PARLIAMENTARY REPORT
CANADA
PRE-PRE-ELECTION BUDGET FOCUSES ON JOB CREATION AND ECONOMIC GROWTH
On 11 February, Hon. Jim Flaherty, MP, Minister of Finance, delivered his tenth federal budget. With a general election expected in October 2015, some observers referred to it as a pre-pre-election budget. For the most part, it continued along the path set out in the government’s previous budgets and focused on encouraging job creation and economic growth, while aiming for a balanced budget in 2015. Reducing the federal budget
deficit has been a government priority ever since it resorted to stimulus spending to address the global economic and financial crisis. At the height of the crisis in 2009-2010, the deficit reached $55.6 billion. By 2012-13, it had been reduced to $18.9 billion and the government anticipates that by 2015-2016, there will be a budget surplus of $6.4 billion. In terms of the ratio of debt-to- gross domestic product (GDP), the government hopes that by 2017-18 this will have fallen from roughly 33 per cent currently to below the pre-recession level of about 28 per cent. Except for an increase in the
taxes on cigarettes and other tobacco products, which will increase government revenue by $685 million in 2014-2015, the government plans to reduce the deficit largely by controlling direct programme spending. It plans to keep this spending at about the 2010-11 level over the next six years, with anticipated savings over that period of $9.1 billion. In addition to freezing
54 | The Parliamentarian | 2014: Issue One Hon. Jim Flaherty, MP
departmental operating budgets for two years, the government will seek changes to public servants’ disability and sick leave benefits when it negotiates the next round of contracts and will seek to increase the amount paid by retired public servants who participate in the Public Service Health Care Plan (PSHCP). For these people, the government currently pays 75 per cent of the benefit costs and it will reduce this to 50 per cent of the costs. This would result in increased costs for retirees and an individual retired public servant can expect the cost to go from $261 per year to roughly $550. At the same time, future retired public servants will need to work six years to be eligible to participate in the PSCHCP, rather than the current two years. Overall, the government expects that changes to the PSCHCP to result in savings of $7.4 billion over six years.
Despite the government’s
emphasis on reducing the deficit, the budget also contained a few
Legislation On 20 December 2013, the
modest spending promises. These included $1.5 billion over the next decade to fund university research, $500 million over two years to support the Canadian automobile industry, $391.5 million over five years to improve infrastructure in national parks and $305 million over five years to expand broadband internet service in rural and northern communities. In addition, there were a number of measures to help Canadians find jobs, to increase trade and investment and to support responsible resource development. The budget also addressed consumer issues, by announcing that it will introduce legislation to cap wireless roaming rates and to reduce the gap between consumer prices in Canada and the United States. While setting the stage
for next year’s pre-election budget, Minister Flaherty was also careful to sound a note of caution, pointing out some of the external factors that could change the government’s forecasts. In his speech in the House of Commons, he noted the world economy remained fragile, Canadian household debt was higher than he liked, and while many Canadians were looking for work, some employers could not find enough workers. He also said that a return to a surplus in a few years would not mean reckless government spending.
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