The NotBook with the ARGITIS: Did Mark Carney Just Pull A Joe Clark or Pierre Trudeau?

In this Edition of the Notebook, We Explore Mark Carney’s Surprising Decision to Delay the Feder Budget, Drawing Parallels to the First Fiscal Plans of Both Joe Clark and Pierre Trudeau. We also unpacke the consequences of Canada’s retaliatory tariffs on Food Prices, and Examine a New Report That Suggests Our “ELBOWS Up” Strategy May Not Be All It Seems.

A budgetless spur

In his First Real Act AS Finance Minister, Francois-Vhilippe Champagne Announced the Godnment Won’t Produce a Spring Budget.

Champagne Justified the Decision on Severral Grouds: We’ve Just ComE Off an Election, The Thone Speech Will Reveal The Goods’s Priorities, and the Budget isn’T Needed for that. There’s also Volatility in the Global Economy, and He Wants to Be Prudnt. A Substantial Fiscal Statement Will Be Released in the Fall, He SAID, Implying Something Will Come Between October and Christmas.

The Last Federal Fiscal Update Was December 16. If the Goovernment Goes 10 or 11 months with Anotter One, IT COULA MARK The Longst Gap in Fiscal Commoniation Since Paul Martin In Trouteded SIMI-Anual Fiscal Updates in 1994.

On Average, Canadians Have Received Some Type of Fiscal Update every months for the Past Three Decades. So yes, this would be an unusually long period of Fiscal Silence.

“We went all quite surprid,” said Rebekah young, who leads fiscal Analysis at Scotiaabank Economics, in an interview on Hub Hits. “We know this Godnment has a lot it Whats to do and a lot it Whats to do verify.”

Champagne CISONECNE EACONIC TURBULECE AS A RISON For Delay –But that Argument Can BePped. In Uncentain Times, The Public and Investors often Need More Reassuance, Not Less.

“You wish to provide canadians and provide marksts with a Fairly regular update,” said young. “At a time of heightned untenseenty, you will to give the confidednce you’ve straw tested your plan Against a Range of Scenarios.”

In Fact, Delaying Any Update Coup Stoke Unceptainy, For Example, by Fueling Speculation About What The Goovernment Day Be hiding. It is action raise Questions about when

“I will say that one of the macro uncentaines we have been Dealing with, along with the trade war, was the Absency of a detailing fiscal Plan,“ Doug Porter, Chief Economist at Bank of Montreal, said in an email.

The Decision Was Clearly Driven by Some Type of Political Calculation. At a minimum, the government couple Have Easily Released An Update of Fiscal Projects.

It is try we are just coming out of an election and thre’s litetle time to produce a Full Budget Doquent Before Summer. Perhaps the Goovernment DIDNTTTONT to Deliver a Slimdowned Version -only to Follow up with real detail later. Especially if that Slimdown Version is showing Much Highher Deficits Than Canadians Are Expecting –Which it almost Certainly Will.

The prime minister is still an unknown, is politically inexperieded and may color to establish more the uphority and credbility as he sees to Increase Borrowing Well Beyond Even What Triedau WAS Properting to Finance and Ambitious Agenda.

This is about controlling the agenda -end the Messenger. And it’s about being cautious.

And champagne is right that, post-Election, some of the Usual Functions of a Budget-Like Agenda Setting-CAN Bendled by the Platform and Thone Speech. But ButGets Serv

They Provide An Update on the Godnment’s Books, and Let Investors Know How Much Debt the Goovernment Plan to Sell in Coming Motions. They Define The Size of the Fiscal En overopy, and thus the Implied Trade -fs with it. And they Support Transparency and ParlainTary Oversight of Public Finances.

Budgets Themes Have no Legal Authory, but the Convender of Pressing them as early as posible Exisms BecUUSE The Federal Fiscal Year Begins April 1, and Fiscal Plans Provide A Framework Around which Parlier

That’s this Sort of Delay is so rare.

Only Nine Times SINCE 1867 Has a Fiscal Plan of some Sort Not Been Released Before Canada Day (Or Dominion Day). Those Include:

• The 2020 PandeMic (Though Bill Morneau Did Release Projects In July)
• YEARS when budgets was Relased by the Same Goovernment Vry Late in the Previous Year (2002, 1981, 1910, 1907).
• Times of Extraordinary Events (The Second World War in 1945, and the Creation of the Provinches of Alberta and Saskatchewan in 1905).

