Cardus' Analysis of 2010 Canadian Federal Budget: Long-Term Talk Masks Short-Term Thinking

March 4, 2010

OTTAWA, March 4, 2010—Ray Pennings, Director of Research for Cardus, expressed concern that although today's federal budget rightly focuses on returning the books from deficit to surplus, it pays too little attention to imminent deficits in elder care, charitable service and broad social architecture.

"It's a good budget, but it's not visionary," said Pennings. "Canada will begin facing down critical problems in the coming decades that need bold fiscal leadership, and by that standard, today's budget is focused too much on short-term physical stimulus, and not enough on helping institutions outside of government build capacity for providing critical services over the long term."

Cardus released its analysis of the federal budget asking three core questions:

1. "Has the Economic Action Plan provided value for money?" In general, the Action Plan has enabled valuable updating of our physical, transportation and educational infrastructure that will reap positive rewards in the future. It has done so without any indications of significant fiscal mismanagement-no small achievement for a quickly-executed program of this magnitude.

2. "Will the plan to rebalance the books still pay to maintain our social and physical infrastructure?" The budget fails in this regard. While it acknowledges the impact of demographic challenges as it affects its own transfers to provinces, it ignores the impact this same trend will have on social services, labour supply, elder care and other spheres. The failure to include any significant measures encouraging the institutions of civil society to build capacity to address these needs is a significant mistake that will exacerbate long term problems.

3. "Are the plans for economic growth credibly taking into account the known demographic changes which are facing our country?" For the most part, this government is relying on tinkering with the status quo to achieve economic growth. While this is certainly preferred to a strategy of government trying to "pick winners and losers," it does not address the significant future challenge of a shortage of workers and taxpayers that cannot simply be solved by markets.

Cardus' analysis not only calls into question some of the government's long-term projections, but also urges greater attention on the inevitable economic and social impacts of the demographic crisis.

"The short-term strategy is a prudent check on stimulus," concluded Pennings, "but dealing with Canada's long-term economic and social challenges have been left for another day."

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Media Contact:
Ray Pennings (403)479-4590
rpennings@cardus.ca

A copy of the proposal and background paper is available at http://go.cardus.ca/budget2010.

Posted in Business, Civic Core, Economy, Markets, Politics. Linked to Cardus' research project.