With its 2019 budget, the Liberal government is doubling down on its strategy to target the middle class, if only with its rhetoric. They are investing in the middle class, they say. They want to grow and strengthen the middle class and those working hard to join it, they say. In fact, Bill Morneau uttered the words middle class 15 times in his budget speech.
Scratching the surface, two key demographics are actually targeted by the Liberals, namely millenials and seniors. The first group ensured Justin Trudeau’s victory in 2015, the second tends to vote more than others. Securing a large chunks of these groups are key for the Liberal’s re-election bid.
The cost of housing is a key concern for millenials, especially those trying to build a family. Not surprisingly, it is the very first measure to appear in the 2019 budget. The government is introducing measures to make home ownership more affordable to them. The First-Time Home Buyer Incentive will reduce the monthly mortgage payments by making the government own up to 10% of your home and rack up the profits once you sell it. Buyers will also be able to withdraw more from their RRSP to buy a first home. This is good news for young families, especially in smaller markets, but it won’t do much to help access to home ownership in the bigger, hot real estate markets of Montreal, Toronto and especially Vancouver.
Environmentally-friendly measures are also present, which will also please the millenials. They’ll make electric vehicles more affordable by chipping in up to $5000 for those who buy zero-emission vehicles; there will be some investments in hydro power and targeted measures to retrofit buildings. All good steps, but they won’t do much overall to help Canada reach its gas emission reduction targets.
Seniors are no doubt looking forward to lower costs for prescription drugs. The government is creating a new Canadian Drug Agency that could, maybe, lower drug costs, eventually. But the government is shying away from putting together a real, universal national pharmacare plan. They have a plan to have a plan.
Seniors and those about to join them will be hopeful that after years of hard work, the government is taking steps to protect private pensions. Albeit somewhat timid, these steps will offer a better protection than the current regime allowing the Sears of this world to raid the workers’ deferred wages as they go down in flames, while protecting the interest of shareholders and executives first and foremost.
The government is also keeping the door wide open for the opposition parties to reinforce their own narratives. The NDP will be able to say that the Liberals are not going far and fast enough to make housing affordable, to bring down the cost of drugs and to bring down gas emissions. The Conservatives will be able to point out that the deficit is still out of control, adding over 91 billion dollars to the debt between now and 2023-2024.
The Liberals are banking on the fact that Canadians do not care about the deficit. After all, they were elected despite promising $60 billion in deficits. They were doing just fine in the polls even without meeting their target to balance the books. Deficits are a good thing, because all these years of deficit spending have improved the economy, and brought Canada to its lowest unemployment rate in almost 40 years. So let’s keep deficiting!
With this budget, the Liberals are going almost all in. Because since their selling point on the deficit is that the debt-to-GDP ratio is going down, they had to show some restraint. Because the budget has yet to balance itself, the Liberals can’t go all in with social investments, allowing the NDP some room to campaign on bigger, better universal programs and measures.
In the end, this pre-electoral budget is reinforcing the narrative the Liberals have been surfing on since 2015, which has served them fairly well. There is nothing spectacular that will signal a shift in their strategy. Nothing really unexpected or surprising. Which means that, as an attempt to change the channel from the SNC-Lavalin affair, this budget won’t do much at all.
Photo Credit: CBC News
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