Ottawa Sun
Published: Wednesday, January 28, 2009

Budget will pass, deficits and all

Yesterday Finance Minister Jim Flaherty tabled Budget 2009, arguably, the most important budget since Paul Martin's landmark document in 1995, which slashed spending -- by savaging provincial transfers -- and put Canada on the road to balanced budgets a few years later.

The irony of the governing right-of-centre Conservatives projecting $64 billion in deficits over the next two years and almost $85 billion over the next five, including a $1.1-billion deficit for fiscal 2008-2009 has Liberals quietly thinking of a return to power later this year or sometime in 2010.

But the real question is not if this budget will pass? The fundamental question is will it work?

Will it help if the country out of recession? Will it help restore consumer confidence over the long run? And will it create or maintain 190,000 Canadian jobs as advertised? And this, dear reader, is likely the ballot question that Liberal Leader Michael Ignatieff will ask when we next head to the polls.

From my vantage point, the Liberals will fume a bit, propose a few amendments, but in the end support the government and pass this budget. The list of initiatives proposed yesterday could have easily been ripped from the Liberal and NDP platforms in last fall's election. In fact, it may have been.

More than $12 billion for infrastructure projects with at least $6 billion in new money ($4 billion for restoration and $2 billion on the post-secondary sector) where the feds will fund up to 50% of project costs, as opposed to the traditional tripartite fedprov- municipal deal with each level of government in for a third, is on offer.

Then there's another $2 billion for social housing and $1 billion for a communities adjustment fund. And get this, there's $1 billion for a southern Ontario economic development agency -- apparently the GTA is now a have not region.

My personal favourite is the $500-million Recreational Infrastructure Canada program, or RInC for short. Indeed, fixing up hockey rinks, soccer fields and baseball diamonds is long overdue, ask any parent.

And this list doesn't even begin to capture the changes to Employment Insurance, regional development measures, arts and culture funding, industry-specific initiatives and welcome tax measures with the basic personal exemption and tax bracket changes for lower- and middle income earners.

To be fair to the Conservatives, Prime Minister Stephen Harper was not alone in his assurances last fall that he would not run a deficit.

Stephane Dion and Jack Layton joined him in this no-red-ink, noton- our-watch chorus as they campaigned for your vote. But that was then and this is now.

And if anyone stil doubts the severity of the global financial crisis and its impact on Canada, a simple look back at Budget 2008 will put these doubts to rest. Last year, Finance officials forecaste $252 billion in tax revenues for fiscal 2009-2010. Yesterday, this same forecast declined to $224.9 billion. This $27- billion drop represents a staggering 11% decline in personal, corporate and GST tax collections.

For Ignatieff, given hi s age and the party's present position (no money, no policy and no star candidates in the wings), he has one shot to become a majority Liberal prime minister. Defeating this budget to go to the polls or join a coalition with the NDP and Bloc is not that shot.

Budget 2009, deficits and all, will pass. And for the country's sake, it better work. In this sense, Harper's future and that of his Conservative government are inseparable. Over to you Canadian economy.