Almost everyone in Ottawa would agree with these general goals. As always, the real debate is how to do it. As Freeland spoke, caretaker Conservative leader Candice Bergen was at the microphone in the foyer of Parliament, telling reporters that her MPs would not support the “out-of-control spending” of an “irresponsible … typical NDP budget and tax budget.” “ Not to be outdone, Pierre Poilievre, the supposed leader in the Conservative leadership race, wrote on Twitter that the “Socialist coalition budget” would “swirl” inflation. The NDP result should not be overestimated. Despite the publicity, the NDP’s contributions to this budget are relatively modest, at least in the budgetary sense. The NDP’s biggest demand – for expanded subsidized dental care – adds $ 5.3 billion to the budget over the next five years. A one-off increase in Canada’s housing allowance – a proposal stemming from negotiations between the Liberals and New Democrats on a bid and confidence agreement that would prevent elections until 2025 – will cost $ 475 million this year. NDP leader Jagmeet Singh ascends during the question-and-answer period on April 6, 2022. The New Democrats’ budget influence may have been overestimated. (Sean Kilpatrick / The Canadian Press)
Aside from these elements – which will be of great importance to Canadians benefiting from them – this is a budget that would have been tabled by a Liberal-majority government, with a few orange notes attached. The deficit is projected to fall steadily to $ 8.4 billion in 2027, which would be the smallest deficit these Liberals have. But there is still debate about how Ottawa should help build a growing economy – especially now that the federal government has embraced – or at least borrowed – a new name for its own approach. “Our strategy is what Janet Yellen, the US Secretary of the Treasury, recently called Modern Supply-Side Economics,” Freeland said on Thursday. US Treasury Secretary Janet Glenn considered the concept of a “modern” economy in terms of supply. (Al Drago / Associated Press)
Freeland argued in the budget that what Yellen described in a speech in January was more or less what the Liberals had been trying to do for the past six and a half years. But Yellen may have explained it in a more direct and concise way than any Liberal has done to date. As Yellen put it, the “traditional” supply-side economy – the name given to the political agendas of conservative figures such as former US President Ronald Reagan and former British Prime Minister Margaret Thatcher – “seeks to expand its economy… through aggressive deregulation in conjunction with tax cuts aimed at promoting private capital investment “. “The modern economy in terms of supply, on the contrary,” he continued, “prioritizes labor supply, human capital, public infrastructure, [research and development] and investments in a sustainable environment “, said the Minister of Finance. “The modern supply-side economy seeks to stimulate economic growth by both boosting labor supply and increasing productivity while reducing inequality and environmental damage.”

A different approach to development

Two and a half months later, Freeland introduced a budget that has significant amounts of new money for housing, infrastructure, innovation and clean growth, while addressing issues such as immigration and training. “Modern supply-side economic data lends itself to the supply-side image of supply – that growth in supply is fundamental to growth – but follows a progressive, anthropocentric approach,” Freeland said Thursday. The abstention from business critics was that the Trinto government had no focus on economic growth. These critics are unlikely to be mitigated by the fact that the word “economic growth” is right there in the title of this year’s budget – just as they were not convinced when “growth” was in the title of last year’s budget. But the real controversy seems to be over how this government chose to promote growth – with those critics wanting the government to be more interested in cutting taxes, cutting regulations and balancing the budget.

Reversing a two-decade trend in the budget

Freeland said in a statement that it was committed to fiscal discipline. He cited the “fiscal anchor” of the debt-to-GDP ratio reduction. The budget promises two separate revisions to find $ 3.8 billion in cuts in planned annual spending. And there are tax breaks for investing in critical minerals and carbon sequestration and storage. But it is also a budget that promises to create a Canadian Development Fund to support low-carbon industries and a Canadian Innovation and Investment Agency to help commercialize research. In this sense, the invocation of the “modern supply-side economy” can be seen as an attempt — by a liberal government that has never done very well with Bay Street — to broaden the debate about what counts as a focus. in economic development. The Liberals have reversed a two-decade trend of cutting federal revenue and spending. Federal program spending was 12.5 percent of GDP in the last full year of Stephen Harper’s Conservative government, and Freeland forecasts it will be 14.7 percent in 2026-2027. Federal revenue was 14.0 percent of GDP in 2014-2015 and is now projected to reach 15.7 percent. These are not insignificant changes. If at one time it seemed dangerous to propose new taxes or expenses, these changes might seem somewhat remarkable.

Future risks

But they also need to be put in perspective. This revenue ratio would still be lower than it was in 2004-2005 (16.0%), the last full year of Paul Martin’s liberal government. Expenditure would still be lower than it was in 1994-1995 (15.6%), before Jean Chrétien and Martin made a series of deep cuts to balance the budget. However, there is no small risk to the modern Freeland economy in terms of supply. First, federal spending still has to be spent well – and the more you spend, the more vulnerable you are to bad spending categories. For another, the economy must continue to grow. WATCH: Interim Conservative leader Candice Bergen tears up federal budget

Liberal budget is “NDP manual – it’s tax and expense”: Bergen

Interim Conservative leader Candice Bergen joined Power & Politics on Thursday to discuss the Liberal government’s first budget since last year. 10:07
The finance minister has also not yet budgeted for all the expenses that the federal government may need or want to make. A possible increase in Health Transfer to Canada and perhaps a future funding boost to bring military spending closer to NATO’s two per cent GDP target have not been added to the books. Freeland suggested on Thursday that the government’s actions would ultimately help fight inflation, but did not offer quick fixes. To be fair, there may not be quick fixes. And the idea that federal spending drives inflation can be overly simplistic. But as long as this high inflation and the rapid rise in property prices persists, the grumpiest voters may remain. Inflation was what helped bring Reagan and Thatcher’s economy into the economy, after all. And Poilievre is waiting in the wings, who is full of contempt for the federal government’s spending habits and is calling for tax cuts and the removal of government “gatekeepers” so that Canadians can prosper. The modern economy in terms of supply is not socialism. But its benefits – and the continuation of the Liberal government – have yet to be tested.