Tag Archives: Budget 2022

Roundup: Lower-tier leadership candidates

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It is now on or about day fifty-five of Russia’s invasion of Ukraine, and it looks like the fighting in the eastern part of the country, around the Donbas region, has intensified as has been signalled for a couple of weeks now. At the same time, more missile attacks have hit western cities in the country like Lviv, which has mostly been out of the fighting, so that is keeping everyone on edge, particularly given that Lviv is hosting a lot of the people who have fled from other parts of the country.

Other news from Ukraine over the long weekend:

  • Thus far, the invasion has damaged about 30 percent of the country’s infrastructure, at a cost of about $100 billion.
  • There were further attacks on Kyiv over the weekend, possibly in retaliation for the sinking of the Moskva
  • Ukrainian fighters in Mariupol are defying Russia’s surrender-or-die orders
  • Here is a look at the situation LGBTQ+ Ukrainians find themselves in during the war.

Closer to home, Power & Politics interviewed Conservative leadership candidate Roman Baber yesterday, and it was…painful. He is not a serious person. At all. He kept speaking in facile talking points about “restoring democracy,” as though we didn’t just have free and fair elections, based on his nonsense reading of public health restrictions and what happened during the Ottawa occupation, with a dose of facile catch-phrases about “cancel culture.” And, bless her, Vassy Kapelos did gently try to push back against some of what he said, but wow. I would be very surprised if he manages to get his $300,000 in fundraising and all of his signatures to become a verified contestant because he offers nothing original, and even if this about trying to rebuild his profile after being booted from the caucus provincially, it’s a very difficult way to go about it, with not much in the way of reward.

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Roundup: Sanctions take time to really bite

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It’s now around day forty-nine of Russia’s invasion of Ukraine, and it’s carrying on as Putin insists that they will continue until they meet their goals. This as there are unconfirmed reports that chemical weapons were used in an attack in Mariupol, while Russian spokespeople from Donbas were discussing the possibility. That could lead to another escalation in sanctions, and talk of “red lines,” though that didn’t seem to do much good when it happened in Syria. The mayor of Mariupol says that more than 10,000 civilians have been killed as the strategic port city continues being flattened by Russian forces. Ukrainian government officials also say that they have thwarted an attempt by Russian hackers to knock out power to parts of the country, and it’s worth noting that Canada has been providing cyber-security assistance to Ukraine.

On the subject of sanctions, there are lots of questions circulating about how effective they really are if the invasion continues, and it’s one of those things for which it’s not an easy answer. Yes, they’re hurting Russia, but Putin and his inner circle seem fairly insulated from some of the worst of it, in part because they managed to stop the ruble from collapsing entirely. That makes it even more imperative to provide military support to Ukraine so that they can defeat Russia on the battlefield, which will hurt Putin more. This doesn’t mean that we shouldn’t carry on with sanctions, because we should, but they’re at the point where they are hurting us as well, and we had Conservatives demanding exemptions for farmers last week who bought fertilizer from Russia before the conflict began and now don’t want to pay the tariffs associated. But for sanctions to be effective, they will hurt us as well, and people seem to forget that.

As well, this conflict is now going to have an effect on inflation globally, because of the effect of diverting from Russian oil and gas, and from the effect this war has on Ukraine’s ability to produce and export food, as the breadbasket of Europe. Of course, it’s going to continue to be blamed on government spending (never mind that it actually isn’t, and this is a global problem), and the Bank of Canada is going to hike rates this week if only because they need to be seen to be doing something about the problem even if it won’t actually address the root causes of these price increases. Things are messy, and it’s going to take time for everything to work itself out, but what will really help is for Russia to get out of Ukraine.

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Roundup: Trudeau confirms that there are to be strings attached

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It’s around day forty-eight of Russia’s invasion of Ukraine, and it appeared to be a fairly quiet day. Well, as quiet as can be in a country where two-thirds of its children have been forced to flee their homes in the past six weeks, which creates plenty of problems for their safety and security as they may be exploited in the confusion. Meanwhile, Russia has tapped a new general to lead its forces in Ukraine, and he’s one with a reputation of particular brutality in leading the Russian troops that acted in support of Syrian dictator Bashar al-Assad, leaving a trail of civilian deaths and human rights violations in his wake. As well, Austria’s chancellor met with Putin, the first European leader to do so since the invasion, and tried to convince him to end the invasion, but he walked away from the meeting without any optimism that the war will end anytime soon.

