Federal Budget #2

One of the problems of predicting the future is that there is a better than fair chance that you will be wrong as often as being right. In my previous blog I suggested that the Finance Minister "would thump down on his lectern a rather thick, newly printed tome". It was in fact a surprisingly thin book as compared to other budget presentations. It is not clear whether this means that this government is more succinct than other previous governments, that it is less inclined to pad the facts or if it just had less to say.

I however, was quite right in suggesting that the speech would be boring (he is not a great communicator) and that  the Minister would be "frequently interrupted by members of his political party as they cheer and thump their desk tops on cue". I didn't use a stop watch but it did feel at times as if there was more desk thumping than talking - which I suppose could be seen as a blessing. I was also right in assuming that  the opposition " will sit there practicing their looks of boredom and/or disgust." It was not a particularly entertaining bit of television.

I was partially wrong about whether or not anyone would feel that the budget was a good one. Not surprisingly both of the mainstream opposition parties were completely opposed to it. More surprisingly, some of the special interest groups such as university students were pleased as were big city mayors. I think for the most part representatives of First Nation communities were pleased although there was a feeling, quite rightly, that there was not enough money. Lower and middle class families got  a bit more money if they have children, people who have lost their jobs in certain parts of Canada will get a bit more money from Employment Insurance  and people can now retire at 65 instead of 67. All of which are good news for those people. Whether or not that will do anything to stimulate the economy is less clear. Many of the changes announced will take months if not years before any real impact is noticed; most Canadians will not notice anything, ever. But this budget may have a side effect that while not provable, may have the longest term impact. I suspect (and all of the commentators said so) that the budget fulfilled many of the Liberal government's promises. That will make us feel good. That may makes us feel more confident about the future, That confidence may in turn, stimulate the economy.

Personally I don't think so. That is not the way modern economies work.  While my neighbours may feel a bit more confident and in fact may spend a bit more, the multi-national companies that control so much of our economy are not going to be buoyed by the promise of sunny days. They are going to invest their money where ever it will return the greatest profit. There are no obvious reasons as to why they should invest in Canada. Even a Canadian company,  Bombardier, who are asking for a large federal bailout, have announced plans to ship jobs to another country because the cost are lower there.

The down side of the budge is that a rather large deficit has been projected. We have been given some promises today that will be paid for tomorrow. Or even worse those promises will be paid for by the young people who are just starting to work. People who are comfortably off will continue to be able to plan for a nice retirement. Young people may have less to look forward to. And that is a shame.