When the federal budget is released on Tuesday, the two big questions economists and pundits will have are “how big is the deficit?” and “how closely does the budget match the Liberal campaign platform?” While these are important issues, they are plenty of others worth considering. There are eight items in particular I will be looking for in Budget 2016:
1. Realistic economic forecasts
One of the first things I look for in any budget are the economic projections, particularly after Budget 2015 contained wildly optimistic oil price forecasts. The economic forecasts in the budget will be a little less interesting this year as in late February the Department of Finance released a set of forecasts in their Canadian Economic Outlook (CEO). That said, many of the projections in the CEO only go out one or two years, so the forecasts in the budget will still be worth examining as they may have a longer time horizon. Hopefully Budget 2016 will contain cautious and realistic economic forecasts for the next five years.
2. A food rebate
Food price inflation caused by a falling loonie has negatively affected the ability of low-income families to buy healthy food. A food rebate program would both provide assistance for low-income families and economic stimulus.
3. A commitment to selectively eliminate import tariffs
It would be surprising if there are any actual tariff cuts in Budget 2016, but I would like to see the government commit to a process to selectively eliminate import tariffs. I would be delighted if they would attach a dollar commitment as well (e.g. we will cut $250 million in tariffs over the next 3 years), though that is probably asking too much.
4. A commitment to tax simplification
The Customs Tariff is not the only part of the tax system in need of an overhaul. The Income Tax Act has become unnecessarily complicated and is full of a litany of tax credits of dubious effectiveness. Do not expect Budget 2016 to clean up the tax code, but we could see a commitment to a process of tax simplification. In an ideal world, the budget would announce that 2016 being the 50th anniversary of the release of The Report of the Royal Commission on Taxation (a.k.a. the Carter Report), the government will call a second royal commission to provide recommendations on improving Canada’s tax system. Call it Carter version 2.0. A full-blown Carter commission is probably asking too much, but some process for determining how to simply the tax code is sorely needed.
5. Progress on immigration reform
Reform of the Express Entry and Post-Graduation Work Permit Programs are badly needed and it appears the government is moving in that direction. Given the budget is inherently a financial document, specific details about immigration reform are unlikely to be in it, but it certainly would not hurt to see more financial resources allocated to speeding up the turnaround times on Labour Market Impact Assessments and other applications.
6. Details on a possible Guaranteed Minimum Income program
The Ontario budget contained a clause committing to a basic income pilot and it is possible that the Federal government may consider the same. I am highly skeptical of many of the proposals floated by proponents of a Guaranteed Minimum Income, so I will be looking to see if the federal government is considering moving in this direction.
7. Help to get agricultural and agri-food products to market
The Trans-Pacific Partnership and Comprehensive Economic and Trade Agreement create massive opportunities for Canada’s agricultural and agri-food sectors, particularly in Southwestern Ontario. In order to capitalize on these opportunities, we need to be able to ship our products to market. Improvements to Canada’s to air transport infrastructure would be helpful, along with upgrades to Canada’s ports, such as Hamilton’s. There are many other types of Southwestern Ontario exporters that would greatly benefit from improved trade infrastructure.
8. More useful and timely data
Statistics Canada makes some odd choices when it comes to data collection and many useful series are released with a substantial lag. Doing any kind of long-run macroeconomic study is difficult due to the agency either lacking the will or the resources to splice together series after definitions change. Data at the Statistics Canada site is not displayed in the most user friendly fashion (I would kill to have our municipal data displayed the way the U.S. Bureau of Labor Statistics does it) and too often the site simply returns the message “UNEXPECTED ERROR.” Our open data portal, while a worthwhile initiative, substantially lags behind that of the United States. Committing resources to addressing these issues would be greatly appreciated by the policy wonk community.
The budget is a lengthy document which is always full of surprises, so there will be plenty of announcements that are off of everybody’s radar and will be worth looking for as well. But when I first get the budget book in my hands, I will be immediately searching for these eight things.
MORE ABOUT THE ECONOMY:
- 10 reasons why Canada should eliminate most import tariffs
- Amid a rising tide of tax credits, we need to simplify the tax code
- Tax cuts won’t grow the economy if Canadians are too scared to spend
- Why entrepreneurs are the key to growing Canadian jobs again
- The low loonie is driving a boom in Canada’s used-car exports
- Canada’s hardest-hit economies need immigration to thrive again
- The Bank of Canada’s pro-deficit signals just got even stronger
- Why Canada’s governments shouldn’t be scared of debt right now
- A fast and cheap way to stimulate the economy: a food rebate
- Like everyone else, the Bank of Canada awaits the first Trudeau budget