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		Budget 2012 May 2012 Published 10 times per year, Policy Options is Canada's premier public policy magazine. Its goal is to encourage an informed debate on the important public policy issues of today and tomorrow.
	Editor's note Interview with the Editor L. Ian MacDonald ON THE COVER A conversation with the Finance MinisterFinance Minister Jim Flaherty sat down with Policy Options Editor L. Ian MacDonald to discuss his seventh budget. He describes it as both moderate and transformational. For the first time, he said, he was able to look down the road as Finance Minister in a majority government without worrying whether the budget would trigger the defeat of the government in a minority House. Jim Flaherty Harper’s magical message machine (a.k.a., Budget 2012)Summary not available Todd Hirsch Fiscal austerity and economic renewalBudget making is complex, especially in the current changing global climate. Good fiscal planning requires a longer term lens to today’s challenges and opportunities, writes Kevin Lynch, BMO Financial Group vice-chair, with a focus on long term fiscal stability and sustainability, policy coordination and enhancing potential growth. Lynch argues that “the 2012 Budget appropriately returns to a balance between short term exigencies and longer term structural challenges” but that significant economic renewal over the long-term will necessitate ongoing focus and diligent follow through in subsequent budgets. Kevin Lynch The making of a federal budget: Pressures on the finance ministerThis article outlines the pressures experienced by the minister of finance in the preparation of a budget. Pressures from inside and outside the system as well as revenue, expenditure, political and policy pressures are discussed. Three budgets are used as examples to explain how these pressures come about and are dealt with by the minister. The 2006 budget, developed in a time of surplus, fulfilled many election platform promises. The 2009 stimulus budget, created during a time of economic crisis, was designed to put Canadians to work while avoiding a structural deficit. The 2012 budget starts to move Canada back to balance, addressing restraint while at the same time stimulating economic growth. Bruce Carson Seniors and the 2012 federal budgetThe increase in the age of eligibility from 65 to 67 years for claiming Old Age Security and the Guaranteed Income Supplement is the hallmark change introduced in the federal 2012 budget. Many other countries have adopted similar rules to reduce long-run fiscal costs and encourage later retirement to deal with looming labour shortages. It will likely be the first of many steps to deal with demographic pressures. Jack M. Mintz The budget and the provinces: Toward a national blueprintReading the federal budget you get the sense Canada is a unitary state, suggest Thomas Courchene and Tyler Meredith. While Ottawa is well on the way to setting its fiscal house in order, the same is not true at the provincial level. On a number of fronts — from pensions to equalization — the authors see turbulence ahead in the economic and fiscal union, with potentially significant consequences for the country. The budget, they argue, should provide a national blueprint. Thomas J. Courchene and Tyler Meredith Economic Action Plan 2012 to find savings, transform how government serves CanadiansTony Clement, President of the Treasury Board, who led the government-wide savings review, looks at the work that went into finding a way to balance the budget by 2015t — all this without raising taxes or cutting transfer payments to provinces. He explains why, in his view, Budget 2012 attends to the priorities of Canadians and will allow Canada to remain a leader on the world’s economic stage. Tony Clement Bold action with an aging tool kit: Toward a true Canadian innovation strategySwift response to some of the “Jenkins Panel” recommendations on programs that support business innovation was a hallmark of the recent federal budget. There are also hints at more to come for the innovation ecosystem in Canada. Operational and governance changes are more crucial than ever before to modernize the way government supports the needs of Canada’s high-growth firms. Canada needs an Innovation Strategy in addition to its existing Science and Technology Strategy. Nobina Robinson Backing into the “back-office” budgetThe communications in support of Budget 2012 confounded media, observers and, quietly, even many Conservatives. Expectations of a sweeping assault on public finances that would reshape the nation into a more Conservative contour were allowed to grow for weeks. Eventually, a contradictory message was unrolled, promising both fiscal austerity and economic expansion. Predictably, this generated confusion in the media coverage and even in public attitudes. But apart from simple sloppiness, there were rational reasons for this inconsistent communications effort. Scott Reid Canada does not require fiscal stimulusDuring the economic downturn of 2008-09, the Canadian government followed, rightfully, a stimulative fiscal policy that helped our economy to move in a recovery path. Since then, the European debt crisis has created deep uncertainty in the global financial system. This has, indeed, dampened Canada’s economic growth and job creation. In this environment, many observers may call for a continued stimulation. However, the author argues any fiscal stimulus will fail to uplift the economy or create employment due to limitations in various macroeconomic fundamentals. Al Chatterjee The road to powerThe NDP had a choice to make at its leadership convention, between a proven performer, Thomas Mulcair, who was also known as an attack dog and who came to the party late in life, and a lifetime NDP insider and brilliant backroom strategist, Brian Topp, who was the clear choice of the party establishment but lacked a seat in the House and had trouble developing a retail game. In the end, by a clear margin of 57 to 43 percent on the fourth ballot, the NDP chose Mulcair. Contributing Writer Robin Sears takes us inside the leadership campaign. Robin V. Sears PLUS What I saw at the NDP conventionTo get a view of the NDP convention through another prism, we asked Liberal Party activist Andrew Balfour to give us his impressions of the third major party convention he had attended in the last year — the Conservative and Liberal conventions as well as the NDP’s. Andrew Balfour A basic annual income for the neurodevelopmentally disabled in CanadaFrom the University of Calgary, the authors compare the characteristics, labour force outcomes and incomes of the 5 percent of Canadians with a spectrum of brain and neurological conditions (neuro-developmental disabilities) with those of a broad classification of physically disabled and nondisabled Canadians. These simple descriptive statistics show the dire need for something more than what governments have been doing to meet the needs of a particularly disadvantaged group of adult Canadians. The authors show that the costs of providing a basic annual income for Canadians with a neuro-developmental disability equal to that provided to Canadians 65 and over would increase annual total government expenditures by only 1 percent. Margaret Clarke, Herb Emery and Ron Kneebone Nunavut, Greenland and the politics of resource revenuesA cynic’s assessment of Ottawa’s approach to sharing natural resource revenues with its three northern territories might go like this: Yukon got the least attractive deal, the Northwest Territories got a much better one — but Greenland got the best deal of all. Left on the sidelines, Nunavut has had to content itself with an advance look at the terms on offer, including the comparatively generous terms Greenland obtained from Denmark. Should Nunavut try to match Greenland’s revenue-sharing deal for itself? Anthony Speca Le débat sur les droits de scolarité au Québec : les progressistes font-ils fausse route ?The Quebec government has enacted an increase in university tuition fees of 75 percent over five years. The left in Quebec is largely in favour of freezing the fees. However, given the precariousness of Quebec’s public finances, there are specifically progressive reasons to accept an increase, under certain conditions. Jocelyn Maclure argues that an increase in tuition fees that is attenuated by a larger than planned reinvestment in the student bursary program would be a targeted and effective way to accentuate the progressiveness of Quebec’s tax system. Jocelyn Maclure Pierre Juneau: A giant of Canadian broadcasting and cultural policyRecent obituaries have renewed attention on Pierre Juneau’s key role in shaping Canada’s broadcasting system, such as its rules for Canadian content, ownership and control, and its mix of public and private operators. But commentaries have largely ignored a unique set of factors in his success, notably his strong social- Catholic values, expert knowledge, political relationships, and a public mood of national optimism. Juneau emphasized the centrality of culture and communications for all citizens and their shared identity. Will a policy and administrative leader of his calibre emerge again on the contemporary stage? Victor Rabinovitch Le vent tourneSummary not available Alain Noël

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