How to read a budget

By Nick Taylor-Vaisey and Maura Forrest

Presented by Innovative Medicines Canada

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Thanks for reading Ottawa Playbook. I'm your host, Nick Taylor-Vaisey, with Maura Forrest. Today, we're reading and re-reading and annotating CHRYSTIA FREELAND's federal budget at a lockup in the Westin Hotel. Watch for POLITICO coverage this afternoon. Plus, there's drama in the world of defense procurement. And PHILIPPE J. FOURNIER reports on the mood of the nation.

DRIP, DRIP, DRIP — Reuters took the call on a tactical budget leak that'll put a smile on the face of heavy carbon emitters. OK, also think tanks like the Canadian Climate Institute. But definitely polluters like the Pathways Alliance of oilsands giants, too.

Finance Minister CHRYSTIA FREELAND tables her third budget today, and Reuters reports it'll include a measure aimed at incentivizing companies to invest in low-carbon technology.

Known in the jargon as "carbon contracts for difference," the measure would lock in the value of tradable carbon credits that companies can earn by cutting emissions. If the value of credits falls below an agreed-upon carbon price, the government would cover the difference when the company trades the credit.

The result is music to the ears of everybody in the decarbonization game: certainty. Expect press releases from all corners that applaud the move (even if the stakeholders disagree about various other budgetary measures).

— We know it's true: Because Playbook confirmed the scoop with a senior government source familiar with the budget document.

— Wait, there's more: Bloomberg News reported a treasure trove of budget details late Monday evening: Trudeau to lean on carbon capture in green-subsidy race with U.S.

On March 9, Playbook detailed the oil and gas industry's heavy lobbying of the Department of Finance's top tax policy bureaucrat. The patch wanted a long-planned carbon capture and storage investment tax credit to cover operating expenditures, not just capital costs.

Operating costs won't be covered in the budget's incentives, according to Bloomberg's "people familiar with the document."

— Wait, there's even more: The Globe and Mail reported Monday the budget aims "to save about C$7 billion over five years through cuts to federal travel and reduced outsourcing, with a particular focus on using fewer management consultants." The source: "a senior government official."

— And more: Tonda MacCharles reports this morning that a one-time $500 top-up to a rental housing benefit that was brought in last fall will not be renewed.

— Mum's the word: Journalists sign an undertaking that promises not to break the budget embargo until the finance minister rises in the House. The punishment is potential banishment from future lockups for the journo and/or their outlet.

Rest assured the POLITICO Ottawa bureau will be there, but what's left to leak, anyway?

FREELAND'S INDEX — As we save countless PDFs and spreadsheets to our laptops in anticipation of several WiFi-less hours behind closed doors in the lockup, we're consulting key metrics that paint a picture of Liberal fiscal planning.

Here are some of the numbers we've jotted down in advance:

C$4.5 billion: The projected budget surplus in 2027–28, per Freeland's November fiscal update.

C$8.3 billion: The projected budget deficit in 2027–28, according to a downside scenario in the same document.

0.7 percent: Canadian real GDP growth for 2023, per Scotiabank this month.

42.2 percent: The projected debt-to-GDP ratio for 2023-24, per the fiscal update.

37.3 percent: The projected debt-to-GDP ratio for 2027-28 in the same document. (All eyes will be on the government's updated projections.)

5.2 percent: The annual inflation rate in February 2023.

3.7 percent: The annual inflation rate for 2023, per the Parliamentary Budget Officer.

88, 85: The price, in U.S. dollars, of West Texas Intermediate crude oil in 2023 and 2024, per the fiscal update.

78, 73: The price, in U.S. dollars, of West Texas Intermediate crude oil in 2023 and 2024, per the PBO.

C$816,720: The average price of a home in Canada, per the Canadian Real Estate Association in March 2022.

C$662,437: The average price of a home in Canada, per the Canadian Real Estate Association in February 2023.

2: Number of budgets until 2025, following today's tabling

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A message from Innovative Medicines Canada:

Canada’s vaccine strategy was one of the most effective in the world. Historic co-operation between pharmaceutical industry and government led to one of the fastest rollouts of vaccines, saving Canadians over $30 billion. This wasn’t an accident. With so much uncertainty looming over Canadians right now, knowing how to protect yourself from illness should never be a concern. Take a look at how we’re working with governments and stakeholders to protect Canadians.

— Prime Minister JUSTIN TRUDEAU is in Ottawa. He'll chair a Cabinet meeting at 10:30 a.m., and then cede the day to his finance minister.

— Deputy PM CHRYSTIA FREELAND will attend Cabinet. She'll pose for photos with the PM at about 3:50 p.m., and table her budget in the House at 4-ish.

