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'Budgets are always about appeasing voters’: economist

'Budgets are always about appeasing voters’: economist

If Finance Minister Joe Oliver’s choice for budget day shoes are any indication, the Conservatives will table a document Tuesday that will be a centrepiece in their federal election campaign this year.

For the annual tradition, in which Canada’s finance minister selects a pair of shoes for budget day, Oliver chose to don blue New Balance runners, reflecting the expectation that the budget will be more about campaigning for the next federal election — the promise of a balanced budget, and candidates running for office — than about creating a sound economic roadmap for the country.

“Budgets are always about appeasing voters,” said David Macdonald, senior economist at the Canadian Centre for policy Alternatives. “I mean, that’s not something that’s new…But certainly this budget will be going to voters in a much more direct way than most, in the sense that this will be an election budget.”

Tuesday’s document is expected to reveal a number of measures, including doubling of the annual contribution for tax free savings accounts and income splitting measures.

Oliver has already tabled balanced budget legislation and is expected to balance the 2015-2016 budget, the first time the government is set to do so in eight years. Additional funding for Canada’s spy agencies to combat terrorist activities, as well as measures geared towards seniors — an important voting block — are also expected in this year’s document.

Macdonald told Yahoo Canada News that some measures expected to appear in the budget are “extraordinarily dangerous.”

He said the doubling of the tax free savings account limit won’t be an expensive move initially, but will blow holes in future federal budgets. If someone starts right off at the age of 18 a hit that — now doubled — limit every year, Macdonald continued, they could easily become a millionaire over the course of their lives.

“Because of the way TFSA is structured, [even if] they become a millionaire…they would be eligible for low income senior benefits when they retire. That’s one of the major reasons why TFSA is so dangerous.”

A report from the Parliamentary Budget Officer in February said boosting the maximum contributions to TFSAs could cost billions, most of this weighing on the federal government’s coffers and the rest on the provinces. The report also stated that the change would most benefit wealthy Canadians.

Macdonald said this year’s economic outlook isn’t great and added that the proportion of Canadians working today is the same as it was at the worst of the recession, in the summer of 2009. The unemployment rate has gone down, but that, he said, is because many Canadians have given up on looking for work.

“It’s a very fragile position here. We’re not seeing strong growth,” he said. “The decline in oil prices has been devastating to capital investment in the oil sands. The federal government does not appear to be particularly interested in pushing against those difficult headwinds.”

Macdonald has suggested the government take a very hard look at other ways to improve the Canadian economy.

The CCPA released a fact sheet listing five things that the organization says should be in the budget, but probably won’t be, one day ahead of its tabling. The five measures include getting the job market on track, reducing child poverty, improving drinking water safety, creating affordable child care and committing to action on climate change.