Liberal budget a boost for Toronto, finance minister says

Budget spending will drive up the deficit in the short term but pay dividends for Canadians, Finance Minister Bill Morneau says

Thestar.com
March 25, 2016
By Bruce Campion-Smith

With its big-ticket investments in transit, affordable housing and homeless shelters, and the pledge of more cash for families and seniors, the Liberal budget will help boost the quality of life in Toronto, especially for its most vulnerable residents, Finance Minister Bill Morneau says.

The MP for Toronto Centre conceded the spending measures outlined in Tuesday’s budget will drive up the deficit in the short term but pay dividends for Canadians.

“In cities like Toronto, they’re going to see cranes in the not too distant future as a result of our infrastructure spending and they will feel improvements in their lives in the course of our mandate because of the investments we’re going to make,” Morneau told the Star.

“We’re looking at affordable housing for seniors, we’re looking at increasing shelter spaces; that’s clearly going to have an impact on cities,” he said in an interview.

The Liberals will roll out their infrastructure program in two phases. The budget promises $11.9 billion over the next two years for the initial stage, including $3.4 billion for transit nationwide, $5 billion for water and waste-water facilities and $3.4 billion for affordable housing.

Morneau said the initial funding is meant for projects that are ready to go. Yet the $1.5 billion earmarked for Ontario transit won’t go far, making the timing of the second, bigger phase important for municipal leaders.

“We don’t yet have the whole plan articulated because it takes longer to work with provinces, municipalities and institutional investors. We want to make sure that if we’re investing $120 billion over the next 10 years, that we amplify that impact,” Morneau said.

The finance minister also said that enhanced benefits outlined in the budget will put more money in the pockets of low-income Canadians. For example, the new child benefit will provide an average of $2,300 tax free per year, providing a big impact on lower-income families, especially single-parent households “where you see a significant amount of poverty.”

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It is two days after the budget’s release. Trudeau and his ministers have fanned out across the country to sell Canadians on their fiscal blueprint.

Morneau emerges from one meeting in his Parliament Hill office and heads straight into an interview with the Toronto Star. A spring snowstorm swirls outside the windows. The office is spacious but the bare desk and empty bookshelves are a clue that Morneau’s real workspace lies a few blocks away in the office tower that houses the finance department.

The finance minister doffs his suit jacket and sits down, a pen and blank sheet of note paper on the table in front of him.

He is keen to pitch the Liberal focus on the middle class, a theme that underpinned the election platform, Tuesday’s budget and a topic Morneau says will remain a focus for the entire mandate of the government, driven by the concern it’s been hard for this segment of society to get ahead.

Gone are the job security and the good pensions that marked the jobs in the past, Morneau said.

“We know that globalization and technological change will continue to make for challenges for people in the middle class,” he said.

Despite its array of spending commitments, the finance minister insists that some things didn’t make the cut in the budget, though he doesn’t specify what got left out.

“There were many things that we said no to. In the making of a budget, there are many, many requests and you have to evaluate which ones are going to have the greatest impact,” he said.

Still, the budget spending will mean a $29.4 billion deficit in the coming fiscal year, breaking the Liberals’ election vow to keep the deficit to $10 billion. Also in peril is the Liberal promise to eliminate the deficit by the end of their mandate.

But the finance minister says the budget forecasts and assumptions are cautious and careful. Rather than the word deficit, he uses the term “investment plan.”

He sketches out two graphs on his sheet of paper. The first shows the deficit being whittled down over the coming five years, in some scenarios sooner than others. The second graph shows the debt-to-GDP ratio steadily declining over the same period.

Under the best-case scenario, the books are balanced in five years, he says.

“If the growth rate that we expect to happen happens, we find ourselves in a much improved fiscal situation in the course of our mandate,” he said.

“We wanted to be prudent. We didn’t want to over promise,” he said.

He downplays the risk of the deficit spending, saying the government will be “very aware” of the global economy and its implications for Canada’s bottom line.

“We’ll be careful in managing finances over time, but we’re confident in this budget,” Morneau said.

He also suggests that tax hikes are off the table, ruling out for certain any increase in the Goods and Services Tax, saying instead that economic growth will deliver the needed revenue. “We promised people we would reduce their taxes,” he said.

Though the work of the budget is behind him, Morneau says other priorities lie ahead. One is innovation in the economy. Ottawa will also continue discussions with the provinces on enhancements to the Canada Pension Plan.

A review of the tax system is also in the works, though Morneau says it won’t be a “grand national commission.”

A few Conservative measures have already been ditched - income splitting and boutique tax credits for arts, fitness and textbooks that Morneau says “were not focused on people who were most in need.”

The rookie minister revealed that he’s coming to terms with the many demands of the cabinet post. Thanks to his former career as head of Morneau Shepell, a large human resources firm, discussions of public policy, tax codes and pensions are all familiar ground for Morneau.

Communications was also part of his corporate job but the demands of the political post are “obviously much more intense.”

It’s the parliamentary work, such as the thrust and parry of question period, that has taken the most getting used to, Morneau says. He credits his more experienced seatmates - Scott Brison on one side and Judy Foote on the other - for their assistance.

“It’s an incredible honour to do this,” he said.

As an aide leads him out the door and on to yet another meeting, he stops and says with a smile, “My life is no longer my own.”