On October 12, 2010, the Minister of Finance delivered his “2011 Budget” in front of the Mississauga Chinese Business Association. This was the first time a budget had been delivered outside the House of Commons and no one noticed, or even cared.

In his “budget”, the Minister maintained the same approach to eliminating the deficit as he did in his 2010 budget. First, Canada is doing better than any other G-7 country, so Canadians don’t need to worry.  Second, economic growth will be strong enough to eliminate the deficit by 2015-16, because he discussed the economic outlook with 14 private sector economists. Again Canadians don’t need to worry.  Third, there is no structural deficit for Canadians to be concerned about. Fifth, the government looking at ways to trim government spending, but the government won’t cut transfers or raise taxes, so Canadians again don’t have to worry.

This “don’t worry be happy” approach to budget planning has served the government well.  Canadians see the Conservatives as better managers of the economy than the Liberals, despite the absence of any supportive evidence. Why would the government change this approach if it seems to be working?

The Liberals would also prefer that the Conservatives stick with their current approach to budget planning because they don’t have an alternative. At present, the Liberals have pretty much adopted the Conservative deficit track, vowing to reduce the deficit to 1% of GDP by 2012-13 and to eliminate it as quickly as possible after that.

The reality is that neither the Conservatives nor Liberals want to have a public discussion or debate as part of an election on where they would take the federal government should they get elected. This is too bad because in the 2012 budget tough decisions will have to be taken.

The government’s goal has been and will continue to be the downsizing of the federal government and the downloading of more responsibilities on to the provinces. The first major step in this strategy was the cutting of the GST by two points. The second major step will be a significant reduction in the growth of the Canadian Health Transfer (CHT) and the Canadian Social Transfer (CST) beginning in 2014. The review of federal programs currently underway will of course continue, but will not yield significant savings without the complete elimination of economic and social programs.

This, of course, is not what the government is saying and won’t want to say until after an election. The government does not want the downloading of most, if not all, of the CHT and CST on to the provinces to be an election issue. Downloading the CHT and CST also shifts the inevitable increase in taxes to pay for rising health care on to the provinces and away from the federal government. Simply restoring the two points to the GST would almost eliminate the structural deficit, but that will never happen under a Conservative government. Better to make the provinces raise taxes in exchange for a smaller federal role in health.

What about the Liberals? It is fairly safe to assume that the Liberals are not planning to downsize the federal government. Like the Conservatives, they don’t want to talk about a structural deficit, but also like the Conservatives, they know one exists and that it is going to get bigger. Like the Conservatives, they don’t want to talk about it, because this would mean explaining how they would deal with it. For the Liberals maintaining a federal role in health care and increasing the size of government would mean having to reform the federal tax system and increase tax revenues.

Canadians should understand that, under either the Conservatives or the Liberals, in the 2012 budget and beyond, taxes for Canadians will increase to pay for the growing pressures of an aging population and lower potential growth. It is only a question of who raises them.

It would be nice to have the 2012 budget debate before an election, but that is not going to happen.

Both Conservatives and Liberals don’t want a debate