Budget 2016

The Liberal election platform promised to “make the Parliamentary Budget Officer (PBO) truly independent” of the government and to make sure that the office is properly funded. The platform also promised to make government accounting “consistent and clear.”

It was, then, a bit surprising that the PBO had to make a formal request for information normally provided in the federal budge, and was forced to provide its own estimates for the missing numbers in its report to Parliament on April 6.  The Department of Finance finally released the requested information only on April 8, more than two weeks after the budget was delivered in the House of Commons (on March 22^nd.)

The new Canada Child Benefit (CCB) unveiled in the 2016 federal Budget has been widely supported by progressives and anti poverty activists who have long favoured the expansion of income tested child tax credits. By contrast to the so called middle-class tax cut which favours the more affluent, the CCB will have a positive impact upon the lamentably high rate of child poverty in Canada (which stood at 16.5% in 2013), and will promote greater income equality among families with children.

Somewhat ironically, the new program is an unintended consequence of the regressive policies of the Harper government which opened up the needed fiscal room for progressive change. 

The Budget reinvests significantly and appropriately in many important government programs broadly in line with the promises made in the Liberal platform. However, it falls short in some important areas, and the biggest failure is to restore federal fiscal capacity to support improved social programs and public services over the long term.

The bottom line is that the Budget increases federal government program spending from 13.6% of GDP in 2015-16, the last year of the Conservative government, to 14.6% of GDP in each of the next two fiscal years. This represents a significant increase in spending of about $20 Billion in the coming year, 2016-17. Program spending is, however, forecast to gradually decline as a share of GDP back to the 2015-16 level after the next two years.

The Broadbent Institute is an independent, non partisan organization that promotes progressive change. Grounded in social democratic values and ideas, the Institute seeks to deepen our democracy, encourage strong action to counter growing economic and social inequality, and fuel a transition to a more innovative and sustainable economy. This submission lays out concrete policy proposals that the government should consider if it is serious about implementing progressive reforms in Budget 2016.