As Finance Minister Jim Flaherty sets out on his cross-country tour to sell the budget, he realizes he faces a daunting task in reassuring Canadians all is well financially.
At the same time he is preparing them for what’s going to be some bitter medicine down the road.
Following the release of the federal budget last week, most financial experts appear willing to give the government some time to continue working through the final stages of a global recession.
As the recession began impacting the national economy a year or so ago, Flaherty and the federal Conservatives didn’t panic. They continued to show calm and patience while their counterparts in other countries – most notably in the United States – went into full panic.
It was that atmosphere and some of the differences in our financial system that helped this country escape the recession in better condition than our American cousins. That’s not to say there was no impact in this country, but it wasn't as deep and some of that credit has to go to government as well as to business and consumers themselves.
There are still some troubling areas. There are too many Canadians walking around with huge debts, sitting on a bubble that may be about to burst. There’s also the deficit. With stimulus spending, it has been allowed to grow to a size not seen in nearly 20 years. Unless it’s well managed we could be headed for a financial catastrophe.
As much as Flaherty may try to avoid raising taxes while maintaining modest spending increases, it’s going to become increasingly difficult to do. That’s why it’s important for Canadians to understand and accept that the gravy train that was recession-busting spending is about to an end.
Let’s just hope we don’t see a return to the 1990s when we were fighting for our lives financially and the deficit was used as an excuse to cut programs and services to the bone.