The federal budget was disappointing, writes Peter Watson.
This federal budget was a missed opportunity. But first we will start with a positive. The budget contained many strategies designed to build more housing units. These ideas were publicized in previous weeks.
Affordable housing is an issue for Canadians and a political requirement if the Liberal government has any chance of winning the next federal election next year.
The Trudeau government’s bold housing announcements was welcome but regrettably is too little too late. The lead time for building houses that are needed now was years ago, perhaps a decade ago.
Unfortunately, the budget projected deficit this year is $40 billion. That is despite having higher government revenue than forecasted because we escaped the predicted recession and introducing a higher capital gains tax on the wealthy.
Our current challenge is dealing with our massive federal debt that continues to grow. There will be future challenges and we do not know when and what they might be.
We just went through the COVID-19 pandemic. The government wisely invested money to support Canadians and Canadian businesses. That was a job well done but it was expensive.
In financial planning terms, we sometimes refer to building up a nest egg to pay for a future unexpected cost as an “emergency fund.”
What kind of a financial tailspin would our federal government be in if there was another significant challenge that required a large infusion of cash?
We do not have an emergency fund; we have a huge debt that will curtail our ability to react and spend on the next challenge.
Canadians need an ongoing conversation with federal leaders on how we are going to regain financial stability. That conversation did not start with this budget.
Canada is at a critical stage and needs politicians with courage and conviction to outline a strong financial foundation for a prosperous future.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com
