Manley's 2003 Budget

YOU COULDN'T BLAME John Manley for not seeing it coming. He rises in the House of Commons making like a department-store Santa handing out goodies like there's no tomorrow - yet everybody's mad at him.

Manley's 2003 Budget

YOU COULDN'T BLAME John Manley for not seeing it coming. He rises in the House of Commons making like a department-store Santa handing out goodies like there's no tomorrow - yet everybody's mad at him. City mayors fume they've been ignored, the military lobby complains of being short-changed, the slash-taxes crowd accuses him of morphing into a spendthrift Trudeau Grit, the fiscal purists wonder what happened to debt reduction, and the NDP types accuse him of stretching out social spending over three, five, even 10 years without firm guarantees future governments will follow through on his commitments. And almost everyone questions his motives - is he launching his leadership campaign, or providing Jean CHRÉTIEN with a legacy? Tory Leader Joe Clark even suggests Manley is exacting "revenge" on the behalf of his boss by "trying to limit the options Paul MARTIN might have" when he - as is likely - takes over.

The novice finance minister courted the scrutiny by tabling a budget unlike anything seen in the first nine years of the Chrétien era. In one fell swoop last week, he erased his predecessor's hallowed template for budget-making. As finance minister, Martin repeatedly underestimated growth in order to claim better-than-expected results - at first in cutting the deficit, later in posting massive surpluses. Manley, by contrast, is optimistically banking on robust economic growth of 3.2 per cent this year and 3.5 per cent next year - despite an uncertain U.S. recovery and the possibility of war with Iraq. And, unlike Martin, who used those "surprise" surpluses to pay off about $47 billion of debt, Manley leaves little room aside from the usual $3-billion contingency fund for reducing the still-gargantuan $508-billion mortgage that Ottawa took out under Pierre Trudeau and Brian Mulroney.

More critically, Manley has attempted to redress much of the hurt caused by his predecessor's fiscal zeal. That process had already begun in 2000, when Martin put in place a generous five-year tax-cut program and partially restored funding for medicare. Manley, in what may be his only chance to make a mark in Finance, has done Martin many times better - sprinkling tens of billions of dollars in additional spending on a constellation of interests and sectors. For health care, he allotted $34.8 billion over five years; for the child tax credit, $965 million more annually; to implement Kyoto, $2 billion; for the military, $800 million more in each of the next two fiscal years; for infrastructure, $3 billion over 10 years; for daycare, $935 million over five years. And so on. There is new cash for foreign aid, Aboriginal health programs, the homeless, disabled children, university research, student scholarships. Even the Rick Hansen Man in Motion Foundation gets $15 million. "They are spending on just about everything they can come up with," says Toronto-Dominion Bank economist Marc Lévesque.

Politically, Manley is doing what he thinks he must. He is satisfying the short-term needs of the two most powerful men in the government: himself and the Prime Minister. Chrétien wants his last year in office to be an activist one, after being accused of running an unimaginative, tight-fisted government that presided over the deterioration of Canada's social safety net. And Manley, if he is to run for the Liberal leadership, needs to show he can be as responsible as Martin - his budget is, after all, balanced - while exhibiting a hitherto unsuspected social conscience.

But as the criticism rained down last week, it was doubtful Manley had upped his leadership stock. Governing well requires making choices, his critics argue, and by spreading the gifts too liberally, the government may have missed a historic opportunity in splendid economic times to address Canada's most pressing problems - be it child poverty, urban renewal or defence - in a manner that would make a real difference.

And the spending spree may come back to haunt future governments. "One of the reasons Canada is looking so good now is because of five, six or seven years of the government keeping its nose to the grindstone," Thomas d'Aquino, head of the Canadian Council of Chief Executives, points out. "All of that could come to an end fairly quickly if you consider some apocalyptic scenarios, which I don't think can be ruled out." That would likely leave it up to Martin to once again clean up the mess. No one is cynical enough to believe the Chrétien-Martin family feud has escalated to such a level. But it likely crossed more than a few minds last week as it became clear just how many promises were being made today that someone else may have to break tomorrow.

See also BUDGETARY PROCESS; PUBLIC DEBT.

Maclean's March 3, 2003