So, next Tuesday, federal Finance Minister Bill Morneau will announce the new Liberal government’s first budget. What should the PSE community expect?
Well, it’s going to be a deficit budget, we know that much. Underlying weakness in the economy means that tax receipts are lower than expected, and the projection for a balanced budget in 2016-2017 that the Tories presented last year has now turned into a $12 billion deficit, even before an extra dollar was spent. They’ll inflate that by another $6 billion in “prudence factors/contingency funds” (this will make subsequent recovery look better in, say, 2019-2020). Next, add in the $10 billion in additional spending that was promised in the election, which they seem unlikely to walk back. Then, add a couple of extra billion because certain promises weren’t costed accurately, and you’re pretty close to $30 billion in the red.
How much of that will end up heading towards PSE? If you simply look at the Liberal manifesto (which I dissected here and here), pretty much nothing. There will be some big, welcome changes to student aid worth noting – less tax credits, more grants, better repayment assistance – but the reform is specifically designed to be cost-neutral. The manifesto promised exactly $0 new dollars to the granting councils, and a bit of money on commercialization, which would go to incubators, etc., rather than universities. Transfers to provinces will go up exactly as they would have done under the Tories (and that was baked-in several years ago, so it’s not really a “new” expenditure). Similarly, money for some programs like the Canada First Research Excellence Fund were projected to go up over time anyway – don’t be fooled by announcements of increases from the new government.
Where universities and colleges might be able to cash in on the Liberal Manifesto is in construction. The new government has promised new infrastructure spending, and it’s possible we could see a carve-out of some of this money for “knowledge infrastructure”, in much the same way the Tories did with the KIP program back in 2009.
The real question is whether there is anything in there for universities and colleges if the Liberals decide – in the name of stimulus spending – to ramp up the deficit beyond $30 billion. I don’t have a good sense of how likely this is, but there have certainly been some hints that the government may go this route. And if this happens, all bets are off. They won’t be constrained by the manifesto, and can do what they like. In that case, we may see some larger investments in certain areas (personally, I’d be surprised if they didn’t find money to boost granting council spending by at least inflation, but that’s just a hunch).
However, I think we are unlikely to see two things. First, we won’t see any new programs that weren’t clearly signaled in the manifesto (like the stuff around commercialization). The new government simply hasn’t had time to think about more than fulfilling what they promised in the fall. Second, I think we’re unlikely to see much of what I have called the “Fourth granting council” announcements. Under the Harper government, we regularly saw one-off funding for specific scientific projects outside the tri-council structure. My guess is we won’t see that on Tuesday.
If it is a minimal budget, it will be interesting to see how the PSE community reacts. I mean, the Harper government usually received pot-shots even when it *was* investing in the area (see here for a recap, if you’ve forgotten). Will the Liberals be given similar treatment? I wonder.