Canada’s 2016 Budget - A Road Map for the Future ?

Rivers 100x100By Ray Rivers

March 25, 2016


If you want to make money, you have to spend money. And that pretty well sums up the 2016 federal budget – it’s about re-investing in Canada and Canadians. Hardly revolutionary, this economic plan is corrective and moderate in its measures – a first step in the right direction.

R&D spending

While outdated the graphic does show the impact research and development spending has on an economy.

There is investment in transportation infrastructure, something which will improve our productivity, particularly in built-up areas like the GTA. There is some modest spending to improve access to education, particularly for the underprivileged. And there is a huge push to restore levels of R&D, innovation and science, which had been allowed to lapse over the last decade.

Changes to the income tax code, already in the works, modestly favour the middle class over the wealthy. This is more than an attempt to arrest and correct the growing spread between the rich and the poor; this is sound economic policy. It’s called the marginal propensity to consume – redistributing income from the wealthy increases domestic spending, driving consumption and investment, and consequently economic growth.

There is no question of the social dimension of this budget, which invests heavily in people, particularly the disadvantaged. Veterans complaints about neglect are addressed. More child care money will be going to the lower income parents who really need it. Canada’s first nations are given the opportunity to catch up to the rest of us. And age of seniority has been rolled back to 65, at the same time as greater assistance is provided to those seniors in need.

Energy east pipeline map

Perhaps the bigger questions is – will the country be affected by the pipeline?

There is investment in the environment as well. So we’ll see our national environment assessment process restored. Ironically that might expedite the construction of the Energy-East pipeline, as that is a precondition for Quebec’s consent. And the Prime Minister has solidified his commitment to put climate change money on the table to help motivate Canada’s Premiers to action.

The price tag for this budget comes in at just below the thirty billion deficit that everyone was expecting. The largely muted response to the size of the deficit is the result of a government which has shown its ability to manage expectations, and, of course, the promises made during the last election. Only the interim leader of yesterday’s government couldn’t resist the temptation to dump on the budget.

30 Billion dollars is a lot of money, but even after another four years of deficit, Canada will still have the lowest debt-to-GDP ratio in the G7, and half the level of the US or the UK. Moreover, if the annual deficit projections in the budget bear out, relative debt levels will shadow the debt performance of the preceding government, making Ms. Ambrose’s complaint at best a case of the pot calling the kettle…

And not everyone will benefit from this package. New toys for the military are on the back burner, reflecting a lower immediate priority. There could have been more income re-distribution, even greater support for our cultural industries and a faster path for infrastructure development. But you can’t do everything. We also know that more money will still be needed for a new national health care charter and enhancements to the Canada Pension Plan, initiatives on a different timetable.

There are thousands of small solar panel installations like this across the province - they work very well and in many cases provide revenue for the owners.

There are thousands of small solar panel installations like this across the province – they work very well and in many cases provide revenue for the owners.

The budget represents a necessary investment to return Canada to a more balanced, engaging and innovative economy. The fossil fuel era has itself becoming fossilized. Coal has left the station and oil is following suit, being replaced everywhere by renewable energy. Those were yesterday’s ideas promoted by yesterday’s short-sighted leaders.

Canada’s future lies in its potential as a balanced diverse economy. Its strength lies more with our human than with our natural resources. This budget helps us move in that direction by promoting education, science, industry and clean energy. If you get stuck in the past you’ll miss the future.


Ray Rivers writes weekly on both federal and provincial politics, applying his more than 25 years as a federal bureaucrat to his thinking.  Rivers was a candidate for provincial office in Burlington where he ran as a Liberal against Cam Jackson in 1995, the year Mike Harris and the Common Sense Revolution swept the province. Rivers is no longer active with any political party.

Background links:

2016 Budget in Full



More Deficit


More Criticism


An Easy Sell

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2 comments to Canada’s 2016 Budget – A Road Map for the Future ?

  • Nolan Julet

    I was disappointed that the focus was on expenditures and not on revenue. However, it will be remembered favourably for years to come because of its concrete plans to finance a new relationship with Canadian Indigenous Peoples. Long overdue!

  • Marco Pardi

    Say, would you guys be interested in taking over a country just to the South of you? It would be greatly appreciated.