Canada: COMMENTARY: 2 prime ministers named Trudeau, 2 minority governments — and 2 very different budgets

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The predictable story coming out of Thursday’s budget is the partisan contrast between the Conservatives, on the one hand, and the Liberals and their junior partners in the NDP, on the other, over how much the federal government should be spending and on what.

Finance Minister and Deputy Prime Minister Chrystia Freeland and Prime Minister Justin Trudeau speak with members of the media before the release of the federal budget, on Parliament Hill, in Ottawa, Thursday, April 7, 2022. Ottawa has unveiled a tax credit worth $2.6 billion over five years to help Canada’s energy sector invest in carbon capture and storage technology. THE CANADIAN PRESS/Sean Kilpatrick © GAC Finance Minister and Deputy Prime Minister Chrystia Freeland and Prime Minister Justin Trudeau speak with members of the media before the release of the federal budget, on Parliament Hill, in Ottawa, Thursday, April 7, 2022. Ottawa has unveiled a tax credit worth $2.6 billion over five years to help Canada’s energy sector invest in carbon capture and storage technology. THE CANADIAN PRESS/Sean Kilpatrick

But there is another contrast that is less expected, and perhaps more telling. It is the contrast between this year’s budget and the Liberal budget from 1973 — the last time the NDP agreed to prop up a Liberal minority. That government was also, of course, led by a prime minister called Trudeau, but the budget speech delivered by then finance minister John Turner was a world away from the one Chrystia Freeland delivered Thursday.

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Turner’s speech was to the point. “Two major problems confront us,” he told the House of Commons. “The first is unemployment. The second is the rise in prices and costs. These are the key problems to which my budget measures are directed.”

Right away we see the first difference. In 1973, unemployment was a problem for several reasons, but a big one was the entry into the workforce of the largest demographic bulge in Canadian history. Finding work for the Baby Boomers was a government priority. Today, we have the opposite problem: hundreds of thousands of unfilled jobs, partly due to our out-of-touch post-secondary education policy and partly due to our cratering birth rate.

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This budget does nothing to address either problem. There seems to be an all-party consensus in Canada that we can compensate for our domestic policy failures by importing ever more temporary foreign workers and permanent residents (432,000 this year, a new record) to do the jobs we don’t seem interested in training young Canadians to do, assuming we bother to have them in the first place.

We also see the first similarity — 1970s-style inflation is back! In his speech, Turner announced right up front that his “budget [was] aimed at reducing inflationary pressures in Canada and at offsetting the effects of past inflation.” Fast forward to 2022 and inflation is up to 5.7 per cent. That is already higher than it was in 1972, when Turner would have started preparing his budget. By end of 1973, it had climbed to 7.5 per cent. A year later it was 11 per cent.

Turner’s response was to put more money in the pockets of Canadians by cutting personal income taxes, especially for the working and middle classes. This, he said was “essential to reduce the squeeze of rising prices on family budgets and the erosion of the hard-earned savings of Canadians.” He also explained that his plan to fight inflation would “lean heavily ... on the side of cutting taxes, as opposed to increasing expenditures.”

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This year, by contrast, Canadians were told that inflation is “a global phenomenon” (translation: not the government’s problem) and that the solution is — surprise! — all that new social spending that last month’s Liberal-NDP pact promised. Apparently, anything can be economic policy if we want it badly enough.

Finance Minister Chrystia Freeland put it in her budget speech: “Housing and immigration and skills and child care. These are social policies, to be sure. But, just as importantly, they are economic policies, too.”

(Even the war in Ukraine is a major part of the Canadian economy, judging by how much Freeland talked about it — a sign, perhaps, of where her head has been for the last month when she was supposed to be drafting the budget.)

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The Liberals’ new term for dressing up expanded social programs as hard-nosed economic policy is “modern supply-side economics,” which Freeland helpfully explained is a “progressive, people-focussed” way to spend more money. In fact, what the latest budget promised is the opposite what is normally meant by “supply-side economics,” which is closer to Turner’s plan to cut taxes to drive private-sector spending.

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The Conservative Party was quick to jump on the disconnect. Leadership front-runner Pierre Poilievre accused the government of “turbo-charging inflation” by running a $52.3-billion deficit this year, on top of half a trillion dollars of new debt since 2016. Speaking from Vancouver, he hammered the Liberals’ failure to address the increasing cost of living.

Poilievre noted that housing prices on the West Coast are among the most expensive in the world, gas prices are pushing $2.00 a litre, and the cost of groceries is forcing hard choices on working families. The answer, he said, is not more government spending but to “make government affordable so that your life is affordable.”

If it wasn’t before, the economic policy divide for the coming years is now clear.

On the one hand, we have reassurances about inflation with no plans to stop spending from the Liberal party and Chrystia Freeland.

And on the other, we have concern about inflation and warnings about the need for fiscal discipline from the Conservatives and ... John Turner?

Howard Anglin was senior adviser of legal affairs and policy and deputy chief of staff to former prime minister Stephen Harper. He is a postgraduate researcher in constitutional law at Oxford University.

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