Closer to home, prime minister Justin Trudeau has confirmed that he’s looking to have strings attached to future health care funds from the federal government, because he’s well aware of the history of provinces that have taken more federal dollars and used them on other things, including tax cuts, and the healthcare system has been left to suffer. Which is the way it should be—if the federal government is giving you money for healthcare, it should be used for just that, and no, that doesn’t mean they’re micro-managing, it means they want accountability for the money they send.

We also got confirmation that provinces are dishonestly ignoring the fact that the agreement in the 1970s to transfer tax points to the provinces in lieu of health transfers. They continue to insist that the federal government only funds 22 percent of their health care systems, but with the tax points, it’s over 33 percent, which is not insignificant considering that provinces are demanding the federal government fund the systems to at least 35 percent—a 35 percent that they don’t count the tax points under. They need to count those tax points, and government and media need to make that clear, rather than media just repeating the premiers’ talking points and both-sidesing it.

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Roundup: Faux concern over a decades-old system

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We’re now on or about day forty-seven of Russia’s invasion of Ukraine, and Ukrainian forces are digging in and preparing for a renewed Russian offensive on the eastern and south-eastern portions of the country. UK prime minister Boris Johnson visited with president Volodymyr Zelenskyy in Kyiv over the weekend, to show his support and solidarity in person. Elsewhere over the weekend, Ukraine was trying to ensure humanitarian corridors out of the Donbas region for Ukrainians to evacuate in advance of the coming Russian onslaught in the region.

https://twitter.com/ZelenskyyUa/status/1512858863728570369

https://twitter.com/NikaMelkozerova/status/1513190467743236103

Closer to home, we are being subjected to a bunch of nonsense around Canadian content regulations in the context of Bill C-11, which updates the Broadcasting Act to now include streaming platforms like Netflix or Disney+. The particular nonsense? The notion that the CRTC will define what qualifies as Canadian. Erm, except they have been doing this already. They’ve had a well-defined point system for what counts as CanCon since 1984. Nineteen gods-damned eighty-four. This is not new. Extending broadcast regulations to streaming platforms changes absolutely nothing about what counts as Canadian content, because the rules are platform neutral. For decades, production companies needed a 6/10 on the CanCon scale to qualify for tax credits. None of this is new.

The problem, however, is that in the debates over C-11 (and its predecessor in the previous parliament, Bill C-10) you had Conservative MPs trying to make this an issue (and Rachael Thomas, who was then Rachael Harder, was particularly vocal about this). She kept trying to propagate this insane notion that somehow these rules should be in the legislation, which is bonkers because that shouldn’t be the job of Parliament, nor is legislation responsive in the way that regulation is. We have arm’s-length regulators like the CRTC for a reason, which is to de-politicise these kinds of decisions. Sure, everyone comes up with supposedly scandalous examples of why certain things which may sound Canadian on the surface isn’t considered Canadian under the CanCon rules (such as The Handmaid’s Tale series), and it’s only until you look at the points system and think through the rules that you realise that these examples really aren’t that scandalous. The whole point is to ensure that our industry isn’t just a branch plant for American productions who can do it cheaper and get tax credits up here. It’s to ensure that there are incentives for things that are actually Canadian-led and produced, and under Canadian creative control, to get made. You can argue that the rules need to be updated, but let’s not pretend that there is anything new here (and really, The Canadian Press deserves a rap on the knuckles for this kind of framing of the issue).

