Finance Minister Jim Flaherty speaks to the Chamber of Commerce in his hometown of Whitby, Ont. at lunch today, officially kicking off the budget “sell”. Flaherty, John Baird, Lisa Raitt, Jim Prentice and other cabinet ministers will be dispatched across the country to tell you how great the budget it is. You may very well agree with them; you may have some points to ponder.
In any event, you are likely to hear politicians from each side advance a series of numbers from the budget that best supports their individual position.
As you hear the spin war begin about the size of the deficit and the size of the stimulus package, the following might be helpful. Much of the following is based on the analysis of the budget by the economists at BMO Capital Markets [PDF]. That bank's chief economist, Sherry Cooper, and its deputy chief economist, Doug Porter, were among the 40 or so reporters, editors and experts that Canwest News Service had in the budget lockup yesterday and we very much appreciated their advice and counsel.
The Deficit:
- For the fiscal year beginning on April 1 2009 and ending March 31 2010 (This is known as Fiscal 2010 or FY2010), the deficit is $34 billion.
- For the following fiscal year, it is $30 billion.
- *** Buried news of the day*** The government will finish the current fiscal year (April 1, 2008 to March 31, 2009) in a deficit. If you've got a copy of the Budget Plan [PDF]it's all right there in the chart on page 217. That's the first time any official government document has concluded that this year, not next year, is the first deficit year since 1998. Finance officials estimate Ottawa will finish in the red by about $1.1 billion this year.
- If the government had done nothing yesterday, the so-called “status quo” deficit before the Flaherty cut a single tax or spent a dime, is about $15 billion for fiscal 2010, higher than expected.
How big is the stimulus package?
- The economists at BMO Nesbitt Burns estimate that the size of the stimulus package is just $33.5 billion over two years. That's $18 billion this year and $15.5 billion.
- All G20 countries were to introduce a stimulus package worth 2 per cent of GDP. Two per cent of Canada's GDP is about $32 billion.
- The government estimates that, because of the $33.5 billion stimulus package, the GDP will grow this year by an extra 1.2 per cent.
- The government believes their plan will create 142,000 new jobs by the end of the year.
- Porter estimates that the tax cuts in the stimulus plan are worth $6 billion this year and the new spending in the stimulus plan accounts for $17 billion this year.