The essential take-away in Finance Minister Jim Flaherty’s 2014 budget can be found in the title: The Road to Balance. Then, reading on to the subtitle: Creating Jobs and Opportunities.
That’s the top line: The government is looking a year ahead to balance the books in 2015-16 going into the October 2015 election, with a forecast surplus of $6.4 billion that will be available for promises in the Conservative campaign platform.
The deficit for the current 2013-14 fiscal year, which ends March 31, is forecast at $16.6 billion, down from the estimated $17.9 billion only three months ago in the fall update. That’s less than one per cent of GDP.
In the upcoming 2014-15 fiscal year to begin April 1, Ottawa sees a deficit of $2.9 billion, including “a $3-billion annual adjustment for risk.” This is the contingency reserve, and it’s also included in the forecasted surplus of $6.4 billion for 2015-16. The 2014-15 budget, then, is a balanced budget in all but name; if the contingency reserve were excluded, it would be.
Some economists think the budget numbers will balance into place in 2014-15 instead of 2015-16. Flaherty doesn’t think so, but you never know. If the economy grows at a forecasted rate of 2.3 per cent (up from 1.8 per cent last year), and the U.S. grows at a forecasted 2.7 per cent (up from 1.9 per cent), then Canada should see modest economic and employment growth going into 2015-16.
U.S. growth and the decline of the loonie should result in increased exports, particularly from southern Ontario.
And if you don’t think the Tories are focused on vote-rich southern Ontario, consider the announcement of “an additional $500 million over two years to the Automotive Innovation Fund.” This could also be called the Chrysler Fund. Chrysler has threatened to close its Windsor plant unless governments subsidize modernization costs. General Motors might also have an ask for its Oshawa assembly plant.
And for those who’d like to work there, Flaherty is introducing the Canada Apprentice Loan to “help registered apprentices in Red Seal trade with the cost of training.” It also “promises to create thousands of new paid internships for young Canadians entering the workforce.” It even says Ottawa will “eliminate the value of student-owned vehicles” from the assessment process of the Canadian Student Loan Program.
You could call this the 905 program, after the sprawling 905-area-code suburban belt around Toronto, where many post-secondary students have to drive to campuses such as Humber College in Flaherty’s riding of Whitby-Oshawa.
And here begins the Jobs and Opportunities part of the budget, with a focus on labour markets and training, including First Nations’ education and the $1.9 billion in Ottawa’s partnership with the Assembly of First Nations.
On research and development, Flaherty is creating the Canada Research Excellence Fund, with $1.5 billion in funding over 10 years. This continues in Canada’s commendable tradition of endowing university research, though we face a deficit of private-sector innovation compared with most developed economies. For the rest, Flaherty said at a press briefing Tuesday, if Canadians find this budget boring, he will take that as a compliment.
“Boring is good,” he quoted a mentor, former Ontario premier Bill Davis, who had 14 consecutive boring years in office.
Referring to his upcoming trip to Australia for a G20 finance ministers’ meeting next week, Flaherty said Canada is regarded as “the envy of the world — virtuous Canada.”
Which is where his narrative of success kicked in: one million new jobs since the end of the recession, two-thirds in high-wage industries, 80 per cent of them in the private sector. The highest foreign investment rate in the G7 since the recession.
The best employment and GDP growth rates in the G7 over the same period. The second-best place in the world in which to do business, according to the Bloomberg ranking.
And never to be left out of Flaherty’s litany, the strongest banking system in the world, for the past six years, as ranked by the World Economic Forum.
Yes, boring is good. Boring works.
L. Ian MacDonald is editor of Policy magazine.