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Roundup: Sour premiers wanted more money

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We’re not on or about day forty-five of Russia’s invasion of Ukraine, and yesterday’s particular war crime of note was an attack on a train station in Kamatorsk that killed fifty-two Ukrainians fleeing to safer parts of the country. More chilling was the fact that the remains of the rocket had “For the children” spray painted on its side. Meanwhile, an international organization formed in the 1990s to identify the dead and the missing in the Balkan conflicts is preparing to send a team of forensic experts to Ukraine to help identify their dead as a result of Russian atrocities.

Closer to home, there is more reaction to this week’s budget, and in particular, some of the sour notes coming from provinces. It’s not just the current bit of confusion around just what the dental care programme is going to entail, because we don’t have any implementation details yet, and it sounds like the federal government may try to leverage existing provincial programmes for low-income earners. But more to the point, it’s about health transfers, and the fact that premiers aren’t getting their way with their demands for increased unconditional transfers, ostensibly to ensure that the federal government pays 35 percent of the share of health costs—a figure which is distortionary because since the 1970s, provinces were given tax points instead of direct transfers, so the true cost to the federal government would be far, far higher than the 35 percent figure they like to float. Not to mention, we saw that when federal transfers were higher for a decade, provinces used much of that money on other things, as certain provinces also did during the pandemic. So frankly, I wouldn’t expect the federal government to just hand over more unconditional money in the budget, particularly as they are negotiating with provinces for specific outcomes around mental health and long-term care.

Those demands for higher transfers are also raised in this op-ed by economist Trevor Tombe and professor Daniel Béland, which accuses the federal government of being uninterested in reforming those health care arrangements. I would dispute that because they have made it clear, during the election and since, that they are very interested in reforming those arrangements, and that those reforms mean strings attached to federal dollars, and those negotiations are ongoing. I’m also troubled by the notion that the federal government should be doing something about provincial debt, which is far more unsustainable than the federal government’s. Is the suggestion that the federal government upload more costs or programme responsibilities? Because I don’t see premiers clamouring for that (though they do want more money). Is the suggestion that the federal government simply pay for everything? Because that’s absolutely not sustainable either. It also ignores that most provinces have the ability to raise revenues the old-fashioned way—raising their own taxes. (Some provinces are admittedly screwed demographically, but again, what levers are we proposing the federal government employ?) Tombe and Béland want an open and collaborative process to rethink the fiscal relationships between levels of government, but we’ve all seen this movie before, and it always winds up with the provinces demanding the federal government give them more money. I’m not sure how that helps.

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Roundup: A more modest budget than feared

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We are now somewhere around day forty-four of Russia’s invasion of Ukraine, and Russia’s retreat from Chernihiv has shown much more destruction in its wake. Given that Russia is re-positioning to the Donbas region, Ukraine is trying to maintain humanitarian corridors from the area, while pleading with NATO and other countries for yet more weapons to fight the Russian invaders. Meanwhile, RCMP officers in Canada are reaching out to Ukrainians who have made it here to gather evidence of Russian war crimes, so that it can be forwarded to The Hauge.

As for the budget, it was not the orgy of NDP-led spending that Candice Bergen and others had been hinting at, though it did increase spending somewhat, but that was largely offset by higher revenues thanks to the booming economy. The deficit is reducing rapidly, as is the debt-to-GDP ratio, which is the “fiscal anchor.” In fact, Bergen’s reaction speech was pretty much drafted with a very different budget in mind, and when called on this, she prevaricated. Jagmeet Singh, predictably, said there was enough in there for him to support (checklist here), but he still put on a show about criticising things he didn’t like, and the environmental provisions in particular.

Some specifics:

  • Here are the $10 billion in housing measures the government is proposing, though some of those measures will do nothing for affordability.
  • The corporate tax rate is going up, and there is a special surcharge being levied against banks and insurance companies, as promised.
  • There is money allocated for dental care, but no details on the implementation mechanism, which is very important to have.
  • The $8 billion over five years in new defence spending won’t get us to the NATO two-percent goal, but a needed defence review is included.
  • There is some $500 million earmarked for more military aid for Ukraine, plus another $1 billion in loans to prop up their economy.
  • There is new money for cyber-security, much of it going to CSE.
  • Some $15 billion is earmarked for the creation of two new arms-length bodies to help with medium-and-long term growth.
  • There is $4.3 billion over seven years for Indigenous housing.
  • As expected, the tax credit for carbon capture and storage projects is drawing heat from environmental groups.
  • There is $3.7 million being earmarked for mental health services for Black civil servants (as they have a class action lawsuit underway).
  • There is some more money for arts organizations including the National Arts Centre.
  • Both the National Post and The Canadian Press have lists of smaller items in the budget that may have escape notice.

