Budgets, tax filing and spring usually coincide in Canada. Each focuses the mind. Most of us hope for no drastic change in any area—particularly water levels as winter recedes!
Unique to the cycle this year is the lead by provincial governments in British Columbia, Saskatchewan, Quebec, Alberta and Ontario in releasing their provincial budgets in advance of the one from the federal government. Much has been written about the delay in delivering the federal budget, with many speculating it is due to economic volatility and falling oil prices. While the energy market is likely part of the reason for the delay, we see a much more significant reason: Differentiation.
Budget making is all about calibration. Finance ministers and their teams work tirelessly to get the forecasts, the expenditures, the tax increases or cuts just right. In Alberta, Premier Jim Prentice introduced a budget that only omitted a sales tax, with some expenditure cuts and a target for a balanced budget three years out. For Quebec, Premier Philippe Couillard introduced a budget focused on expenditure reductions and no tax increases – or cuts. Ontario’s budget is expected to focus on divestiture of government assets and changing long-standing monopolies to increase excise revenue. All of which demonstrates that provincial budget-making is taking its toll on voters.
The federal government, on the other hand, is preparing a spring budget that is centred around a balanced budget and which will offer Canadians tax cuts and increased expenditures in key areas related to job creation and entrepreneurship. The federal government’s objective is to demonstrate economic management and leadership and to show that the many years of tough decisions already taken have delivered results for Canadians. It will be interesting to see if voters agree.