The federal budget missed an opportunity to renew Canada’s federation
Trevor Tombe is a professor of economics at the University of Calgary. Daniel Béland is director of the McGill Institute for the Study of Canada and the James McGill Professor at the Department of Political Science at McGill University. Both are members of theCanada is among the most decentralized countries on earth, and so our federation is necessarily at the heart of any effort to secure our future prosperity.
While it was rich in new spending and taxation initiatives, the budget does very little to renew our federation and sustainably address important, long-run challenges. And, rather than work with provinces on shared priorities, the budget appears largely indifferent to provincial demands.To be sure, the budget does touch on key issues relevant to our federation, such as housing and health care. Helping boost the supply of new homes and supporting first-time buyers may well be warranted.
Some pressures are fundamental, resulting from external sources. These include climate change, an energy transition that will alter the global demand for fossil fuels, rising economic volatility and a rapidly aging population. The budget also ignores rising levels of provincial debt, which raises long-term financial sustainability concerns. Recent moves by the federal government – accelerated by the pandemic and continued in this budget – to increase involvement in areas traditionally under provincial jurisdiction that also require provincial contributions may be adding to the pressure.
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