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QP: Counting down to the budget release

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The benches were fairly empty today, as many MPs were preparing for their budget reactions, leaving a reduced presence in the Chamber. After a moment of silence for both Portapique and the anniversary of the Rwandan genocide, Luc Berthold led off, worrying about a “secret trial” that took place in Quebec. David Lametti noted that the was concerned about the reports but prosecutions remain independent of government, and he couldn’t speak more about the issue due to proceedings underway. Berthold then switched to the budget, and was worried about reports that Jagmeet Singh received a briefing on its contents, and wondered if he was sworn to secrecy about it. Mark Holland assured him that no secret information was released. Berthold insisted that there must have been a briefing based on media comments, and worried that leaked details could affect the stock market, and Holland repeated that no secret briefings were had. Kyle Seeback took over in English to worry that carbon prices would mean higher food prices, and that both the environmental and economic policies were a failure. Steven Guilbeault read off investments the government has made and corrected him that emissions have gone down by 30 million tonnes. Seeback chuckled at his own lame joke about how government spending only drove housing prices up—missing a few of the steps to that logic—and Randy Boissonnault denounced the Conservatives delaying the vote on Bill C-8 and the supports therein.

Alain Therrien led for the Bloc, and was outraged that the prime minister was chosen by the UN to promote sustainable development and an hour later approved Bay du Nord, insisting that this made Canada a rogue state. Guilbeault said he was confused by the Bloc being outraged over a provincial decision, a wondered if they wanted federal interference in the Third Link project in Quebec City. Therrien insisted that there was no place for new oil projects, for which Guilbeault reminded him of Yves-François Blanchet’s decision to approve drilling provincially when he as a minster in Quebec.

Alexandre Boulerice appeared for the NDP by video, and he too railed about the Bay du Nord approval. Guilbeault assured him that he read the IPCC report, and that the project was as low-carbon as possible. Laurel Collins repeated the condemnation in English, and Guilbeault repeated his response, and assurances that they would reduce Canada’s emissions by the level required in the report, and that the report did admit that fossil fuels would still be used.

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Roundup: What the budget leaks reveal

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We are on or about day forty-three of Russia’s invasion of Ukraine, and it looks like Russian units have pulled out now from around Kyiv and Chernihiv, back into Russia or Belarus in order to resupply and reorganise, and the expectation is that they will move toward the Donbas region, which Russia says it wants to “liberate.” That has Ukrainian authorities encouraging people in the region to evacuate before they come under fire. On a related note, the mayor of Mariupol says that at least 5000 civilians have been killed in his city including 210 children, and that 90 percent of the city’s infrastructure has been destroyed, because that’s what Russia does.

Closer to home, it is the great pre-budget tradition of leaks from the PMO in order to set the stage for the main event. So far, we have leaks on:

  • Defence spending—as much as $8 billion will apparently be allocated (though who knows if they will have the capability to actually spend it, as they can’t with their current allocation)
  • The promised surtax on big banks and insurance companies who profited during the pandemic, which they hope will raise $1.2 billion per year for the next three years.
  • They plan to allocate $10 billion to housing over five years to implement the various measures from their platform, including $4 billion to help municipalities update their zoning and permitting to hopefully unclog that particular bottleneck.
  • There are hints coming that it may “overperform” in its fiscal anchors because of the roaring economy boosting revenues.

And of course, the usual wailing and rending of clothes by a subset of economists who think that enhancing the social safety net is expansionary fiscal policy that will force the Bank of Canada to fend for itself in tackling inflation.

https://twitter.com/kevinmilligan/status/1511835606132830211

Meanwhile, here are Chrystia Freeland’s budget shoes. This was the first time federally that the event had taken place in a women’s shoe store (as she had them delivered to her home last year because of the pandemic). And thankfully, she didn’t try something gimmicky.

