Deputy Prime Minister and Minister of Finance Chrystia Freeland and Prime Minister Justin Trudeau walk together before delivering the fall economic statement in Ottawa on Nov. 21, 2023.Blair Gable/Reuters
The target audience is young people and like a pair of Instagram influencers, Justin Trudeau and Chrystia Freeland have treated them to a series of unboxing videos to show off shiny new products.
One day it was a renter’s bill of rights, the next it was $1-billion for school lunches, then a $6-billion infrastructure fund. There was $15-billion in construction loans for apartment buildings and $1-billion in loans for child care. And the Liberals squeezed a multibillion-dollar defence policy update in there, too.
On Tuesday, the trick will be packing all those things back into the box – a smaller box than you might guess.
The weeks of prebudget announcements were aimed at making you feel like Canadians are getting a lot of stuff. Ms. Freeland’s budget has to convince Canadians the cost will be reasonable. The task is to make those big numbers have a smaller impact on the deficit. Ms. Freeland has promised to stick to debt and deficit targets.
A lot of the measures already announced were designed with that in mind.
The Liberals keep saying they’ll turbocharge housing construction, but for the most part, the fuel of choice is loans. The $15-billion for apartment construction loans is a lot smaller on the bottom line – Scotiabank economists estimate it at $375-million – because the government only pays for loan losses.
And then there are spending plans that look like hockey sticks on graphs, with smaller amounts now and bigger sums years down the road. The $8-billion in net new defence spending over the next five years will only include $612-million this year.
The bigger sums announced in the Liberals’ three-week roadshow will melt to smaller sums on this year’s bottom line.
All these things still won’t be cheap. But there will be an expected boost to government revenues and additional corporate taxes.
The political point is for the Liberals to tell younger voters they are doing a lot of big things for them, and tell the country they aren’t breaking the bank.
Once upon a time, that was the Liberal brand – promising NDP policies on a Conservative budget. But Mr. Trudeau’s government leaned more to the spending than the restraint, with pandemic and postpandemic spending tipping the scales of their fiscal policy.
Now the Liberals literally have to accommodate NDP policies, but Ms. Freeland has promised the debt-to-GDP ratio will be reduced and deficits will be brought under 1 per cent of GDP by 2026-27.
That’s a tricky enough problem in itself, but Mr. Trudeau’s government has another massive political problem with younger voters in their 20s and 30s, who have abandoned the Liberal Party.
On Monday, the Prime Minister was framing the problem in a speech to the Chamber of Commerce as a matter of fairness for millennials whose economic lives were riled by the financial crisis 15 years ago and Gen Z, whose start was hobbled by the pandemic and who now face high rents, house prices and mortgages.
“Our country cannot succeed unless young people succeed. And more, our country cannot succeed unless young people can imagine themselves succeeding,” Mr. Trudeau said. “They just don’t feel that right now.
The past three weeks of prime ministerial unboxing announcements have been all about trying to grab the eyeballs of those under-40 voters to get them to look at what the government is doing. The Liberals are desperate to find some way through to people who seem to have tuned them out.
Some of those things were no-cost measures designed to make a struggling 20-something or 30-something prick up their ears, like the renter’s bill of rights or efforts to get banks to count on-time rent payments in credit scoring. But the Liberals also need to put weight behind promises to alleviate the housing crisis. And they couldn’t neglect the defence update for another year.
Now the day has come for the Liberals to pack those promises into a more modest-size budget box. If the past is prologue, the Liberals will stretch that box to the edge of its limits and hope they’ll be able to stretch a bigger box next year. That’s getting a lot harder, but the Liberals are desperate to convince younger Canadians there is something left in the box for them.