Budget 2019 Commentary

Regina–Lewvan MP Erin Weir’s commentary on today’s federal budget:

Budget 2019 includes some welcome investments in the middle class while keeping Trudeau’s powder dry for Election 2019. The Conservatives may have delayed the budget presentation with procedural tactics, but the Liberals have strategically delayed much of the budget’s content.

Since the current Liberal government’s election, it has presented four budgets: “Growing the Middle Class” in 2016, “Building a Strong Middle Class” in 2017, “Equality & Growth: A Strong Middle Class” in 2018 and “Investing in the Middle Class” today.

“Investing” is an apt verb in that today’s budget lays the groundwork for future developments. It also lays the groundwork for this year’s Liberal re-election campaign.

The budget provides about $4 billion annually of new spending paid for with revenues slightly above, existing expenditures slightly below, and debt-servicing costs slightly below previous projections. This accounting balance allows the government to unveil some new initiatives without changing its underlying deficit projections.

By maintaining current deficit projections, the Trudeau Liberals keep options open. If the economy strengthens, they can make a virtue out of a lower deficit. If the economy falters, they can make a virtue out of running a larger deficit to bolster output and employment. This approach is clever politics, but also sound policy.

Many expected today’s budget to unveil some version of pharmacare. The budget instead establishes a drug agency to develop a national formulary. In terms of public policy, those are necessary steps toward pharmacare. In terms of politics, these steps position the Liberals to announce a pharmacare program as part of their election platform.

On the revenue side, the budget proposes to partially close the tax loophole for stock options, while maintaining generous tax treatment for start-up businesses that might rely on such compensation. The Liberals have now addressed the most egregious tax loophole that they had initially failed to close (despite promising to do so in the last election).

The full details and costing of this measure will not come until the summer. However, since the stock option deduction now costs the federal treasury over half a billion dollars annually, the government’s fix could easily recoup more than every other tax measure enumerated in the budget. And the additional revenues will appear just in time to help fund the Liberal election platform.