OTTAWA—The first shoe has dropped in the Conservative government’s first majority budget, but other than opposition party members and a select group of insider info-chuffed pundits, most are waiting for the other shiny new shoe to hit the floor before they comment.
‘The devil is in the details’ is the most commonly refrain heard from mayors, reeves, CAOs and CEOs of non-governmental organizations when contacted in the first blushing dawn of a new budget offering. Until the regulation, and specific details of how the budget will be implemented are released by government departments, it is difficult to predict what the plumbing is going to deliver to the front line.
Weighing in at some 498 pages, the 2012 Federal Budget is a ponderous tome in its own right, but Finance Minister Jim Flaherty has managed to boil it down to the catchphrase: “Canada’s plan for jobs, growth and long term prosperity.”
The opposition, not surprisingly, characterizes the budget somewhat differently. “This will hurt the most vulnerable people people and communities across the country—especially in places like Northern Ontario,” said Algoma Manitoulin Kapuskasing MP Carol Hughes, even before the budget had left Mr. Flaherty’s hand. “It will do nothing to help Canadians who continue to struggle in these hard economic times.”
Once the budget had been delivered on the floor of the house, Ms. Hughes increased volume with more specific criticisms—accusing the Conservatives of dumping their fiscal problems on to the doorsteps of the province.
“When it comes to health care, the provinces have given this government a failing grade,” continued Ms. Hughes. “Instead of strengthening health care, this week’s budget downloaded even more costs to the provinces.”
In his budget speech, Finance Minister Flaherty outlined the government’s path. “Our goal is to strengthen the financial security of Canadian workers and families to help create good jobs and long-term prosperity in every region of the country,” he said. “Still, it is not enough simply to maintain Canada’s advantage among the major advanced economies. We must also position Canada to compete successfully with the world’s large and dynamic emerging economies. In a changing global economy we must aim higher. We must avoid falling behind. We must realize the enormous potential of our great country.”
This budget is also aimed squarely at the burgeoning federal deficit, however, and the government is looking to cut $5.2 billion dollars from the expense side of the ledger each and every year.
That means there are some 12,200 federal employees waiting for the axe to fall on their jobs when the other shoe drops. Another 7,000 positions are expected to disappear through attrition for a total reduction in the workforce of 19,200. This will bring the number of civil servants down to near the levels they were when the Conservatives first formed the government.
A nickel for your thoughts? Other changes of note include ditching the venerable penny. The government will stop making the penny (which cost more than a penny and a half to make) and merchants will round up or down to the nearest nickel this fall.
The Governor General’s paycheque will now be seeing an income tax line, ending a long tradition of not taxing the Queen’s representative.
Among other changes, Ottawa is launching a pilot project designed to ensure claimants are not discouraged from taking work while collecting EI benefits. The project will cut the current clawback rate in half and apply it to all earnings made while on claim.
Small business owners will likely be happy with the one-year extension of a hiring credit to encourage growth and job creation worth $205 million. Another limit set on increases to Employment Insurance premiums will also help small and medium-sized businesses keep payroll costs down.
The 2012 federal budget proposes to reform innovation incentives by granting fewer tax credits and providing more direct grants to businesses to spend on research and development. The government plans to use around $500 million in savings from cancelled tax credits for direct grants and venture capital for businesses.
The government is moving forward with a controversial plan to delay the age at which Canadians can start receiving Old Age Security and Guaranteed Income Supplement payments from 65 to 67. The change will be phased in so that anyone over 54-years-old today will not be affected, and Canadians under 50 will not see OAS payments until they turn 67. Those between 50 and 54 can start collection between age 65 and 67. What wasn’t predicted by the pundits is that the budget proposes that Canadians who choose to delay receiving OAS will receive a higher benefit.
The budget provides some relief for people coping with disabilities and their families. Changes to the Registered Disability Savings Plan will make the program more flexible and easier to use and set up. New incentives are also proposed to make finding jobs easier for people with disabilities.
In keeping with the Harper government’s trade fixation, plans are afoot to intensify Canada’s pursuit of new and deeper trading relationships, especially with countries with large and growing economies like India.
In a shoring up of what might be seen as one of the Conservatives weaker flanks, an advisory council made up of leaders from the private and public sectors will promote the participation of women on corporate boards by linking corporations to a network of women with professional skills and experience. No targets were included in the description of the initiative.
Under the 2012 game plan, the government is moving to create Canada’s first national near-urban park in Ontario’s Rouge Valley, a 40-minute drive from downtown Toronto.
Ottawa has slated $8 million over two years to help compensate property owners and municipalities for potential losses related to clean up of low-level radioactive waste in Port Hope and Clarington.
The budget mapped out a clear intention to follow a path to smaller government, but critics charge that the document has kept Canadians largely in the dark as to what services are going to be snipped and which jobs will see their incumbents swelling Canada’s 7.4 percent unemployment rate.
They point to the current crisis in Britain, whose own austerity move has pushed that country back onto the slopes of recession.
For their part, the Conservative government points out that this budget plans to return to balanced columns ahead of schedule in fiscal 2015-2016, the next federal election year. And that, they claim, will lead to a stronger and more competitive Canada and provide the fiscal strength to protect the nation’s social programs.
One notable social program that felt the axe from this budget was the venerable Katimavik program, which sought to bind the country together through the exchange of youth to community programs in different provinces.