BARENAKED MONEY PODCAST: EPISODE 6

See Saw on the Canadian Budget

Speaker 1:

You're about to get lucky with the Barenaked Money podcast. The show that brings you the naked truth about personal finance, with your hosts, Josh Sheluk and Colin White, Portfolio Managers with WLWP Wealth Planners, iA Private Wealth.

Colin White:

Welcome to Josh and Colin's SeeSaw on the Budget. This is what I see, is that what you saw? So, Josh, I'll throw it to you first. You tell me what you see and I'll tell you what I saw.

Josh Sheluk:

Yeah. We're going to do things a little bit differently today. So normally we sit down and hash out a little bit of a rough outline for what we're going to talk about. Today we just said, "Well, let's talk about the budget. You come up with five things that were interesting to you. I'll come up with five things that were interesting to me, and we'll sit down and we'll talk about it." We'll discuss, no preparation whatsoever. So we're throwing ourselves in here cold.

Colin White:

And you're going to go first, so impress... And I know for a fact, you've got more than five things on your list. So don't lie to our listeners.

Josh Sheluk:

Yeah, well, it's tough. I know we both pored over 739 pages of this federal budget. Every word, we looked at it in detail. Every footnote, every note in the margin, and we both had tons to talk about. So, we both have more than five things on our list, but we'll try to keep it concise for everybody. So, first and foremost, I think this is maybe the most significant sort of long-term part of the budget. And that's some of the reform and the push that they're doing on childcare. And so, just at a very high level, what they've said is that over the next five years, they want to push for a $10/day cost for your children in daycare. And, so that's over the next five years. By the end of 2022, so let's say a year and a half from now, they want to see a 50% reduction in average fees for childcare over that period of time.

Josh Sheluk:

I think this is awesome. I think this is extremely important. I think childcare, speaking to people that I know that have young kids that they're dealing with this, I think it can be exorbitantly expensive. And I think economically speaking, I'm going to put my economist hat on, we want people to be working. And the fact that childcare is so expensive is a disincentive for some people to work. It's better off for them to stay home and just take care of the children than it is to go out and get a job. And that has some real implications for the economy as a whole. So from the idea of, this should get more people out there making more money, spending more money, more tax revenue, et cetera, et cetera, bolstering the economy, I think it's a lovely thing. What do you think, Colin?

Colin White:

Oh, it's a fabulous idea. Like cinnamon farts and bubble gum trees. But the problem is, you're pushing on a rope. You got the government trying to overstep its mandate because this is largely something that's done at the provincial level. And a lot of what was in the budget, from what I read, involves the provinces also ponying up. So the federal government's going to kick in, but then the provinces have to agree and kick in. Provinces don't necessarily have the money, because they're trying to pay for that whole healthcare stuff. And to have a five-year plan, when you have an election coming up next year, come on. Just stop that. You get to have a one-year plan. That's all you get. And then if you win the election, you can have another year. Don't pick the five-year plan when you got to win your mandate. I fully agree.

Colin White:

And I think that childcare should be less expensive. We need to support the families in the workforce. That's absolutely... You can't be a human being and think that's a wrong thing, but the way that they're trying to do it makes no sense. I hope that this moves the rock. I hope that they're able to actually make some progress on this because you're right. This is a very valuable thing. It should be important. We should pay attention to it, but we got to be competent while we're paying attention to it. We can't just announce things with big dollar figures and the years that we don't have control over. That's not helping.

Josh Sheluk:

Yeah. Well, and that is very true. I think what's made me a little bit more encouraged on the subject is that they're taking from the model that Quebec has put in place. And the Quebec model, by everything that I saw data-wise, has been fairly successful. And one of the good data points is that the number of women in the workforce, the percentage of women in the workforce in Quebec is much higher than the rest of Canada. So obviously they're doing something right there and stealing from that model or borrowing from that model makes some sense, but, maybe you're right. Maybe it should be the provinces that are looking after all these. And having it regulated at a federal level is just going to work out to be a mess, as so many other things.

Colin White:

We will see.

Josh Sheluk:

Yeah. So what's first on your list?

Colin White:

Well, the first thing on my list is something that's not on the list. There were no changes to capital gains inclusion rates, and there were no changes to the taxation of your principal residence. So sometimes the biggest thing in the budget is what's not in the budget. So that was the number one takeaway I took. Now listen, if you will all write this down. Stop trying to figure out what comes next, because you are going to worry about... In the entire history of the human species, worrying about anything has never made it better. Anticipating things long before they happen are going to cause... And this is just another example, and think about it. They're a year out from an election. They're not going to do something that's really hugely unpopular, and they're certainly not going to do it suddenly. And I've got other points about that, but I'm not going to steal my own thunder. So Josh, what say you?

Josh Sheluk:

Well, we came into this knowing that there'd be some overlap in what we had on our list. And it took only two items to get to it. And it's funny. We both had something on our list that wasn't on the list. So, we just spent way too much time together, I think is what it comes down to. But, this is something we talk about a lot, you and I, especially over the last month or so. And it's just, you can't or you shouldn't maybe spend too much time planning for something that hasn't happened yet. And as we could both agree, tax planning is extremely valuable and makes a ton of sense, but trying to speculate on what one government or the next institutes, in terms of tax code, tax law, that's going to be an impossibility, and you're going to end up banging your head against the table more often than not.

Josh Sheluk:

So, I think if we look at the situation a little bit longer term, I'm actually not surprised that they didn't introduce something this time, because an election is probably coming up in the next year or so. And jacking up people's taxes before an election, probably not a recipe to get reelected. So the ...