Federal budget a political sales pitch
April 30, 2015
The ugly side of politics was on full display last week in the form of the federal budget. Canadians were not sure if it was a financial document or a sales pitch for the anticipated federal election anticipated this October.
The lightning rod of this budget was the anticipated increase in the annual contribution to the Tax-Free Savings Account. TFSAs where introduced in 2009 and the original $5,000 contribution limit was later increased to $5,500.
The commitment made by the government to doubling the TFSA limit was dependent on achieving a balanced budget. A balanced budget means the government would take in more revenue then it spends.
This pledge was repeated last Tuesday when Finance Minister Joe Oliver presented the budget in Parliament. He proudly said: “A promise made, a promise kept. This budget is written in black ink.”
The budget showed the government had balanced the books and therefore would double the annual contribution limit of TFSAs.
However, the budget was only balanced after some fancy footwork with simple arithmetic. The projected budget surplus is $1.4-billion.
Past budgets starting in 2012 included a contingency fund of $3-billion. This budget reduced that number to only $1-billion.
So the statement of achieving their target to balance the budget was technically true but a footnote to that claim is the budget was not balanced. Rather it was a change in how funds are allocated that allowed the government to “balance the budget.”
If the rest of the population could take such liberty with the way we interpret numbers we would all have much better golf scores and our children would have better marks at school.
If the normal contingency fund were maintained the budget would not have been balanced. Welcome to the world of politics.
The Conservative government has consistently promoted their ability to be the best fiscal managers of our country during these tough for economic times. They needed to continue to suggest that ability and needed to balance the books as promised.
In the world of business there are some things that are out of your control. The same applies to government. The world collapse of oil prices had a devastating effect on the financial strength of Canada.
The main reason the government could not balance the books was because of the oil collapse. A more transparent government would have acknowledged that reality and have the confidence the electorate would take that into consideration when deciding to award them another term in office.
Better to not balance the budget and communicate openly than change the way the country’s financial success is measured.
So the arithmetic and politics continue. The pre-budget TFSA contribution limit was $5,500 a year. Double that and my calculation is the new limit would be $11,000.
The new limit is only $10,000, which is not a doubling. One might argue this is only a rounding error. Our thoughts are this is much more: It is a political error and an error in judgement.
Politics means trying to convey a positive image to the voters. That’s especially true in an election year. All parties do it. Consider this to be one of the less attractive sides to the way democratic governments work.
My political wish list includes politicians from all parties to treat Canadians with more respect. To be more honest and open with the way they communicate.
Stop putting a spin on what you do and how you serve all citizens. Last week’s budget was a sales pitch. We deserve and expect better.