Social Policy in Ontario

NDP and Liberals could use Joe Oliver’s good-news budget to their advantage

Posted on April 22, 2015 in Governance Debates

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TheStar.com – News/Canada – Canada’s finance minister used sleight of hand to balance his budget. The opposition can do the same.
Apr 22 2015.   By: Thomas Walkom, National Affairs

Politically, this week’s federal budget is designed to stymie the opposition.

It’s a neat ploy. But it may not succeed

The ploy is supposed to work this way. First the Conservative government racks up a budgetary surplus. Then it promises to spend most of this surplus on popular tax breaks and subsidies.

That is supposed to leave the opposition New Democrats and Liberals in an impossible position.

If they try to pitch anything new and expensive to voters (the theory goes), they will have to cut back some of these popular new Conservative subsidies, raise taxes or put the government back into deficit.

Embracing any of these positions will allow Prime Minister Stephen Harper’s Conservatives to label his opponents tax-and-spend wastrels. Result: Harper wins another four-year term.

That’s the theory. It won’t necessarily come to pass.

The reason is that both major opposition parties will be able to take advantage of the same sleight-of-hand that made Finance Minister Joe Oliver’s Tuesday budget such a political success.

In particular, they won’t have to cancel popular new measures, such as increased subsidies for seniors, because most aren’t expected to cost the federal treasury much money.

Take one example. The Conservatives promise to subsidize certain kinds of home renovation for the elderly and disabled. Once fully implemented, this is projected to cost between $40 million and $45 million a year.

It will almost certainly be popular. But for a government that spends roughly $190 billion annually, $45 million is chump change.

Another plan, to give those over 70 a break on their retirement income funds, will cost between $120 million and $145 million annually. But even that amounts to less than 1 per cent of Ottawa’s annual budget.

Simply put, the opposition parties can play the government’s game. The Conservatives are, in many cases, spending chicken feed to target key voting groups like seniors and families with children at university. In these cases, the Liberals and New Democrats can simply shrug and agree.

Indeed, most of Oliver’s new promises are so inexpensive that, this year at least, they will be more than offset by government plans to squeeze an additional $900 million from public servants.

Where the Liberals and NDP do differ from the government is on income-splitting for families with kids. Both opposition parties say they’d end that tax break, which, by the government’s own estimates, is slated to cost about $2 billion annually.

If that $2 billion is added to Oliver’s projected surplus, both opposition parties could plausibly claim that, if elected, they would have $3.4 billion to spend this year on useful projects.

The NDP, which promises to hike corporate taxes, has claimed it could raise at least $9.9 billion annually on top of that.

This would be more than enough to cover Mulcair’s proposed and pricey child-care scheme.

Both opposition parties could, if they wished, say they plan to use Oliver’s projected surplus, plus any money saved from cancelling income-splitting, to speed up spending on public transit.

Like most pre-election budgets, Oliver’s is largely fictional. It is based on assumptions about economic growth and oil prices that may turn out to be untrue but that opposition parties — for their own political purposes — are happy to accept.

The finance minister managed to win his surplus this year largely by taking $3.4 billion from the employment insurance account plus $2 billion more from his rainy-day contingency fund.

The opposition parties may grouse about this now. But when it comes to costing their own platforms, they are likely to quietly accept this bit of fiscal hokey-pokey.

They will likely do so because having government finances in surplus, no matter how tenuous, is good news for them as well.

If the opposition parties stick with their plans to axe income-splitting for families, they will have plenty of leeway — on paper at least — to make strategic political promises.

Best of all, they will be able to claim they can do so without eliminating the most popular Conservative subsidies and without putting government finances back into deficit.

And when asked for the basis of these claims, they will be able to point to an impeccable Conservative source — Joe Oliver’s budget.

< http://www.thestar.com/news/canada/2015/04/22/ndp-and-liberals-could-use-joe-olivers-good-news-budget-to-their-advantage-walkom.html >

Tags: budget, child care, economy, ideology, standard of living, tax

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