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QP: Pre-budget and pre-Bay du Nord

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It was to be prime minister Justin Trudeau’s first Wednesday QP in weeks, and all of the leaders were present once again. Just before things got underway, reports started going out over Twitter that the Bay du Nord project was going to be approved after 4 PM, and that certainly factored into some of the questions that were asked. Candice Bergen led off, worrying about “David,” a young person who is worried he will never be able to own a home. Trudeau stated that they promised to have Canadians’ backs, which is why they have been there for them. Bergen insisted that the Liberals have no plan for the housing crisis, and Trudeau noted that there is no one solution, which is why they are working with a broad range of actors to help Canadians. Bergen worried that the budget would be “high tax, high spend,” and would make inflation worse (no, that’s not what is driving inflation), and insisted that Canadians were worse off than six years ago. Trudeau noted that the first two questions were about doing more, and this one was about doing less, which is why the Conservatives were incoherent. Luc Berthold took over in French to blame the government for inflation, and Trudeau insisted that they were being fiscally responsible while supporting Canadians. Berthold quoted a Liberal backbencher who was hoping for a “responsible budget,” to which Trudeau returned to the line that Conservatives want them to do less for Canadians while they were there to support them.

Yves-François Blanchet rose for the Bloc, and he gave some fairly confused statements about Bay du Nord, and demanded the government not approve it. Trudeau noted that they have shown that the economy and the environment go hand-in-hand and gave a few more bromides to accompany it. Blanchet insisted it was incoherent to support Bay du Nord and the emissions reduction plan, and Trudeau recited some rehearsed lines about the environment and the economy.

Jagmeet Singh led for the NDP, and he denounced the carbon capture tax credit in favour of green jobs. Trudeau took up a script to list projects they have undertaken to reduce emissions at home and abroad. Singh repeated the question in French, and got many of the same bromides.

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Roundup: The competing pre-budget narratives

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We are now on or about day forty-two of Russia’s invasion of Ukraine, and the talk of the day was president Volodymyr Zelenskyy’s address to the UN Security Council, where he recounted (with video) the extent of Russia’s atrocities in towns like Bucha, and demanded war crimes tribunals, and more importantly, massive reform of the Security Council in order to strip Russia of its veto powers. That, of course, is far easier said than done, particularly because the major powers won’t play if they don’t get additional powers, and Russia is a nuclear power. So we’ll see what happens next (which may be nothing).

Closer to home, we are now one day away from the budget, so expect a lot of narratives about the expectations, whether the government should spend more or cut back, though I find there to be some problems with some of the assumptions therein. For example, when it comes to spending, I’m not sure why things like more money for housing or the investment in dental care would be classified the same as subsidies to industries or so on. Is an expansion of the social safety net the same as expansionary fiscal policy that would ordinarily be used to create jobs or growth (which is less relevant right now given that we are sitting around full employment)? I’m not sure they’re the same, but they seem to be treated as much in some of the pieces circulating in the Discourse right now.

At the same time, we should also be realistic about what the budget can and cannot do, such as combatting inflation. In spite of facile narratives that government spending is driving inflation, that’s not showing up anywhere in the data—what is driving it has a lot more to do with the world price of oil (which is directly impacted by the sanction on Russia as a result of their invasion of Ukraine), and the fact that there were droughts in food-producing regions including Canada, thus limiting food supplies and driving up costs, and that the invasion is going to make it worse as Ukraine was considered the breadbasket of Europe (and elsewhere), and if they can get crops planted this year, there are problems with the Russians having targeted ports. Add to that the rising cost of housing (which is largely a problem of supply driving by craven municipal governments who can’t authorize zoning changes or increase density because they’re afraid of NIMBYs and/or are in the pockets of developers), and you wind up with a whole lot of things that the federal budget can’t really do much about. Not that there won’t be an effort to put all of the weight on the federal government regardless, because that’s how we roll, apparently.

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