March 29, 2023

The federal budget is, in a word, underwhelming. In two words: tax credits. And in the voice of the future generations "thanks for nothing".

I would be surprised if we expected anything else from the Liberal-NDP coalition than a budget that overly panders to the deficit hawks and the "state cannot do anything" crowd who seem to run our country.

I think this graphic clearly articulates the entire budget priority structure:

Most of the money being spent is on tax credits—refundable and non-refundable depending on if you are a company or a worker. Most of these are structured in a way as a profit subsidy as opposed to an investment support. And, most of it going to capitals that are going to invest anyway.

I think it shows Canadian policy folks in government are stuck in the previous century where investment money was gained through small percentage increases in profits because there was free money lying around.

That is not the world we live in anymore and they are unable to see just how contradictory their policy statements and their investment program desires are.

Here is the contradiction:

The budget explicitly approves of the interest rate hikes by the central banks to bring down "inflation". The budget acknowledges that high rates will likely cause a recession.

The budget says that their spending is low and targeted so they do not cause inflation.

They explicitly say they are not going to pick winners and let the market decide, say they are going to crack down on monopolies

Then do this:

Announce their main spending it through tax credits (refundable) to those exact same "monopoly" industries they say are gouging consumers and raising prices.

The tax-cut support is a continuation of a profit subsidy regime—literally giving cash to profitable companies—is the very thing that has caused inflation in the first place.

The only limit on the profit subsidy is a—yet to be determined—labour wage regulation.

The government want input from labour unions. However, from the wording it is hard to believe that regulation will be "they must be unionized workers".

Labour should demand that every job created under a profit subsidy regime of tax credits be unionized.

The government will create some very small crown companies to manage oversight. But, when it comes to investment and money, they have contracted-out to private capital.

The Public Sector Pension Investment Board (PSP) will manage the Canada Investment Fund of $15 billion. The Canada Investment Fund is supposed to be a pile of money to attract private investment.

In a sop to labour unions, PSP will have two seats on their board "for unions". While these seats seem like something we need to be part of, those seats on the PSP will likely not be able change course of its history of destructive low-waged, non-union, no-pension workers investments.

Much of the budget is full of tiny tax credits on hoped-for investments in clean technology, "new" innovative techno-Utopian dreams, and support for small businesses.

On the flip-side, the profit subsidy is too small. Canada is competing against a subsidy regime in the US and Europe that is giving away huge amounts of money to private capital to establish production in their borders.

There is no acknowledgement that the only Canadian program for investment that has ever worked is where government thinks that it can, knows that it should, and then does build and invest in production in many of these things directly. From these direct state investments we usually get the "Made in Canada" off-shoots that the government so desperately wants.