Finance Minister Bill Morneau is set to deliver his third budget tomorrow and rumours are swirling about what is in it, what is out and what to expect. Hill+Knowlton Strategies conducted a pre-election survey of more than 1,000 Canadians to gain insight into how the government is doing in several areas and what their expectations are going into the budget.
As the clock starts to tick towards the 2019 federal election, this budget will be critical in positioning Justin Trudeau’s government for the campaign trail next year. This government has made significant efforts to pursue policies that appeal to progressive Canadians in large part because attracting voters who may have voted NDP, Green and even for the Bloc Quebecois in the past will help the government sustain and perhaps even strengthen their majority in the next election.
Our research shows that there are a few key areas the government can focus the federal budget on to broaden its appeal with progressive voters. Notably, while Canadians were more forgiving of deficits in 2015, that appetite is starting to shift to a balance between spending and deficit reduction – in fact, only 1 in 5 in our recent survey believe the focus of the budget should be solely on spending and investment, with the majority of Canadians preferring a budget focused exclusively on debt and deficit, or striking some balance between investment and debt and deficit reduction.
Not surprisingly, Canadians from across the political spectrum say their top priority for government in general is health care (73%), and that health care is their top investment priority for the 2018 budget (80% want to see the government spend more). The challenge is that the federal role in health care is to transfer funds to provincial and territorial governments. With provincial health agreements in place, there is not much room for increased federal investments, other than in areas of federal jurisdiction such as medical research and improving the provision of health services to Indigenous communities.
With little room to maneuver on health, the federal government will be looking to other areas, like affordable housing and homelessness, to appeal to progressive voters. Affordable housing and homelessness is the second most important priority Canadians want government to focus on (45%), and is the second highest rated investment priority for the 2018 budget (68% want to see the government spend more). But more importantly it’s an area that supporters of the Liberal Party and NDP are far more likely to want to see increased investment in compared to Conservative Party supporter. Despite poor performance scores on affordable housing (only 16% rate their performance on this file as good, 31% rate it as average and 46% rate it as poor) there is opportunity with this budget to highlight the National Housing Strategy and provide more details on how the $40 billion committed over the next ten years will be rolled out.
In building an electoral coalition it makes sense to play to your strengths. Our research shows that the Trudeau government is perceived as performing well when it comes to promoting innovation and science (32% good, 37% average and 19% poor), improving the place of women and girls in Canadian society (32% good, 37% average and 23% poor), and, to a lesser extent, fighting climate change and protecting the environment (30% good, 38% average and 25% poor). Therefore, it makes sense for the government to continue to make significant investments in all these areas.
Our research also indicates that supporters of the Liberal Party and the NDP favour investments in workforce and skills training, post-secondary education and scientific research in far greater numbers than Conservative Party supporters, making these areas prime targets to be positioned in Budget 2018.
Spending on initiatives to address climate change and the environment is one area where there is a striking contrast in the views of supporters of the Liberal Party and the NDP and those that support the Conservative party. In our research, we created a 2018 Budget investment priority index where we took the percentage of preferences for “increased spending” in an area and subtracted the percentage of “decreased spending” in that area, and then analyzed the index by party preference. For investments in climate change and environment, Liberal Party supporters averaged a net 57% for increased investment, compared to 58% from NDP supporters. In stark contrast, Conservative Party supporters averaged a net 11% decrease in spending. The political wedge that this provides, coupled with the government’s need to make greater progress on their Paris Agreement targets, means that Budget 2018 should continue to showcase investments in clean technologies, achievable greenhouse gas reductions and any actions that map back to addressing climate change and the environment.
There is another political reason that climate change and the environment will continue to feature big in Liberal budgets: Quebec. Fighting climate change remains a very high priority for Quebeckers. In fact, our research found that Bloc Quebecois supporters even rated it a higher priority than spending on health care. After winning a by-election in Lac St-Jean (a riding that posted the worst results in Quebec for the Liberal Party in the 2015 election), the Trudeau government now sees Quebec as a key path to winning in 2019.
In the same way, supporters of the Liberal Party and the NDP are much more enthusiastic about seeing the government use the public purse to promote gender equality and improve the status of women in Canada. Liberal Party supporters averaged 47% net increase investment and NDP supporters 52% net increase. Juxtaposed to this, Conservative Party supporters averaged a net 15% on increased spending.
Greater spending on Indigenous communities rarely rates high in public opinion surveys amongst the broader Canadian society, and indeed our research shows that only 41% feel the budget should focus on spending more in this area. What is interesting is that when we asked where people “expect” the budget investment to go, the data shows that a large percentage of Canadians, including Conservative supporters, expect the budget to focus on Indigenous Canadians (7% more than for health care). This is likely a result of the Prime Minister consistently reinforcing that this area is a key priority for his government. This means there is an opportunity in this budget for significant investments in improving the lives of Indigenous Canadians, in areas such as housing, education and child welfare, as even Canadians who don’t think these should be spending priorities for the government certainly won’t be surprised if they are delivered.
Expect the 2018 Budget to capitalize on their momentum with NDP, Green and Bloc Quebecois supporters by putting forward a progressive agenda that the Trudeau government hopes will position it well for the 2019 vote.
What to Expect in Budget 2018
Hold the line. With a cooling economy and uncertainty around NAFTA and the impact of US tax changes, this budget is expected to be very thin on new spending as the government leaves room to respond to economic conditions later this year. Instead, expect to see the government re-announcing old money with more specifics on how it will be spent (such as infrastructure projects) and an emphasis on highlighting investments already made (such as the National Housing Strategy).
Funding for science. Following the release of the Naylor Report in 2017, the science community has long been calling for an increase in funding for basic science. This budget is expected to contain increases in funding for granting councils, a focus on targeting funding based on scientific theme, and a specific focus on supporting women in science.
Gender equity. A pivotal theme for this government, Budget 2018 is expected to be the first to fully integrate a gender based analysis of funding and programming in the budgeting process. It will also contain significant measures to address gender equity issues and support increased labour market participation of women, such as a new parental leave for a second parent to share in the responsibilities of raising children. Other initiatives could include pay equity and measures to increase the representation of women on boards and at the executive level.
Cannabis. Though the deadline may be shifting, cannabis will be legal in Canada in 2018 and it is expected that the federal government will roll out more specifics of their funding support for education, public health and enforcement.
Tax changes. After months of debate and consultation, Finance Minister Bill Morneau is expected to rollout the draft legislative framework to clarify the rules around passive investment for small businesses. While no other business tax measures are expected, the budget is will likely contain an expansion of the Working Income Tax Benefit for low-income Canadians.
Indigenous housing. Though consultations are ongoing, Trudeau is expected to make a significant long-term funding commitment for Indigenous housing in this budget. Long term strategies will be finalized one by one, and the government will likely focus on Inuit and Metis agreements first as the consultation is more advanced.
Cybersecurity. Internal stakeholders have been calling for dedicated funding to develop a multi-departmental effort to strengthen Canada’s protections and response capabilities in the event of a cyber-attack. Rumours of up to $1 billion in funding could be made available in this year’s budget.
Journalism. In the wake of recent newspaper closures, Budget 2018 is said to include a $50 million investment over five years to support local journalism across Canada.
Hill+Knowlton Strategies conducted an online survey of Canadian residents February 9-14, 2018. In total n=1,138 members of the general public 18 years or older were surveyed.
Final survey data were weighted based on Census figures according to region, age and gender in Canada (associated margin of error for a probability sample of this size is +/- 2.9%, 19 times out of 20).
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