Tuesday, February 23, 2010

2010 Federal Budget

And you thought the nation's fiscal planning couldn't get any less exciting.

The Globe and Mail is reporting on the Conservative government's plans for the 2010 federal budget, and boy is it a bowl of oatmeal.

The Conservatives are going to focus on reducing the deficit and reigning in spending (you can almost hear that last one in Tina Fey's impression of Sarah Palin), while ensuring that health care, education, and public pensions are not affected. Even the military will see its proportion of the budget shrink in the coming years.

No new spending is planned, and a lot of the fun little incentives from last year's budget will not be extended. No more home renovation tax credit.

Clearly, the Conservatives are trying to repair some of the damage done to their assumed reputation of being good economic stewards. In part because of the economic crisis and in part because of their own decisions, the government's finances are in a lot of trouble. They believe it's time for some belt-tightening to get us back to surpluses.

Along with sincere hopes to rectify the situation, the Conservatives are hoping Canadians will be happy to see their party working on reducing the deficit. A responsible budget in shaky times.

It isn't a bad strategy. People like when parties act responsibly. It will certainly resonate with some Canadians who are very worried about the deficit. But it will not exactly attract a lot of voters to the Conservatives.

From the Opposition's perspective, this is actually a pretty easy budget to work with.

The NDP, who aren't exactly opposed to government spending, will not see much in this budget that they will like. They want spending on social issues. They want work to be done on the environmental file. They want to ensure those hard-working Canadians going through tough times that the government will have their back.

The Bloc Quebecois, also not exactly ideologically opposed to government spending, will not see much in this budget either. The federal debt is not much of a concern to the Bloc Quebecois when they see pressing Quebec needs that Ottawa is not addressing. Good fiscal management is more important in Quebec City than in Ottawa. Why would the Bloc support this?

For the Liberals, this budget only addresses the problem of the deficit. The deficit, they argue, is a structural one created by the Conservatives. Rather than addressing those structural problems, the Conservatives are going to cut spending. What's even better for the Liberals is that they don't have to offer much to Canadians to be offering much more than the Conservatives. Rather than having to out-spend a generous Conservative budget, the Liberals can propose modest measures which would demonstrate them to be responsible, but also offering something tangible to voters.

Would the Conservatives want to go to an election on a budget like this? Fiscal conservativism, moderation, and responsibility can be a good message, but will not make the top story for many of the 40 days of an election. It isn't a vote loser, but it also isn't exactly a vote winner. Going to an election on this budget will not be an easy thing for the Conservatives. The Liberals, NDP, and Bloc don't have to propose much to gain more attention.

But we probably won't be pushed to an election. Although reports so far are very basic, there is no notion of a poison pill, and with so little to offer the Conservatives are making a lot of room for compromise. They only need the support of one of the three opposition parties, and when they are planning to announce no new spending projects, it will be easy to find room in the budget for one or two new items of government spending that will gain them the support of the NDP, the Bloc, or the Liberals.

It's actually shaping up to be one of the least political budgets of the Harper government.

Now we have to wait and see what wrench is thrown into the works between now and next week.


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