“This was a really tough budget at a crucial time – politically, economically and fiscally. I don’t see that the federal government had a lot of room to maneuver on it,” says John Turvey, lecturer in business at Lakeland College.
The economics teacher weighed in on Tuesday as federal finance minister Chrystia Freeland delivered the Liberal government’s financial projections with spending on clean tech, dental care, grocery rebates, healthcare and a deficit that’s expected to grow to $40 billion this fiscal year.
Turvey pointed to what he termed the “social necessities for people who are suffering under low income.”
“There are so many good long term investments that are being made and promises that are being maintained and kept – and a bunch of new things. Bottom line, I’m positive about this. I like the direction that it’s going. It’s forward looking. It’s visionary. It’s high risk.”
Speaking to the aspect of “high risk”, Turvey explains it speaks to the character of Canadians and its trusting that people “will back up the promise of the future of this country.”
The budget comes against the backdrop of inflation, the prospect of recession, the recent struggles with a couple U.S. and Swiss banks and as well western central banks stepping in to shore up the banking system and stop the spread of the contagion.
In that climate, there is also the issue of whether the federal budget spending is premised on positive outcomes rather than the sombre economic reality of the federal debt reaching $1.18 trillion and the Debt-to-GDP ratio hitting 43.5 per cent this fiscal year, before it’s projected to settle back at 39.9 per cent in fiscal 2027-28.
Some of the highlights in spending include:
- A one-time grocery rebate – eligible families can get up to $467. Single people with no kids could get up to $234.
- A 40 per cent rise in Canada Student Grants.
- $13 billion for dental care to families earning under $90,000 a year
- 15 per cent refundable tax credit for clean electricity investments
- Refundable 30 per cent tax credit for clean tech investments
Turvey responds to the issue of how the government’s standing would be affected if the positive outcomes don’t materialize.
“Well we are probably looking at a new government, I would think. This goes back to what I said earlier. The government is trying to channel our positive thinking. If we all pull together and we all row together, then it is entirely likely that we can all achieve something as a country.”
The fiscal package proposes spending $198 billion in public health care, $359 million over five years on the opioid crisis, $158 million over three years for a suicide prevention helpline, $4 billion over five years on Indigenous housing, $8.7 million for more consultations on Indigenous resource sharing, a deal with Visa and Mastercard to lower fees for small businesses among other proposals.
Turvey says it is incumbent on the government to be as positive as possible and get people behind the budget.
The economics lecturer concludes that right now the country is “below the natural rate of unemployment, businesses cannot find enough workers, the economy is doing quite well – we do have inflation, but with the debt we were going to have to pay that anyway.”
He adds the lesson over the handling of the economy during COVID-19 was whether to spend and keep the economy going or not spend which would have led to a shutdown of industry and then it would cost more to restart the economy.