s, but of not, they should read the recent Ontario auditor general’s report on them (or at least my summary of it).
http://www.progressive-economics.ca/2014/12/12/the-ontario-auditors-damning-report-on-p3s/
Clear and concise. Well done. But are you not preaching to the choir? How can we get this out and in a way the ordinary folks ‘get it’?
For a while there I thought you were back in Australia talking about the Liberal-National Party government we have here. The themes are the same as we prepare for the second budget from this lying, wowserish, government that is utterly dedicated to rescuing corporate Australia, foreign and domestic, from their own cock-eyed system. Only the details will be different.
On a more serious note: your / our analysis examines such things as Tory budgets from a working class point of view, or if you prefer from the point of view of the 90%. I agree with the comment that provokes us to work out ways that more of the working class listen to and discuss this analysis, and then act upon it. At the movement we are drowned out by the ANZAC Day memorials that mainly reinforce the imperialist justification for the ANZAC landing at Gallipoli and the First World War itself. The wars of the past creating the consensus for the wars of the present and the near future.
Harper Canada makes moves like a corporation other than a so called Country. The people under this current leadership and their rights are expendable too non existent
WELL DONE MR. STANFORD. I/VE WATCHED THIS GOVERNMENT FROM THE SHADOWS AND SEEN (THE FRAUD). I RECALL IN TWO CASES WHEN THE GOVERNMENT SHUT DOWN NOT TO BE DEFEATED. AN ORDINARY CITIZEN COULD HAVE BEEN CHARGED UNDER OUR LAWS. THIS GOVERNMENT IS A MAJOR FRAUD AND GETTING AWAY WITH IT. MORE COMMENTS, PASS IT ON.
I was born and raised in this country a great many years ago and I have never experienced a government that has harmed Canada as this one has. It is my hope that the people of Canada will recognize the stupidity of these goons and turf them out for all time.
Harper’s insistence on Free Trade agreements with other countries is nothing more than a giveaway of Canadian sovereignty and jobs. More than time for a Bill of Rights for individuals that encompasses the right to a good job and opportunity to benefit from one. If my my memory serves me well, and at my age it sometimes does not, something of this nature was a firm belief of probably the finest President the U.S. has ever had, Franklin D. Roosevelt.
It is time for a return to “fair trade”, not the free trade promoted by Harper and his goofs.
It’s ridiculous to argue, as you do in #2, that the government should have held on t equity because “consensus analyst forecasts†say that in a year the stock will be up 23%. Nobody can time the market and nobody knows what the future will hold- if you believe otherwise then you might also want to argue that the government should setup an active asset management ministry and make some serious cash following analyst forecasts.
You can keep your election-timing argument by instead just asking why they didn’t sell these before now, when it wasn’t so politically advantageous.