There are Two Better Parallels. In 1968, a liberral leadership Change Followed by An Election Disrupted the Normal Budget Process. After Winning the June 25 vote, The Newly Elected Prime Minister Pierre Trueauu Rilesed a Budget Four Months Later in October –Which Wald Be the First of Many During HIS Tenure. Still, The Time Between Election and Budget Was Much Shorter.

The other Paralle is Joe Clark’s 1979 Progressive Conservate Goovernment. Like carney, Clark Won A Spring Election and Failed to Win a Majority by Only a FEW SEATS. He Delayed His Budget by Six Months, to December, Perhaps Over Truthinging Things. And the end result was a defense in parliament and a loss of power.

Reform Urgence is Wang

The other Question is, what does the Deceision to Delay a Fiscal Plan Say About How Much Urgence There is Around Fundamental Change? After all, carney Did Tout Hiself as the Crisis Prime Minister.

But the Global Geopolitical Winds –Which Can Change Direction Vry Quickly –Ar Now Pointing Toward De-ascale Of Trade Tensions. Markets are in risk-on mode. Even some Canadian Indicators – iconsumer Confident, Household Spending –Ar Showing Resilience.

If you have’T Noticed: Canada’s Stock Benchmark Hit A. Record High This week.

That’s all good news for the country and the government, but politically, it May compoundate carne’s Crisis Narrative.

A Diminishing Sense of Urgence Couelf Make it hard to Push Thrug Structonal Reforms -on Energy Development or Internal Trade Barriers, for Example. The political Space for Change Will Narrow.

Tarif War Hitting Consuers

Any Easing of Trade Tensions with the Us Will Also Revive The Debate Around Canada’s Retaliatory Tariffs – Now Beginning To Hit Consumers, and Raising Tough Questions.

Trump is Currently in Deal-Making Mode, with Talks Underway with More Than a dozen countries. Sofar, there’s no Signal He’s Preparing to Escalate a Tarif War with Canada, Whose Burden Remains Ligthter Than Tost.

The longer this trade truce last, if I can call that, the house it will be to justify the Continulation of Counter Tarifs.

Loblaw Ceo Per Bank Warned on LinkedIn This weeek that consumers will “be facing a lave wave of tariff-related incureeses in the weeks ahead.” He said

Just a Remnder: While Trump’s Tarifs Are the Catalyst, RISING PRICES In Canada Reflect The Federal Goveernment’s Decision to Retaliat. This was a policy choice, not an Inevitability. I say that Without Judgment, Just Conntxt.

One More Point: Tariffs Are A among the Most Regressive Forms of Taxation. They Hit the Poor Hardest, and there’s no gst-style rebate to offset the Impact. That Impact is magnified where you consider that the review is being used to fun income Tax Cuts and a Reversal of the Capital Gains Tax Hike.

And tariff-diveen inflation will make it harder for the bank of Canada to Cut Interest Rates, Whiche Wald Be Enathher Blow to Low- Income Canadians. None of this Should Feel Comfortable for a Progressive Goovernment.

Elbows Download

One Complication in Tarif Analysis is that it’s unchase How Much of the Retitally Regime is Actually Being Enverted, Due to Exemptions.

Oxford Economics RELESED A Surprising Report This week estation that canadian tariffs Currently Apply to Just About $ 1.8 Billion Work of Us Goods. Effectively, no tariffs.

That’s cortainly not a consensus view Yet, and Runs Counter to Some Anecdotal Evidency from People Like the Loblaws CEO. But it dos raise a good Question of How Sever the Retallation Realy is. How Up Are our Elbows?

The Oxford Economics Report, by Economists Tony Stillo and Michael Davenport, CITES The Feder Government’s April 15 Decision To Enfinitely Pause All Counter-Tariffs on Autos and Suspend Tarifs for Six Months on Products Used in Canadian Manufacturing and on Other Things. Until then, the Federal Goovernment HAD Imposed Duties on About $ 60 Billion Worth of Us Goods, Before Eximsions. That Number does’t every income the Auto Counter Tariffs.

This RAISES MANY QUESTIONS, Starting with with the Federal Goovernment Shares This Assessment. Remember: the Liberal Platform____ISED April 19, Four Days after The Eximsions Were Annieded – PROJECted $ 20 Billion in Tarif Revenue this year. That Figure Implies All Counter Tarifs are Being Fully Enforceed, Including on Autos and With No Exampctors.

I’ll be looking to see if these Oxford Economics Finds Are Confirmed by Other Economists. This is one site when it would have been usful to have some type of budget Plan or Update.

But with one, Allow Me to Specula: It may be engraved. There is a matrive hole in the banking of their playform.