March 22, 2017 / 10:53 PM / 8 months ago

Despite abandoning debt vow, Canada's Trudeau safe over budget

OTTAWA, March 22 (Reuters) - Although Canadian Prime Minister Justin Trudeau abandoned a debt-cutting pledge in a budget on Wednesday, the cautious nature of the document and an unsteady opposition means he is unlikely to suffer much damage, say analysts and insiders.

The stay-the-course budget targeted export growth and some measure of tax reform and unveiled little extra spending, but did promise more money for social housing.

Although Trudeau’s Liberal government last year promised to keep cutting the debt-to-GDP ratio, the budget shows the ratio will increase slightly. That said, deficits for the next three years will be a shade smaller than forecast.

“I don’t think there’s much for the opposition to grab on to ... if the Liberals had created either a bigger deficit hole, or spent money, they would have been targets,” said Nik Nanos, head of polling firm Nanos Research.

“A no-news budget is just much more difficult because the opposition parties are basically shadow-boxing,” he said in a phone interview.

Trudeau is in no immediate political peril, since the next election is not due until October 2019 and he is still popular.

A Nanos poll on Tuesday put the Liberals on 41.9 per cent support, the official opposition Conservatives at 28.5 per cent with the left-leaning New Democrats at 17.1 per cent. If an election were held now, the results show Trudeau would win a comfortable majority.

A government source, who declined to be named because he was not authorized to speak to the media, said the budget’s promises of long-term fiscal responsibility should appeal to the political right while the plans for social housing would placate the left.

The Conservatives said the lack of tax relief would hurt Canadian businesses once U.S. President Donald Trump followed through on promises to cut taxes.

Liberals though said it was impossible to judge what exactly would be in Trump’s budget, which could yet be many months away from final adoption.

The challenge for the opposition parties is that both of them lack permanent leaders and will be holding contests later this year to fill the position.

“It allows the Liberals to get away with a budget that is really not going to address a lot of crucial questions,” said Kathy Brock, a political science professor at Queen’s University in Kingston.

“If there were strong opposition parties with permanent leaders I think they’d be hitting this budget pretty hard.” (Reporting by David Ljunggren; Editing by Bernard Orr)

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