Wednesday, January 28, 2009

Can we support this budget as is? No

I’ve a busy day in store at the day job so I don’t have time for too in-depth of an analysis (although I do tend to ramble), but I did want to get my thoughts on the record before Michael Ignatieff announces the Liberal game-plan late this morning.

In short, I don’t think we can support this budget without several amendments. These will be reasonable amendments the Conservatives should have little trouble supporting, but important amendments that will ensure this budget does what it needs to: provides effective stimulus. If the government unwisely refuses to accept reasonable amendments, then we should vote the budget down and go from there. But I don’t think they’ll refuse reasonable amendments.

There are some good things in this budget: spending on infrastructure, measures to loosen credit (which is the oft overlooked major issue facing the economy), investments in housing and First Nations. For the industry I cover, the accelerated write off of computer hardware and software purchase by business is interesting.

On the other side, I think the tax cuts are poorly focused and eat-up too much money for too little impact. Instead of across the board, they should have been focused on lower-income earners more likely to spend them. There’s nothing on green innovation. And this budget suffers from an extreme lack of focus. They’re tossing money at everything, which means less bang for the buck than targeted spending would have achieved.

And frankly, given the ire this budget has raised on Blogging Tory land and with fiscal-cons like Andrew Coyne, given how far away from his supposed ideological roots Harper has gone in an attempt to please every interest-group imaginable, its kind of surprising really that he’s done a pretty poor job of it.

Now, we can’t we-write this budget into the budget that the Liberals, or the coalition, would have written. That’s an unreasonable proposition, we need to settle and compromise in some areas. And I think there are a few key areas where this budget can be amended to make it much more effective, and should be supportable by the government.

One, the infrastructure spending. Yes, usually these programs operate on a municipal/province/feds matching-share basis. Normally I’m fine with that. It’s more bang for the buck. And I don’t think asking the provinces to match the funds here is unreasonable. Ontario and BC have already signaled they’re open to that. But in this climate, and with the need for shovels in the ground now, I don’t think asking municipalities to have to find the money or lose-out is appropriate. Their ability to carry debt is much less than the feds and provinces, and their only other option – raising property taxes – would be counterproductive. We should move an amendment to remove the requirement for municipal matching funds.

Secondly, employment insurance. The Conservatives did not go far enough on EI. Want to really stimulate the economy? Improve EI. You know the newly unemployed will be spending that money. We should move amendments to liberalize EI including, at least on a temporary basis, removing the two-week waiting period for collecting benefits. This will make a real difference for laid-off employees.

These are two key areas I think our amendments should focus on. As I said, we can’t re-write this into a Liberal budget, but we can make it more effective. If there could be tweaking around the tax provisions I’d be interested in that, but I’m not sure how that could go.

The other issue I’m hearing from the opposition is pay equity. Here’s the section on that from the budget, on page 211 of the document:

The existing complaint-based pay equity regime is a lengthy, costly and adversarial process that does not serve employees or employers well. Legislation to modernize the pay equity regime for federal public sector employees will be introduced. The new regime reflects the Government’s commitment to pay equity. It will ensure that the employer and bargaining agents are jointly responsible and accountable for negotiating salaries that are fair and equitable to all employees.

As I read that, this isn’t a poison-pill, because they plan to introduce separate legislation on pay equity. That means we can see what they propose, attempt to amend it to our liking, and if that fails, vote it down. If the Conservatives really chose at that point to fall on gutting pay equity, then so be it, we’ll bring them down. It would be a weird sword to fall on. But that’s down the road.

So, in short, I say we should bring in targeted and focused amendments designed to improve the effectiveness if this budget and address some of the worst deficiencies of this budget. If we’re reasonable, the government should support them. And if they’re not, then they’ve made their own bed, and I think we can show Canadians we’re acting in their interests.

There’s no need for it to come to that though. Canadians don’t want an election, and they want action now. I don’t think they’d be accepting of the delay getting a coalition going would mean. But if there’s one thing this budget shows, it’s that Harper doesn’t want an election. Some important tweaks and improvements to the budget and he needn’t worry about one. He’ll be open to negotiation.

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Anonymous said...

I largely agree with you on this one. Obviously, I think that a Liberal-NDP coalition could deliver a much better budget. However, the Conservatives have clearly made some significant concessions. The amendments that you propose are fairly reasonable, although I would add one or two more to the list. If accepted by the government, the budget should be passed.

McLea said...

Now, we can’t we-write this budget into the budget that the Liberals, or the coalition, would have written.

You don't have to, Harper wrote it for you.

This is going to be an entertaining exercise, watching the Liberals try to find ways to complain about a Liberal budget.

Jeff said...

Mclea, the only Liberal budget in the last 25 years that even remotely resembles this budget is the last Paul Martin (and Layton) NDP that tried to please everyone with his many priorities. Of course, one big difference: that one was still balanced.

Just because you don't like this budget doesn't make it a Liberal budget, although I know it's natural to label things you don't like Liberal, even if it's done by your own government. But the fact is the three Harper/Flaherty budgets have each spent significantly more than the Chretien and Martin Liberals ever did.

Maybe it's time to reconsider your definitions of Liberal and Conservative when it comes to fiscal policy, yeah?