— As hundreds of reporters, lobbyists and economists are ushered into budget lockups, the House will debate Bill C-27. Some stakeholders are hoping the privacy bill is expedited.

4:45 p.m. Tory leader PIERRE POILIEVRE and his finance critic, JASRAJ SINGH HALLAN, will respond to the budget in the House of Commons foyer.

TELL US WHAT YOU KNOW — We welcome your tips and intel. What are you hearing that you need Playbook readers to know? Send details.

HOW TO READ A BUDGET — No two budget devourers are exactly alike, so we canvassed a group of them on how they most efficiently consume the document.

MATTHEW GREEN, NDP MP for Hamilton Centre: "The first thing I do with an electronic copy is to search for any mention of my riding of Hamilton Centre to see if there are any specifically targeted investments being made that I’ve advocated for. This year I will also be keying in on timelines and investments in housing, dental care and healthcare."

STEVIE O'BRIEN, veteran Hill staffer and former chief of staff to Anita Anand: "The first thing I do is go through the Table of Contents and note the sections I think may impact the department, the minister’s riding, or be of personal interest to the minister. If I have an electronic copy, I would then use the search function to look for keywords."

KIAVASH NAJAFI, policy/comms at the Professional Institute of the Public Service of Canada: "Read the press release to understand the story the government wants to tell. Then read the spending tables in each chapter to get the real story of the budget. For everything else, keyword search is your friend."

MIKE HOLDEN, VP policy and chief economist at the Business Council of Alberta: "The first place I go is the summary table that shows the headline numbers for revenues, expenditures and balance. From there, I check the economic growth assumptions underpinning those numbers, and then spend most of my time looking for policy announcements in priority areas for BCA. I do my best to avoid the budget speech, press releases and other 'key messaging' documents."

BRYAN DETCHOU, consultant at Crestview: “I normally begin by reading the forward written by the Minister of Finance or jumping to the Annex section to review the economic and fiscal projections. Those two sections allow me to understand the budget’s greater context, both in terms of the government’s priorities and the macro-economic environment.”

FATIMA SYED, climate reporter for The Narwhal: "A kind tax lawyer told me after I muddled through my first Ontario budget lockup that you should always start a budget at the back because 'the numbers tell the story the words try to hide.' But I’m a climate reporter and there are e-versions now so Ctrl-F for those clean, green words, y’all!"

THE POSEIDON ADVENTURE — The government buried a statement on a potential breakthrough in a military procurement program that is likely worth billions.

Public Services and Procurement Canada is in the middle of deciding which maritime patrol aircraft will replace the 40-year-old fleet of CP-140 Auroras. Boeing wants the feds to buy its P-8 Poseidon, an aircraft currently in service across the rest of the Five Eyes' fleets.

PSPC's statement claimed the P-8 is the "only currently available aircraft that meets all of the CMMA operational requirements, namely anti-submarine warfare and C4ISR." The department is requesting an offer from the U.S. government’s Foreign Military Sales program for "up to" 16 P-8s, though the statement insists that request "does not commit Canada to purchasing" the aircraft.

— Another bidder: Bombardier, the Canadian aerospace household name, wants to bid on the contract. The company worries a sole-sourced contract is inevitable. CEO ÉRIC MARTEL has raised hell for months about the program, calling for a competition.

More recently, the feds have appeared to take an interest in Bombardier's proposal. Martel has met with Defense Minister ANITA ANAND. The company has several meetings on the books with politicians and bureaucrats who claim to want to learn more.

The company received a head's up from PSPC about Monday's statement, and received assurances that no deal was done.

But the lingering anxiety remains: Are the assurances legit? Or is the fix in?

— Bury it: PSPC posted the statement on the department's website, not the more accessible federal news clearinghouse where most announcements end up. (The effort wasn't totally clandestine. The media relations team sent the link to Playbook's inbox.)

ZERO — That's how many times Conservatives asked the government about foreign interference during Monday's question period. Potentially relatedly, formerly Liberal MP HAN DONG told the world he intends to take legal action against Global News, which published allegations about Dong's conversations with a Chinese diplomat.

The Tories instead focused almost exclusively on economic issues, calling on CHRYSTIA FREELAND to introduce no new taxes, and not raise existing ones, and cut others.

Foreign affairs critic MICHAEL CHONG tweaked his tone on foreign interference allegations in a Monday thread that responded to CHANTAL HÉBERT's caution about trusting everything leaked from intelligence agencies.

"We must be careful. Intelligence agencies sometimes get it wrong, as with Maher Arar & Iraq WMD. They sometimes get it right, as with PCO/Haiyan Zhang & Russia’s invasion," he tweeted. "That’s why we must pursue this until we get some basic facts."

