Trudeau: His first budget

[Canadian Visitor]

Many here took an interest in the election of Justin Trudeau last fall; but wondered how he would actually govern.

Well, today was Federal Budget day in Canada, so you answer has arrived.

For my American friends, in Canada, budgets are the BIG deal every year, where the government [[Finance Minister) get an hour long speech on national TV to announce the governments plans for the year ahead.

Unlike the U.S., assuming there is a majority government [[the norm in Canada), the budget WILL pass, generally without changes. [[if a budget were defeated this would trigger an election).

So this is somewhat like your State of the Union, except that the government can't really be stopped in terms of its financial priorities.

***

That said, here are some of the details [[the whole thing is 269 pages)

In the 'As promised' category:

-A shift in government child benefits which will result in a material increase for low income earning families, more modest as income rises, with a small cut for those earning big $

-A boost to the low-income seniors benefit of around $75 per month.

-More funds for the 'arts' [[mainly CBC)

- An already implemented reduction in the middle-income marginal tax bracket from 22% to 20.5% [[incomes of roughly 45k-90k per year).

- Buckets of infrastructure cash, initially focused on repairing transit/sewer/water and affordable housing.

In the .....that wasn't what you said category.

- Deficit will rise to $29.4B this year [[he campaigned on holding it to around 10B)

Though, it should be said, the number probably isn't really that bad, as they have budgeted 6B in contingency reserves and used economic growth forecast that are well below consensus models. I expect this is an attempt to look good when the numbers are high, but much less high in the out years of his government. [[standard operating procedure of most parties)

- Defense procurement [[nominally, not touched), however, on a cash-basis, several billion dollars has been pushed out beyond the next election cycle.

- A few small boutique tax credits were sacked [[children's fitness/art) and [[textbooks for post-secondary); though this is largely off-set by higher grants to low income students.

- The small business tax rate was not reduced, as proposed from 10.5% to 9%

- But the plan to seriously tax stock options was also dropped.

***

For readers w/interest in all the gore

This is the full document

http://news.nationalpost.com/news/ca...-full-document

[oladub]

P.M. Trudeau is a charming man of seemingly good intentions. He is, at least, the person the majority of Canadians want to see on their TVs. I did not understand the point, "Defense procurement [[nominally, not touched), however, on a cash-basis, several billion dollars has been pushed out beyond the next election cycle." If that means defense spening has been pushed back, then again US taxpayers will have to pick up some of the slack for the defense of the West; open sea lanes, dealing with Islamic terror, and so forth. That is what Trump is accusing our wealthy allies of doing. I hate to see so many young Americans being sacrificed as subsidized mercenaries for Japan, Korea, Canada, and Germany. Other countries should do their share.

Running up a debt and billing it to the next generation to generate a better economy now seems like selling the back forty to buy a new tractor. Some infrastructure projects do pay off in the long run though although "affordable housing" is a joke.

[Canadian Visitor]

P.M. Trudeau is a charming man of seemingly good intentions. He is, at least, the person the majority of Canadians want to see on their TVs. I did not understand the point, "Defense procurement [[nominally, not touched), however, on a cash-basis, several billion dollars has been pushed out beyond the next election cycle." If that means defense spening has been pushed back, then again US taxpayers will have to pick up some of the slack for the defense of the West; open sea lanes, dealing with Islamic terror, and so forth. That is what Trump is accusing our wealthy allies of doing. I hate to see so many young Americans being sacrificed as subsidized mercenaries for Japan, Korea, Canada, and Germany. Other countries should do their share.

Running up a debt and billing it to the next generation to generate a better economy now seems like selling the back forty to buy a new tractor. Some infrastructure projects do pay off in the long run though although "affordable housing" is a joke.

The defence spending issue can be explained this way.

The Liberals didn't cut any specific project [[new combat aircraft, new frigates etc.).

The way the budget records the cost of these projects is life-cycle amortization.

So if you buy $40B in aircraft and and spend $30B maintaining and operating them over a 30 year useful life, then budget records this as $70B divided by 30 or 2.03B per year.

So the Liberals are saying that is unchanged.

However, they change the underlying cash flow [[when actual dollars are paid to actual defence contractors).

They are suggesting this is simply a realism excercise because much of the equipment now being procured won't be actually built for several years [[particularly the ships).

