Deputy Prime Minister and Finance Minister Chrystia Freeland and Prime Minister Justin Trudeau walk together before delivering the Fall Economic Statement in Ottawa on November 21, 2023.Blair Gable/Reuters
The target audience is young people, and Instagram influencers Justin Trudeau and Chrystia Freeland showed them a series of unboxing videos showing off shiny new products.
One day it was a renter's bill of rights, the next it was $1 billion for school lunches and a $6 billion infrastructure fund. The construction loan for the apartment complex was $15 billion, and the cost of child care was $1 billion. And the Liberals also pushed a multibillion-dollar defense policy update into it.
On Tuesday, the trick is to repack all those things into boxes. It's a smaller box than I imagined.
Weeks of budget announcements were aimed at making Canadians feel like they were getting a lot. Ms. Freeland will need to convince Canadians that her budget is a reasonable cost. The challenge is to reduce the impact of these large numbers on the deficit. Freeland has promised to stick to his debt and deficit targets.
Many of the measures already announced were designed with that in mind.
The Liberals keep saying they will accelerate housing construction, but in most cases, the fuel of choice is loans. His $15 billion in apartment construction loans ends up being much smaller. A Scotiabank economist estimates it at $375 million. This is because the government only pays for bad debt losses.
And then there's the spending plan, which is like a hockey stick on a graph, a small amount now, but a larger amount in a few years. Of the $8 billion in net new defense spending over the next five years, this year only includes $612 million.
The large sums announced during the Liberal Party's three-week roadshow will melt into smaller sums in this year's earnings.
All this is still not cheap. However, an increase in government revenue and additional corporate taxes are expected.
The political point is to tell young voters that the Liberal Party is doing a lot of big things for them, and that they're not giving the country a lot of money.
Once upon a time, it was a Liberal brand promising NDP policies with a Conservative budget. But Prime Minister Trudeau's government has tilted the scales of fiscal policy due to the pandemic and post-pandemic spending, leaning more toward spending than restraint.
The Liberals now have to literally respond to NDP policies, but Ms. Freeland has promised to reduce the debt-to-GDP ratio and keep the budget deficit below 1% of GDP by 2026-27.
That's a difficult enough problem in itself, but Prime Minister Trudeau's government has another major political problem with young voters in their 20s and 30s who have left the Liberal Party.
On Monday, in a speech to the Chamber of Commerce, the Prime Minister focused on the issue of fairness for millennials, whose economic lives were disrupted by the financial crisis 15 years ago, and Gen Z, whose start in life was disrupted by the pandemic. He said it was a gender issue. Currently facing high rents, house prices and mortgages.
“Our country can't succeed unless our young people succeed. Furthermore, our country can't succeed if our young people can't imagine themselves succeeding,” Trudeau said. “They just don’t feel it right now.
The Prime Minister's announcements over the past three weeks have been all about grabbing the attention of voters under 40 and getting them to see what the government is doing. The Liberal Party is desperate to find some way to reach out to those who seem to be ignoring them.
These include a renter's bill of rights and efforts to force banks to count on-time rent payments in credit scoring, all of which are free programs intended to hurt the ears of struggling 20- and 30-somethings. There were also measures taken. But the Liberals also need to focus on their promise to ease the housing crisis. And they couldn't afford to ignore defensive updates for another year.
The day has come for the Liberals to squeeze these promises into a more modestly sized budget. If the past is prologue, the Liberals will hope to stretch that box to its limits and expand it even further next year. It's becoming much harder, but the Liberals are desperately trying to convince young Canadians that they have something left.
