Tuesday, January 27, 2009

Coalition Now!

Just joking.

A few personal thoughts on the budget, which isn't a statement on optics or advice on how the Liberals should proceed.

First off, not a very "green" budget, which speaks to the larger point of creating the jobs of the future. I can't really see the grand vision in this budget, more of a hodgepodge, that a focused plan. How this budget modernizes the economy escapes me, it has a panicky feel, plugging holes, rather than using the initiatives to better position us moving forward.

The big item, that was revealed today, the tax cut regime. These cuts do address the "most vulnerable", the budget attempts to speak to the lower and working class folks, whether it's enough, another debate. 20 billion over 6 years, is quite a bit more than the 2 billion the government pushed today. I did like the renovations tax credit, as well as the first time homeowner incentive. If people know they have a limited window to benefit from the renovations credit, it does provide impetus, and most of the money spent in this sector is Canadian made.

Some of the infrastructure money comes with a catch, and I was shocked to hear Flaherty actually acknowledge the deficit could be lower, if this money wasn't spent- "use it or lose it". The pre-condition of provincial and municipal help makes sense on one level, and provides additional funds, but the practical failing, some can't afford the pre-requisite. The prospect of this money left in the federal coffers is, which Flaherty himself stated, is a red flag.

The changes to EI, if you can call them that, probably demands an amendment. The five week extension is clearly good news, so it's an improvement for sure. That said, it falls short on wait times and expanding those that qualify. The re-training money is another positive.

The issue of the deficit as a whole is a tricky proposition. I will give the government some latitude, in that projections in this climate are problematic by nature. However, it was interesting to hear many of the economists, bankers, who were asked already muse about "rosy", Flaherty optimistic. Everybody accepts short term deficits, but I don't sense Flaherty was very convincing in presenting a realistic plan to avoid structural deficits.

Using Flaherty's own numbers, the federal debt payment amount will increase by a full 10 billion at the end of the five years. Tack on the tax cuts, plus the 20 billion increase in spending (for the last two years, AFTER all the stimulus measures are off the books), and it's hard to see how we end up with a very slight surplus. Flaherty reachs a balance, but it assumes massive increases in government revenues, and I think this is why economists are sceptical.

In a general sense, the main criticism of this budget is that it "sprinkles". A little here, a little there, amounting to maybe not enough anywhere. The government clearly tried to cover all of its bases, particularly as it relates to the opposition demands, but for the amount of money being spent, it's still a question of effectiveness. In many respects, more pandering than serious, and the lack of a vision is really evident- no sense of all tenticles moving in tandem, toward a stated goal. Pretty bland, lacking any big picture imagination, more about survival than coherence.

16 comments:

Scott Tribe said...

After all that, you still didnt say whether we as Liberals should support it or vote it down.. thats what I came to see :).

(A 3rd option.. we propose amendments to the Budget, which are also confidence measures, and vote them out that way)

(Not that I confess I already know your reply.. but I was curious you didn't declare it

Mark Dowling said...

If I wanted to boost the renovations sector, here's what I'd do: zero-rate it for GST.

Why? Because (a) a lot of contractors do "no-tax" jobs anyway so contractors who bill the tax are disadvantaged and (b) it doesn't add another layer of complexity to an already overbloated tax form.

That said, I have a basement to finish...

Interesting that GO and VIA get goodies (which go through Flaherty's part of the world) but no announcement for Transit City (no-Tory-land).

Steve V said...

Scott, I'm waiting to see if we offer amendments. You'll notice I purposely omitted what is feasible on the "optics" front.

Mark Dowling said...

@ScottTribe - I definitely think Ignatieff should let Steve (and Jack) sweat until the last reading of the Budget Implementation Bill before pulling the rug.

Steve V said...

Mark

Maybe that's an incentive to do "legal" jobs for contractors. If someone doesn't choose you, because you'll lose the credit, you either agree, or you cut a deal to offset. Either way, the incentive is there for the person who wants work done, and the contractor gets business. I'm doing my driveway ;)

JimmE said...

This budget is just a PR stunt. As you've pointed out - no vision stuff. A cohesive plan to get us out of this mess was not made, & therefore an argument for killing this budget. But Iggy would have to come out like gang-busters tomorrow, a man with a plan! a new budget in two weeks! for a brighter new day! etc. etc. I would very much like to see that, but-sadly I fear this is not to be.

Francesco said...

hmmm this budgety throws money at everything....i just browsed through budget booklet as a finance geek...a lot of good measures introduced to continue unfreezing the credit markets (you can see that adults were in charge) for the headlines ...i was disappointed that EI was not substantially improved, and that more money was not put into r&d, post secondary education, etc...on a personal note i have a bathroom to renovate and windows to change but a lot of contractors give a large discount for cash payment ..creates a dilemma for a lot of folks ....the real question is what is the lasting impacting and for that is that the conservatives where the hat of bringing us back into deficit!!!!! no election at this time but iggy could say he wants amendments to budget and see if the conservatives are really wanting to compromise....

Steve V said...

Jimme

It really reads like they took all the demands, made sure they checked them off SOMEWHAT, all in the name of keeping power. This is a survival budget, nothing more.

Steve V said...

francesco


I appreciate the "finance geek" input, good points.

One thing on the contractor front. With the housing industry going in the tank, one has to think that contractors might be more willing to change behavior, just to get what they can. Just a thought.

Jaytoo said...

Though, apparently, the renovation business paradoxically thrives during recessions - and reports have that happening again.

Steve V said...

Interesting.

Anonymous said...

Senior Liberals are saying that the caucus meeting was not pleasant.
It's either a 'no thanks' or a 'try again'.
Harper wants to keep his job. He'll negotiate.

Scott Tribe said...

Ugh.. not more "Senior Liberals"

Let me guess - they did the leaking to Conservative TV?

Steve V said...

Amendment?

Oemissions said...

COALITION NOW!

Oemissions said...

COALITION NOW!