Federal Budget Outlines Financial and Political Priorities
April 8, 2023
Federal government outlines priorities in the 2023 budget, writes Peter Watson.
This budget is a fiscal and political balancing act between conflicting priorities. There are many worthy causes that require funding, but after pandemic induced spending over the last few years the government must control spending.
The liberals have a minority government, so they needed support elsewhere to prevent a budget nonconfidence vote that would trigger an election. The NDP has supported the government since the last election and after the budget was released its leader quickly announced the NDP would continue that support.
Significant spending was announced for dental care which was an initial condition of political support by the NDP. Lower income Canadians will receive funds to be used for relief from escalating food costs, although there is no requirement on how these funds be spent.
Money is being invested in the green economy. This is necessary to reduce pollution and remain competitive with financial incentives the United States introduced last year.
The alternative minimum tax that was introduced in 1986 will be adjusted. The minimum tax for those with a high income will increase.
Like many budgets, this one pushed up spending to appeal to as many Canadians as possible while hoping that eventually prosperity would allow the government to eliminate annual deficits and start reducing our national debt.
This budget has a problem. There are financial risks. The original idea of our economy having a “soft landing” of a gentle recession is now looking more like a more significant recession.
Economically, we are on thin ice. Canada is limited in the additional financial stress we can endure.
Many admirable initiatives were introduced in the budget. The question is can we afford them. Eventually, continued deficits will backfire and the pain will be felt by us all.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com