STRANGE BEDFELLOWS — The House of Commons is poised to pass a private member’s bill that would exempt natural gas and propane used to dry grain and heat livestock barns from the federal carbon tax.

MPs will vote Wednesday on Bill C-234, tabled by Ontario Conservative MP BEN LOBB. Both the Bloc Québécois and the New Democrats are poised to vote with the Conservatives, essentially guaranteeing the bill will head to the Senate.

The Bloc and the NDP hardly share the Conservatives’ distaste for all things carbon tax-related. But they support this bill because they say farmers have no viable option other than fossil fuels for heating barns and drying grain. Gasoline and diesel used for farm equipment are already exempt from the federal carbon price.

— Counterpoint: The Liberals, meanwhile, say a full exemption isn’t the right approach. They point to a refundable tax credit, passed last year, that returns a portion of carbon tax proceeds to farmers. They say that’s a better way to relieve the burden on farmers without getting rid of the price signal that encourages them to cut their fossil fuel consumption.

— The maverick: One Liberal MP, Nova Scotia’s KODY BLOIS, has broken ranks and will vote with the opposition. Blois represents Nova Scotia’s fertile Annapolis Valley, and in a speech Monday, he echoed the opposition parties, claiming farmers currently have no alternative to natural gas and propane.

Blois was the lone Liberal to vote with the opposition at second reading.

A message from Innovative Medicines Canada:

STATE OF PLAY — Polls have been showing a slow erosion of Liberal support, with Abacus Data, the Angus Reid Institute and Nanos Research all measuring the Liberals just at or below the 30 percent mark.

Léger recently released a narrative buster: 33 percent for the Liberals and 32 percent for the Conservatives — a reminder to not get carried away when the needle fluctuates. Canadian pollsters have performed extremely well in recent federal elections, but one should trust the long-term trends.

Léger also submitted its online panel to some questions about optimism — the results yet another example that social media is not real life.

Isn’t health care on the verge of collapse? Aren’t foreign actors meddling with our democratic process? What about raging inflation? And housing out of reach of Canadians not blessed with inheritance?

Turns out that optimism is not limited to Laurentian elites of Central Canada, but actually pretty widespread from coast to coast.

Have a look:

So then what if results are broken down by voting intentions? Would Conservative Leader Pierre Poilievre’s message that “Canada is broken” resonate with his targeted electorate?

Léger’s numbers seem to indicate party support is not a significant indicator:

Obviously, one shouldn't downplay our struggles, but this data suggests Canadians of all ages, regions and party affiliation are strangely optimistic in a supposedly broken country.

Mental health plays a crucial part of one’s outlook, of course, and on that front, far more Canadians expressed optimism rather than pessimism:

None of this means all is rosy, but perhaps our perceptions of how Canadians feel and live are distorted by the dramatic and moody lens of social media and the Ottawa Bubble.

While Poilievre’s message that “Canada is broken” resonates with a section of the electorate, Léger’s data suggest Canadians’ resolve and strength of character has not been broken.

Optimism does not appear to be a partisan issue.

— “Show up and glow up.” It’s episode two of Humans of the House from the Samara Centre for Democracy.

— From our colleagues in Washington: The military’s blame game over the Chinese spy balloon spills into the open.

— “Is your social media making you angrier?” the Toronto Star asks in a feature shared by MP MICHAEL COTEAU, who notes: “I have seen a drastic increase of anger over the last several years with many of the reference points coming from social media.”

— The Logic’s MURAD HEMMADI writes: Semiconductor sector debates Canada’s best bet to cash in on reshoring of chips

— “A strike, simply, would be a nail in the coffin of the Liberal government,” the University of Ottawa’s PIERRE MARTEL tells the Citizen of a possible work action by members of the Public Service Alliance of Canada.

For POLITICO Pro s, our latest policy newsletter by SUE ALLAN and ZI-ANN LUM: Who's saying what about the 2023 budget.

In news for POLITICO Pro s:
— After triumph of Biden visit, reality bites back at Trudeau.
— GOP ups the pressure on global tax deal.
— ECB focus on rates is a gamble, economists say.
— EU ambassadors approve 2035 car engine deal.
— Biden signs executive order restricting government use of some commercial spyware.
— Fed's Barr signals tougher bank stress tests post-SVB.

A message from Innovative Medicines Canada:

COVID-19 forced Canadians to work in new ways. Whether it was ditching the office commute or adjusting to seeing colleagues through a screen instead of in person.

Government and the pharmaceutical industry also found new ways to work, this time at warp speed to deliver COVID-19 vaccines to Canadians in every corner of the country.

