Federal Finance Minister Bill Morneau likely started making revisions to his 2017 budget plans on Nov. 8, 2016 — the day Donald Trump was elected president of the United States.
Trump campaigned on a protectionist America-first policy, such as renegotiating the North American Free Trade Agreement, implementing border taxes and keeping U.S. companies and jobs at home. That would have a negative economic impact on Canada our finance minister had to consider as he prepares to deliver his second budget on March 22.
Prime Minister Justin Trudeau’s visit to Washington last month may have eased some of those concerns. Trudeau has been in the U.S. several times since, recently assuring the oil industry in Texas that a balance is possible between oil and the environment. He was in New York Wednesday to attend the Broadway performance of “Come From Away,” about the warm welcome extended to Americans who landed in Gander, N.L. after 9/11.
Ivanka Trump was also at the premiere. She’s working with Canada on an initiative to enhance business opportunities for women on both sides of the border. Having the president’s daughter and close adviser on Canada’s side is a bonus.
As he finalizes his first budget of the Trump era, Morneau has some assurances that Canada might escape the worst of U.S. campaign vitriol, but he must still deal with Trump’s repeated promises of major tax cuts for U.S. businesses and citizens and the impact of those tax cuts on Canada.
Last year, the Liberals broke its pledge to run annual deficits of no more than $10 billion and to balance the books in four years, opting for a plan to run deficits as a way to invest billions in infrastructure. It appears the 2017 budget will follow the same course.
Morneau promises that his budget will be fiscally responsible, which translates into help for business but not so much for ordinary Canadians. He is stressing infrastructure investment in communities, skills training and greater workforce participation, preferring to let the private sector do what it does best — create jobs and expand the economy.
Interestingly, Trump is promising the same for the U.S., laying out plans for the greatest infrastructure spending spree since the 1950s, when much of that country’s interstate highways, bridges and dams were built.
Morneau seems more concerned with stimulating the economy than providing promised tax relief for Canadians or reducing the public debt. Like Trump, he thinks helping businesses will create jobs, boost the economy and thus raise federal revenues to help shrink the deficit. A majority of Canadians feel the same way.
Businesses don’t like uncertainty. Finance ministers even less so.
With Trump, we’ve come to expect the unexpected.
Morneau is well advised to hedge his budgetary bets.