OTTAWA—The Harper Conservatives stuck to their frugal,
deficit-reduction mantra in a bargain basement federal budget that keeps the
cash flowing for urban renewal projects but looks to corporate Canada to
refurbish the struggling economy and get more Canadians into the workforce.
Finance Minister Jim Flaherty mixed departmental cuts,
modest spending, a clampdown on tax evasion and support for Ontario’s hard-hit
manufacturing industry in a strategy aimed above all at eliminating the $25.9
billion federal deficit by 2015.
The budget largely ignored demands by the NDP and some
economists for Ottawa to engage in another round of stimulus spending to boost
the economy, which Thursday’s document said will only grow by a mediocre 1.6
per cent in 2013.
“We will not
spend recklessly,” Flaherty declared in the Commons on Thursday. “In uncertain
global economic times, the most important contribution a government can make to
bolster confidence and growth is to maintain a sound fiscal position.”
NDP Leader Tom
Mulcair labelled the package a “shell-game con job.” He said austerity budgets
are no way to cure a weak economy. The finance minister’s predictions for
deficit-reduction and economic growth have been consistently wrong, Mulcair
stated.
“When we’re
here together next year, we’ll find out that that was also wrong,” he told the
media after Flaherty delivered the budget.
The 2013
package is a grab-bag of measures and policies. To help return Ottawa’s books
to black, the Conservatives are counting on ferreting out tax cheats and
closing tax loopholes, which could pull in an extra $300 million in revenue
this year alone. Ottawa for the first time is offering rewards for tips that
help tax collectors track down people using foreign tax havens.
“What we’re
after are people hiding their money offshore and avoiding Canadian taxes,”
Flaherty told the media.
Responding to
complaints that the same products cost more in Canada than the United States,
the government is cutting $76 million worth of import tariffs on ice skates,
skis and snowboards as well as baby clothing.
“This is an
important test” to see if Canada’s retailers pass on savings to consumers,
Flaherty remarked.
In a smattering
of other measures, the budget:
1. Scraps a tax deduction for owning a
safety deposit box.
2. Eliminates a wrinkle in the taxation of
small business income, saving the government $500 million a year.
3. Expands the adoption tax credit.
4. Provides $248 million over five years
to improve weather forecasts.
5. Commits Ottawa to working with the
provinces to regulate payday loan companies.
6. Extends a small business hiring tax
credit.
No
across-the-board income tax increases, or cuts, were announced.
With 1.3
million unemployed, Flaherty unveiled a proposal to enlist the provinces and
employers to expand skills training through the Canada Jobs Grant. Ottawa would
provide $5,000 to a business willing to train an employee if the employer and
provincial government each kick in an additional $5,000.
But the
program, which would be funded with a portion of the $500 million the federal
government already sends annually to the provinces for training, won’t start
until 2014. And it will depend on successful federal-provincial negotiations.
Quebec has already balked at such proposals.
Municipal
leaders will be pleased by Flaherty’s commitment to renew the Building Canada
Fund, which will provide approximately $14 billion over a decade to cities and
towns to finance improvements in transit systems, bridges and other
infrastructure.
In recognition
of the tough times faced by Ontario’s manufacturers, the budget allocates $920
million to encourage economic activity through the Federal Economic Development
Agency for Southern Ontario. Also, there will be $200 million over five years
to promote innovative product development in Ontario under the Advanced
Manufacturing Fund.
The 2013
package also helps manufacturers by providing $1.4 billion in tax relief when
buying new machinery and equipment.
The frugal nature
of the understated budget was driven home by continued belt-tightening, all
with an eye to balance the budget by 2015, the year that Conservatives are due
to face voters again.
Flaherty was
adamant that goal would be met, saying a balanced budget was vital to safeguard
the country against future global economic upsets.
“We can get
there by 2015 by quite moderate choices . . . we do not need to slash and
burn,” he told reporters.
The cuts
announced in last year’s budget, including reducing the civil service by 19,200
workers, continue to bite. This year’s budget adds another $500 million in
savings. Since 2010, the Conservatives have cut federal spending by $15
billion.
For 2013-14,
Flaherty predicts an $18.7 billion deficit, followed by a $6.6 deficit in
2014-15 and a slight surplus the following year.
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