OTTAWA—The federal finance minister has tabled his budget with a projected surplus, meeting a key promise of the Harper government before the Conservatives face the upcoming October election, although the opposition points out that the books were balanced, in part, by raiding the government’s rainy day fund for $2 billion and employing some familiar tactics with the Employment Insurance kitty overfunded to the tune of $1.8 billion.
The budget delivered by federal Finance Minister Joe Oliver on Tuesday, April 21 projects a $1.4 billion surplus this year, down from the $6.4 billion that was projected barely a year ago and $1.9 billion forecast this past November.
The finance minister has projected that the Canadian economy will grow by two percent this year, with an optimistic benchmark for the cost of oil playing a key role and the annual contingency fund, the aforementioned rainy day fund, was cut by $6 billion over next three years.
“It is a balanced budget, just as we promised, and it cuts taxes for hard-working individuals and families,” said Finance Minister Oliver. “It is a prudent and principled plan that will see Canadians more prosperous, more secure, and even more confident in our country’s place in the world.”
“It’s a bit of economic sleight of hand. The contingency fund, as the parliamentary budget officer said very recently, is there for real emergencies,” said NDP leader Tom Mulcair. “It’s not something that you tap into on budget day because you’re missing a couple of billion dollars.”
“Leadership is about helping those who need it most,” said Liberal Leader Justin Trudeau. “But even in this tight budget, Mr. Harper finds ways to give billions to the rich.”
“It’s a status-quo budget, and the status quo is not acceptable,” said Perry Bellegarde, national chief for the Assembly of First Nations, whose constituency is seen as one of the biggest losers in this budget. “We don’t see any investments in housing to deal with the 130,000 units we need. We don’t see investments in education on reserves. There’s still a huge fiscal imbalance there. We don’t see any investments even in access to potable water. There are still 93 communities with boil-water advisories.”
A little closer to home was Algoma-Manitoulin-Kapuskasing MP Carol Hughes’ response. “Obviously Canadians were looking for a budget focused on providing Canadians, especially youth, with a better economic future,” she said. “They were looking for a budget that would give kids the best possible start in life, creating jobs and supporting a foundation.”
A number of goodies were contained in the budget for seniors, a constituency that tends to be more Conservative friendly, including Tax free Savings Account (TFSA) annual limit raised to $10,000 from $5,500, which is expected to benefit most those Canadians who must remove funds from their Registered Retirement Income Funds this year. Seniors at age 71 will also be able to leave more money in their tax-sheltered RRSPs.
“I was sorry to see more tax loopholes for the wealthy,” said Ms. Hughes. “The TFSA changes are quite negative. This is a budget that is focused on the wealthiest people. The increase will not benefit 85 percent.”
This budget also contains a Home Accessibility Tax Credit for home renovations for seniors and people with disabilities.
The small business tax rate cut to nine percent from 11 percent by 2019 did receive some positive response from Ms. Hughes. “There are quite a few things that will impact AMK,” she said. “One thing is the small business tax reduction, that is a good thing.” Ms. Hughes did point out that the NDP party had been advocating for that change. “We proposed the reduction last year, but the Tories were not supportive,” she said. “But we were happy to see that they have changed their minds with this budget.”
Ms. Hughes said she was surprised to see Liberal leader Justin Trudeau say that he did not support the small business tax reduction. “The North has a lot of small communities where small businesses are all that they have.”
Dan Kelly, president, Canadian Federation of Independent Business, was also pleased with the tax reduction. “Reducing the small business corporate tax rate was viewed by CFIB members as the most effective measure the federal government could take to strengthen the performance of small firms,” he said.
In other boosts to business, the accelerated capital cost allowance for industry has also been extended to 10 years.
The Armed Forces will also be kept busy, with $360 million slated this year to pay for Canada’s mission against ISIS. The budget also contains annual hikes of three percent for National Defence, but that ministry, it must be noted, has returned billions in unspent funds to the government coffers in recent years.
ISIL aren’t the only ones in the government’s crosshairs, with $18 million allocated this year to fight terrorism, an amount that will rise to $91 million within five years. The digital frontline has also been boosted, with $94.4 million over five years going to cyber security, while SIRC, the CSIS watchdog, will see its budget doubled to $5 million.
Another positive aspect of this budget noted by Ms. Hughes is that the EI compassionate care benefits will be extended to six months from the current six weeks.
“This was also something that the NDP has advocated for and that the Harper government did not support,” she said. “There are a lot of people suffering from cancer, lots of people who have children with autism, a number of people are quite ill. We debated this in the House but the Conservatives did not support us.”
Ms. Hughes noted that the excess funds in the EI envelope were a continuation of a tactic used by Liberal governments in the past. “That money is meant for people who have lost their jobs,” she said. “It should not be considered part of the government’s general revenues.”
A new infrastructure program was announced in the budget, but there is a catch. The new fund will not begin until 2017-18, long after the October federal election. The fund includes $750 million over two years, followed by $1 billion a year, which Mr. Oliver described as “ongoing thereafter,” to help finance public-private partnerships to pay for projects and upgrades through a combination of public and private investment.
The budget also maintains the 10-year, $53-billion program to enhance provincial and municipal infrastructure that was announced in 2014.
It should be a happy birthday for the nation, with $210 million over four years earmarked to celebrate Canada’s 150th birthday in 2017.
Among some of the other changes to the budget are that interns will be brought under the Canada Labour Code, there will be $1.1 million a year to promote Canadian seal products and on the environmental front, $75 million will be set aside to implement the Species at Risk Act for next three years.
“The Harper administration is set to spend more money on the celebrations of Canada’s 150th birthday than on the crisis of First Nations education,” said Grean Party Leader Elizabeth May, who was obviously not pleased with the direction of the budget. “It is remarkable that in a budget tabled seven months before the negotiation deadline for a comprehensive climate treaty, the words ‘climate change’ are nowhere even mentioned.”
Although the budget is nominally balanced, the Canadian Taxpayers Federation were not effusive in their praise. “The government needs to stop cluttering up the tax code, picking winners and losers, and giving special treatment to some industries but not others,” said federal director Aaron Wudrick. “By all means cut taxes, but do it across the board.”
The public service unions, who are eyeing the cuts the federal government seems to want to set in stone, were also not happy. “This budget does far more harm than good in addressing the gap between workers and the richest Canadians,” said Paul Moist, national president of the Canadian Union of Public Employees. “With this budget, that gap will only continue to grow.”