Because of this partnership, COVID-19 vaccines led to over $30 billion in savings to the Canadian economy.

Take a look at how we’re working with governments and stakeholders to protect Canadians.

Birthdays: HBD to Carleton MPP GOLDIE GHAMARI, ex-MP RODNEY WESTON, former president of the National Assembly of Quebec MICHEL BISSONNET and Saskatchewan’s DON CODY.

HBD + 1 to New West Public Affairs managing director SAEED SELVAM.

Spotted: Enterprise Canada, playing Budget BINGO … WYATT SHARPE, explaining how he ended up with a front-row seat to parts of the Biden visit … CIVIX, publishing the results of its student budget consultation (top issues: "addressing the high cost of living, building more affordable housing, addressing climate change, and support for people living in poverty").

Movers and shakers: Trade Minister MARY NG appointed four new directors to the Invest in Canada board: LOUISE BLAIS, MARC-ANDRÉ BLANCHARD, BARD FERGUSON and RORY MCALPINE … Transport Minister OMAR ALGHABRA appointed THAO PHAM as chair of the Canadian Air Transport Security Authority.

Former Liberal MP and Toronto city councilor JIM KARYGIANNIS is repping D&D Poultry, which is hoping to secure federal funding from the Department of Agriculture and ISED.

→ Find the latest on House committee meetings here.

→ Keep track of Senate committee meetings here.

— U.S. President JOE BIDEN will be in North Carolina to kick off the “Investing in America Tour.”

— U.S. Trade Representative KATHERINE TAI will be en route to Seoul to lead a U.S. delegation to South Korea.

9 a.m. The Senate transport and communications committee meets to take Bill S-242 through clause-by-clause consideration.

9 a.m. The Senate national finance committee meets to hear from department officials from National Defense, Veterans Affairs and Global Affairs Canada.

9:30 a.m. Senators PIERRE-HUGUES BOISVENU, BRENT COTTER, MOBINA JAFFER, SERGE JOYAL, and RENÉ CORMIER will be at the Senate rules and procedure committee to discuss committee structure and mandates.

10 a.m. The House U.S. homeland security committee holds a hearing on “Biden’s growing border crisis: Death, drugs, and disorder on the northern border.”

10 a.m. Also in D.C., the House agriculture committee will receive testimony from Agriculture Secretary TOM VILSACK.

11 a.m. BOB RAE, Canada’s ambassador to the United Nations, will be a witness (via video link) at the House foreign affairs committee for a “briefing” before the agenda flips to Bill C-281 and an in-camera discussion about an upcoming report.

11 a.m. A parade of Quebec MPs have a date with the procedure and House affairs committee today to talk about the Federal Electoral Boundaries Commission’s report for Quebec.

11 a.m. Liberal MP PATRICIA LATTANZIO will be at the House health committee to take questions about her private member’s bill, Bill C-252, before the committee goes in camera to talk about an upcoming report on children’s health.

11 a.m. Large port infrastructure is the topic of the day at the House transport committee. Witnesses include representatives of the City of Prince Rupert, Port of Trois-Rivières, PSA Halifax and the Shipping Federation of Canada.

11 a.m. The House science committee meets to study the commercialization of intellectual property.

1:15 p.m. The House procedure and House affairs committee’s subcommittee on private members’ business meets to discuss non-votable items “pursuant to Standing Order 91.1(1).”

Monday’s answer: JOHN CROSBIE presented his budget wearing handmade-in-Labrador sealskin Mukluks.

Props to KENJI SATO, LILY MESH, MICHAEL POWELL, FRANCIE FORD, FRANCIS DOWNEY, GUY SKIPWORTH, BRIAN GILBERTSON, NANCI WAUGH, RYAN HAMILTON, FERNANDO MELO, JOANNA PLATER, BOB PLAMONDON, DOUG RICE, DAN MCCARTHY, JOSEPH PLANTA, PATRICK DION, PETER MCKINNEY, JOHN DILLON, GORD MCINTOSH, BOB GORDON, ROBERT MCDOUGALL, GERRY THORNE, DOUG SWEET and JOHN ECKER.

Today’s question: Who presented the government of Canada’s first federal budget?

Send your answers to ottawaplaybook@politico.com.

Want to grab the attention of movers and shakers on Parliament Hill? Want your brand in front of a key audience of Ottawa influencers? Playbook can help. Contact Jesse Shapiro to find out how: jshapiro@politico.com.

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Nick Taylor-Vaisey @TaylorVaisey Sue Allan @susan_allan Maura Forrest @MauraForrest Zi-Ann Lum @ziannlum POLITICO Canada @politicoottawa

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