Is it a cut? I leave that to others.

***

Personally I'm anti-deficit spending in most circumstances, particularly when the economy is not even in recession.

Whether or not one agrees w/the spending plan; I would prefer w/e spending you do [[as a government) you ought to pay for it in real time.

The argument they are making, around historically low borrowing costs and being able to hold debt to GDP roughly where it is now, isn't wrong, per se.

But I'd still rather they put less on the proverbial credit card.

***

Most of the 'affordable housing' money will end up going to maintain the public housing we already have.

Again, I'm not particularly a fan of this style of program.

I don't have an issue w/help those who are low-income, but it seems to me that it would simpler and more cost-effective to give people enough cash to get low-end market housing, rather than having a large government landlord.

However, this is where we are now, so I'm all for making sure we repair leaky roofs and such.

[oladub]

The defence spending issue can be explained this way.

The Liberals didn't cut any specific project [[new combat aircraft, new frigates etc.).

The way the budget records the cost of these projects is life-cycle amortization.

So if you buy $40B in aircraft and and spend $30B maintaining and operating them over a 30 year useful life, then budget records this as $70B divided by 30 or 2.03B per year.

So the Liberals are saying that is unchanged.

However, they change the underlying cash flow [[when actual dollars are paid to actual defence contractors).

They are suggesting this is simply a realism excercise because much of the equipment now being procured won't be actually built for several years [[particularly the ships).

Is it a cut? I leave that to others.

***

Personally I'm anti-deficit spending in most circumstances, particularly when the economy is not even in recession.

Whether or not one agrees w/the spending plan; I would prefer w/e spending you do [[as a government) you ought to pay for it in real time.

The argument they are making, around historically low borrowing costs and being able to hold debt to GDP roughly where it is now, isn't wrong, per se.

But I'd still rather they put less on the proverbial credit card.

***

Most of the 'affordable housing' money will end up going to maintain the public housing we already have.

Again, I'm not particularly a fan of this style of program.

I don't have an issue w/help those who are low-income, but it seems to me that it would simpler and more cost-effective to give people enough cash to get low-end market housing, rather than having a large government landlord.

However, this is where we are now, so I'm all for making sure we repair leaky roofs and such.

I agree with fixing the roofs no matter how they got there. The high school that was under construction when I went there in Detroit wasn't properly maintained and has been torn down. It isn't that I am so old as that brand new building wasn't cared for lasting less then 40 years. "Affordable housing" has a different definition in the States. I do have one relative in British Columbia who supports affordable housing there because between building site shortages in the Vancouver area and Chinese nationals buying up so much of housing there, supply and demand make housing there expensive. It's odd that the local authorities would rather let the price of housing be driven up for the local residents and then offer costly solutions to be reelected but that's government.

For what it's worth, all of my Canadian relatives are mildly positive about health care in Canada although they grumble about occasional waits.

[Canadian Visitor]

"Affordable housing" has a different definition in the States. I do have one relative in British Columbia who supports affordable housing there because between building site shortages in the Vancouver area and Chinese nationals buying up so much of housing there, supply and demand make housing there expensive. It's odd that the local authorities would rather let the price of housing be driven up for the local residents and then offer costly solutions to be reelected but that's government.

I can't say for certain, but suspect it has something to do with 2 different forms of tax collection, for a start.

1) capital gains

2) Land Transfer Tax [[both BC and Ontario have this on properties where they take a % of the sale price, on properties over the most entry-level price.

The soaring housing market has been very kind to the BC and Ontario gov't coffers in these regards.

Further, the booming housing market accounts for a vast number of construction jobs.

Government is aware there's a problem, there just afraid that taking a little air out of the balloon might cause a huge pop.

Something will have to give soon though. Median prices are over $1,000,000

Toronto is also adding over 50,000 housing units a year [[not sure what the number is in Vancouver)

For what it's worth, all of my Canadian relatives are mildly positive about health care in Canada although they grumble about occasional waits.

My experience w/ 'the system' is good. But its worth saying first of all that it isn't really 'a system' it varies by province, and within each province by region; and you choose your own doctor/hospital etc.

So waits vary according to procedure and location. Most are reasonable, if not always ideal. But some periodically end up quite poor, especially if you're deemed a non-urgent case.