I wish I had the time to dig into the Conservatives’ 2009 Budget released today. Here’s the link, if you’re interested. But, between my family vacation earlier this month, my 3-year-old-son’s tonsilectomy/adenoidectomy last week, and my ongoing efforts to keep my business strong during these bizarre economic times, my blogging has screeched to a virtual halt.
From what I’ve read and heard in the media coverage so far today, this budget is a puzzler, from both an economic and a political perspective. Economically, the infrastructure-heavy spending plans are anything but a “stimulus” (I hate that word). Infrastructure spending is slow-moving, and highly inefficient thanks to local political graft and massive union-controlled labour inefficiency. If the Cons intend to actually proceed with the spending they’ve announced, then I think they’ve gone nuts. If they have made these announcements as a PR exercise, and end up spending a fraction of the funds (which is what I suspect is the case), then I think they’re acting wisely in the face of a media-generated Keynsian hysteria.
If, however, Flaherty & co. wanted a true “stimulus”, they could have cut the GST again; they could have chopped payroll taxes; they could have reduced energy taxes. Instead, the personal tax reductions are miniscule, and the home renovation tax credit is good “bang for the buck”, but will be a significant spending incentive to only a small sliver of the population. Perhaps government tax revenue projections, thanks to the decline in the investment markets, are so poor, that there’s simply no room to significantly drop taxes. Either way, at least there’s no tax increases.
Politically, it’s a little less difficult to understand. This is a survival budget – a document that the Liberals could not possibly defeat. It has backed the Liberals into a corner – with the coalition idiocy now no longer an option, and the Liberals under Iggy with no ideas of their own, this will maintain the status quo.
The questions for 2009 will be: what will the Harper Conservatives offer to small-c conservatives to excite them to keep their grass-roots support? And when will Harper finally put forward a coherent vision of what Canada is and should be, in order to rally the country to give him a majority? It’s a make-or-break year; he can’t float along forever on simple competence and continuity. And, for Iggy and the Liberals, the question is: what can they do, beyond their typical demagoguic bluster, to differentiate themselves from the Conservatives, now that Harper is, essentially, leading as a Liberal minus the corruption and tax increases.