Even with the highly unusual volume of information being selectively released by the Conservative government, it will not be possible to take proper measure of the federal budget until it is detailed in full this afternoon by Finance Minister Jim Flaherty. But if the spending announcements so far are any indication, a combined lack of focus and ambition may forfeit much of the potential long-term value of the deficit expenditures planned for the next two years.
For the federal government, so-called stimulus spending is a delicate balancing act. Its investments must have a quick enough turn-around to pump money into the economy while it is still in recession – hence the increasingly clichéd calls for infrastructure projects to be “shovel-ready.” But it must avoid projects that do nothing to boost long-term productivity. The aim should be to find opportunity in the current challenges, making investments that help modernize the Canadian economy so that it is stronger coming out of the recession than it was going into it.
There are expenditures announced over the past several days that might serve this dual purpose. A planned $1.5-billion in training for laid-off workers represents an investment in people that should enhance Canada's competitive advantage. A $1-billion “community adjustment fund,” if it is administered with foresight and not just used to prop up struggling towns, could serve a similar purpose in helping resource-reliant areas to embrace emerging industries.
But as a whole, most of the announcements and leaks thus far – $2-billion for social housing, $160-million for arts and culture, $550-million for farmers, $300-million for tourism, $250-million for a new economic development agency in Ontario, and so on – seem scattershot. Yesterday, Prime Minister Stephen Harper dropped hints that the government will provide support for home renovations – and not necessarily just those that retrofit houses to make them more energy efficient, which at least fits with environmental goals. If so, this effort to prop up the construction industry will practically define “make-work.” And if Transport Minister John Baird's emphasis yesterday on the government's $7-billion in infrastructure spending getting “shovels in the ground as quickly as possible” on “road, bridges, and water and sewer systems” (as well as public transit, a more ambitious investment) is any indication, it appears that may define many of the government's plans.
The danger, not surprisingly for a government that is fighting for its political life, is that its spending package will attempt to satisfy every possible constituency, industry and interest group by throwing money at it. If so, the Conservatives will be passing up the chance to target a few key areas – research and development, technology, public transit – that will remain priorities well beyond the next two or three years. Hopefully, today's budget will display greater imagination and focus than the revelations that have preceded it.