Avoiding a Statement of Contradiction
Effective communication requires clarity of purpose. For the Fall Economic Statement to land well with voters the government must pick a lane - and quickly.
Typically, the question facing a government heading into a Fall Economic Statement (FES) is one of scale – whether to make it a ‘mini budget’ or a ‘fiscal update’. This year, the question facing the government is one of scope – whether to show fiscal prudence or continue with historic investments. With recent actions suggesting the government would prefer both, tomorrow’s fall statement risks becoming one of contradiction, at a time they can least afford it.
The government’s most recent attempt at fiscal prudence has been led by Treasury Board President Anita Anand, brandishing newly sharpened government cost-cutting scissors. To date, Minister Anand has identified $500 million in yearly savings, with the goal of finding $15 billion over five years. In a vacuum, that’s a lot of money. Next to $500 billion in yearly spending? A drop in the ocean. Which begs the question – why bother? If fiscal prudence is what you seek, ditch the half-hearted exercise, and get serious.
The FES is also likely to show a slowing economy. And while the r-word is unlikely to make an appearance, the fiscal outlook is expected to be worse than Budget 2023 projections. This reduced fiscal room will, theoretically, make it more challenging for the government to live up to its own self-imposed FES objectives of creating good jobs, building more homes, and making life more affordable for Canadians. But the lack of fiscal room was easily predicted. Now, the government has boxed itself in with ambitious goals that require significant funding at a time when the economy is contracting, and the government is cutting.
Take the recent announcement supporting a major lithium-ion battery cell manufacturing facility in Maple Ridge, British Columbia. The new facility will create and secure 450 jobs, hugely important for the local community and to British Columbia’s role in Canada’s world-leading battery supply chain. But at a cost to federal coffers of over $200 million, not to mention $80 million from the province, one wonders how the government can claim fiscal prudence with a straight face.
Some say this is the cost of doing business these days, post Inflation Reduction Act. For Canada to compete on the global stage, attract companies building the future economy, and secure the talent to staff it, Canada must make outsized investments. Indeed, this is the argument the government has been making in the face of an Opposition (and at times central bank) message of economic discipline.
But if that’s the case, the government should stick to that line instead of batting their eyes at fiscal prudence. That flirtation only undermines its own argument. This in tun makes it harder to cut through the noise of today’s media environment where the importance of clarity has only been heightened during two wars and other international tussles Canada finds itself in the middle of.
The government must decide whether it wants to be seen as a responsible fiscal steward responding to an uncertain global economy and slow domestic growth, or there to support Canadians no matter what the cost. To have it both ways is not only hard to pull off, but risks coming across as indecisive and unsure while watering down their chances of landing their political narrative with voters.
The push and pull between fiscal prudence and spending largesse is a common struggle for government’s, with finance minister’s seeking prudence and Prime Minister’s looking to spend. Recall previous FinMin/PM relationships, and how those ended, to see how ugly these fights can get. And while the current iteration of the two offices appears to be one of unity, signs suggesting the FES was delayed at the last moment, raises questions as to whether everyone is on the same page.
In years past, government’s look to schedule the FES prior to a Parliamentary break week to give MPs something to talk about when back in their ridings. Instead, the government will now deliver the FES at the start of what is known as ‘silly season’ – the long, non-stop run up to the Christmas break – missing out on the chance to connect with constituents and talk up government plans. That is a politically costly, missed opportunity for a government in need of a win.
The theory is given further credence when one looks at the announcements the government made last week. Massive housing announcements were made right across the country, in politically important regions like Atlantic Canada and, interestingly, Toronto. They came fast and furious, and one could easily see them fitting into a larger housing narrative found in a FES. Unfortunately for the government, and likely because of the lack of FES-narrative wrapping, there was little to no news coverage of the announcements. Here again is a missed opportunity by the government, and an especially costly one considering the billion-dollar plus price tag and how important the housing issue is to voters.
Which leaves us back where we started – what is the government’s message tomorrow and can it back it up? One thought is PMO decided to get the good news out in the days leading up to the FES knowing the worsening fiscal picture would cloud out any good news. And normally that would be fine if the good news was covered. But international events, and the Prime Minister’s own statements, kept getting in the way.
No matter which road the government chooses, frugality or spending, they will have their critics. But the last thing this government can afford heading into tomorrow’s FES is a muddled communications approach. It’s time for them to pick a lane and own it.