CANADA BUDGET TIME 2023

Canada budget time 2023 by Maj (ret'd) CORNELIU. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East We have arrived at the time of the year when politicians are working on our financial future. Bad or good we need to live with it. The most populous province in Canada, Ontario, was first to table a budget, soon followed by an interesting federal budget. Let us first see what the Ontario budget tells us. The $204.7B budget forecasts a provincial surplus of $200M by 2024-25. That sounds encouraging, but the budget does little to ease daily affordability issues. Finance Minister Peter Bethlenfalvy tabled the budget Thursday, saying it is "rooted in strong fundamentals" and features "real action ... to not only face the current turbulence we see in the global economy, but emerge from it stronger than ever." Words of comfort from a magician? It comes amid nearly unprecedented economic circumstances for Ontario: above-target inflation, high interest rates, a generational labour crunch and a coming recession. Although, for the moment, the province is reporting record-high revenues and a historically low unemployment rate. The 187-page budget document forecasts that Ontario could run a modest $200 million surplus in 2024-2025, getting back to balance three years earlier than estimated in last year's budget. That surplus could increase to $4.4 billion by the following year. In this upcoming fiscal year, the province expects a $1.3 billion deficit - a figure roughly 12 times lower than that cited last April. I wonder how accurate these predictions will prove to be. Some of the highlights look promising: The government is addressing health-care staffing shortages by investing $200 million in supports to grow the workforce. These include offering up to 6,000 health-care students training opportunities and supporting up to 3,150 internationally educated nurses to become accredited in Ontario. The province is also investing a total of $80 million over three years to expand nursing education in universities and colleges, adding 8,000 additional nurses by 2028. To address the more than one million Ontarians experiencing a mental health or addictions challenge every year, the government is pouring an additional $425 million into mental health services over three years. The government also plans to accelerate the $1 billion it pledged over three years for home care. The budget further expands prescribing power for pharmacists, only two months after Ontario's pharmacists were allowed to prescribe treatments for 13 common ailments. The government plans to expand the Guaranteed Annual Income System, which helps low-income seniors. A higher private income threshold will make about 100,000 more seniors eligible for the program in July 2024. The budget contains $22 billion to build more schools and childcare spaces. The funding will go in part toward a new English elementary school in North Bay, a new English Catholic high school in Windsor and new additions to French elementary schools in Pickering and Oakville. An additional $25.1 million this year will be spent to support searches at residential school burial sites across the province. Ontario is investing an additional $3 million this year and $3 million next year into a program that helps junior mining companies finance mineral exploration and development. The investments build on the government's critical minerals strategy, which aims to grow the sector and make Ontario a leading producer of critical minerals - including those in the Ring of Fire in the province's north. This all looks promising, but the issues start to get complicated when it comes to implementation. Now let's take a look at the federal budget. Canada is facing the most profound challenges to its prosperity since the end of World War II. Our traditional sources of economic growth - a young and rapidly growing population, an expanding oil and gas sector, international trade - are at risk of drying up in the face of powerful forces and trends. There are four key issues facing Canada's future growth that, if not addressed by the current government, could have major repercussions on its prosperity. They are its aging population; its shrinking sources of export growth; its reliance on the United States as its number one trading partner; and public investments to respond to a volatile global market. So let's see what the budget contains. The 268 page 2023 budget, valued at $491B, is full of spending and promises. Titled "A Made-in-Canada Plan", it projects federal deficit to be $43 billion this fiscal year, and Finance Minister Chrystia Freeland no longer forecasts that federal coffers could be back in the black by 2027-28. Instead, the deficit is set to gradually decline over the next five years, still sitting at $14 billion in 2027-28. The 2023 federal budget promises "transformative investments" in Canada's green economy as the country tries to maintain its place in the global reset clean tech revolution and realign its supply chains toward allies who won't use energy as a political weapon. "Together these two great shifts represent the most significant opportunity for Canadian workers in the lifetime of anyone here today," Freeland said in the House of Commons. The remarks clearly mirror World Economic Foundation (WEF) vision, transposed into the Canadian environment. So let's go into a few details. Some of the more significant funding initiatives in Budget 2023 are: - $43B in net new spending over six years. - 3 main priorities: health care/dental, affordability and clean economy. - Doubling of GST rebate extended for lower income Canadians, up to $467 per family. - $13B over five years to implement a dental care plan for families earning less than $90K. - $20B over six years for tax credits to promote investment in green technologies. - $4B over five years for an Indigenous housing strategy. - $359 million over five years for programs addressing the opioid crisis. - $158 million over three years for a suicide prevention hotline - Creation of a new agency to combat foreign interference. It is interesting that more than one-third of new spending addresses Canada's targeted response to keep pace with the United States Inflation Reduction Act, which last year promised to direct US$370 billion at clean technology and electric vehicles over a decade. The budget also warns of the ramifications of not investing in the low-carbon economy, with significant hits to the GDP and jobs in the next 30 years, even as it acknowledges the enormous amount of money this will take. All the plans seek to develop new industries with supply chains connected to allies like the US and Europe. Freeland said in her speech that this would help to end what Ursula Von Der Leyen, president of the European Commission has called Europe's "dangerous dependencies" on authoritarian economies. A clear path to a new world order inspired by the WEF from Davos; a working front element of the powerful lobby of the Bank of International Settlements (BIS). Almost one-tenth of the new spending is directed at making life somewhat more affordable for some Canadians, including the second GST rebate top-up in a year to low-income Canadians, and increases to grants for post-secondary students. As we have seen in both budgets, much of the spending reflects political interests to secure power for the parties in control. While inflation is declining, there are strong indications that a recession is coming, creating unforeseen challenges to the tabled budgets. …and both budgets are still spending freely. Have we learned nothing?