There was plenty of speculation ahead of the federal budget surrounding what, exactly, might be included in the document when it finally went public. Several big-ticket items were noticeably absent on Wednesday, however.
Ian Lee, associate professor at the Sprott School of Business at Carleton University, called these items the “dogs that didn’t bark.” Some of them may have been planned and scrapped, experts suggested, but others were probably just rumours from the get-go.
“(Former finance minister Jim Flaherty) would have the budget all set and then (Stephen) Harper would be going through it with a fine-tooth comb and they would have to change it at the last minute,” Lee recalled.
“I’m wondering if Justin Trudeau … made some of those reversal decisions.”
Here’s a look at what didn’t materialize, and who stands to lose out as a result.
A road back to balance
Perhaps the most glaring, but least surprising, omission was a clear road back to budgetary balance.
The Liberals are projecting a deficit of $28.5 billion this year, then gradually down to $18.8 billion by 2021-22. That’s a drop in the bucket in the grand scheme of Canada’s finances, but still far off the initial promise the government made to Canadians: run modest, $10 billion deficits and then return to balance within five years.
“We have shown in this budget a very responsible approach. We’re making every dollar count,” explained Finance Minister Bill Morneau when asked about the lack of a clear path back to balance.
“You will see there’s a path for debt, as a function of our economy, to continue to go down.”
Morneau was referring to the debt-to-GDP ratio, considered a reliable measure of the country’s ability to shoulder its debt. The ratio is decreasing, the minister noted, which should continue.
Cooling the markets
As the average house price in Toronto and Vancouver soars — pricing many Canadians out of the market — there was some expectation (from municipal leaders in particular) that Ottawa might try to implement new measures in the budget to cool things down.
That didn’t happen, leaving would-be homebuyers in the same situation they were in before the budget dropped.
But according to TD Economics chief economist Beata Caranci, that’s not surprising. The federal government has already moved forward on a few fronts, she said, including the new mortgage stress-test and other interest-rate policies. Canada-wide policies can end up being too heavy-handed.
“Ultimately, to me, the policy side on housing really gets to a regional story at this stage,” said Caranci.
“I wouldn’t fault (the Liberal government) … there is talk in the budget about gathering statistics … and that’s ultimately what’s missing. We actually don’t know how much foreign investment is coming into the country.”
Anyone holding out hope for a clear roadmap, and money, pegged to the legalization of marijuana will be disappointed by this budget.
Last year there was no mention at all of pot, and this year it was limited to a re-commitment of $9.6 million, over five years, to support public education and “surveillance activities” in advance of legalization.
The budget contained the usual kind words about Canada’s longstanding and beneficial partnership with the United States, but there was no specific mention of President Donald Trump, or some of the looming policy changes south of the border (corporate tax, border tax, renegotiating NAFTA) that could have major repercussions in Canada.
“He could have said look, there’s a great deal of uncertainty and we are keeping our powder dry,” said Carleton University’s Lee of Morneau.
“I’m surprised he didn’t telegraph to everybody what he’s doing, which is holding back to see what’s going to come out of Washington.”
This was the biggest “shocker” for Lee, who like many observers had fully expected the Liberals to start moving towards the privatization of Canada’s airports with this budget. Even the Liberals seemed reluctant to deny that such a plan was afoot.
Sales of Canada’s eight largest airports, currently run by not-for-profit airport authorities, could net between $8.7 billion and $40.1 billion, according to one study.
“I’m just sitting there gobsmacked. You just walked away from (billions) free, are you mad?” Lee said.
He said he suspects the government balked after sustained, organized lobbying by airport CEOs and unions, who argued the plan would drive up user fees and provide short-term gain at a long-term loss.
Capital gains tax
There were also a lot of rumours before the budget that the government would finally move to increase capital gains tax. Right now, only 50 per cent of Canadians’ capital gains (money made on selling things like stocks, or your cottage) are taxed.
That won’t change, as Ottawa is holding the line.
“The capital gains tax benefits wealthy people,” noted Lee. “(Morneau) seemed to be preparing the table for a capital gains increase … for what? He didn’t do it. The dog didn’t bark.”
- A tax on Netflix or other streaming services.
- New funding for border communities dealing with an influx of asylum seekers.
- New defence spending, or increased spending to meet NATO targets.