Budget briefs – March 5

Alberta Finance Minister Ted Morton says Ottawa is on the same page as the province when it comes to the new federal budget.

Alberta lauds lack of tax hikes

EDMONTON — Alberta Finance Minister Ted Morton says Ottawa is on the same page as the province when it comes to the new federal budget.

He says the federal Tories are headed in the right direction with a budget that controls costs, has no tax hikes and will balance spending by 2015.

Morton says it would have been a mistake to take any measures that would have stymied Canada’s recovery from the recession.

The Alberta finance minister says most analysts agree that big spending cuts would have led to immediate negative effects on job creation.

Morton says his only disappointment is that Ottawa has not conceded on Alberta’s long-standing argument for an increase in federal health transfers.

But he’s glad to see that the federal government has not cut transfers in an attempt to balance the budget on the backs of the provinces.

Aboriginals praise spending

OTTAWA — The Conservative government is adding another $200 million over the next two years in compensation for former students of the residential school system because of “higher than expected funding needs.”

That and a host of other initiatives for aboriginal people in Thursday’s budget won some praise from the Assembly of First Nations.

“There are some elements there that suggest that even in a time of great fiscal restraint, there’s a recognition of the need to work with First Nations,” said AFN national chief Shawn Atleo.

Among the budget measures were improving infrastructure on reserves, renewing funding for First Nations and Inuit health, expanding child and family services and addressing violence against women.

Budget keeps tax cuts, kills tariffs

OTTAWA — The Tories’ promised corporate tax cuts escaped the scythe Thursday in the face of the $49.2-billion deficit, but there was little fresh help for companies staggered by the recession.

“We are staying on course to having the lowest corporate income tax rate in the G7 by 2012,” Finance Minister Jim Flaherty said in his speech.

“Some argue that we should cancel these tax reductions. Our government will follow through on our commitment. Reducing the tax burden on businesses is a key part of Canada’s advantage in the global economy.”

The federal general corporate tax rate is 18 per cent and set to reach 15 per cent in 2012, down from 22.12 per cent including the corporate surtax in 2007.

Flaherty did extend a hand to the country’s battered manufacturing sector, pushing ahead with a plan to eliminate tariffs on machinery and equipment as well as tariffs on production inputs that was started last year.

A first phase was implemented in the budget last year saving companies about $88 million. The government expects to fully eliminate the remaining tariffs by 2015 in a second phase that is expected to save companies $300 million a year.

Expanded RCMP watchdog in works

OTTAWA — The federal government is confirming plans to create a new watchdog over the RCMP.

The budget provides $8 million over two years to establish the long-promised oversight body.

Though details were unclear, the new organization will replace the existing Commission for Public Complaints Against the RCMP.

The mandate of the commission does not allow it to properly probe the Mounties’ security activities.

New bank rules for cheques, disputes

OTTAWA — A small item in the federal budget will be welcome news for anyone who’s been frustrated by a seven-day wait for a cheque to clear.

New regulations will set a maximum four-day hold period on cheques.

And banks will have to give customers access to the first $100 from a cheque within 24 hours.

Finance Minister Jim Flaherty also says financial institutions will be banned from using negative options. Customers will have to sign up for products and services; they cannot be applied by default.

And the minister plans to strengthen the way banks handle disputes with their customers.

Cosmetic surgery goes under the knife

OTTAWA — The nip-and-tuck business just got nipped.

Finance Minister Jim Flaherty is cutting tax deductions for most cosmetic surgery.

Boob and nose jobs, liposuction and botox, hair replacements, teeth whitening and other procedures “purely aimed at enhancing one’s appearance” are no longer eligible for a medical tax credit.

The government expects to save $40 million annually.

Plastic bills to replace paper

OTTAWA — The old question of cash or plastic is about to become moot because the cash is essentially going to be plastic, too.

The federal budget announced Canada’s paper money, now made from a cotton-based paper, will be printed on a tough polymer, starting next year.

The new bank notes will likely feel different, but are expected to last longer and offer production savings for the Bank of Canada. They will also contain new security features.

‘Do-nothing’ budget

OTTAWA — Opposition parties are full of sound and fury about what they say is Prime Minister Stephen Harper’s tyrannical tendencies, his alleged cover-up of the Afghan detainee torture scandal, and Thursday’s “do-nothing” budget.

But none of that signifies an election is in the offing.

The budget and Wednesday’s throne speech will trigger a series of confidence tests for Harper’s minority government over the next few weeks. And opposition parties could topple the Tories if all three were to vote against the government on any one of those tests.

But Liberal Leader Michael Ignatieff made clear Thursday that a spring election simply isn’t in the cards as far as his party is concerned. And even with that buffer, NDP Leader Jack Layton hedged on how far his party will go to show its disdain for the government.

“Canadians don’t want an election,” Ignatieff said as he announced that Liberal MPs will vote against the budget, but not in sufficient numbers to defeat the government.

Layton declared his party won’t vote for a budget that “has completely left behind the victims of the recession” while giving a “multibillion dollar gift to big banks.”

But he wouldn’t say if New Democrats will actually vote against the budget or find other, less risky ways to show their disapproval, such as abstaining or not showing up for budget votes.

“We’re leaving various options open,” Layton said. “We’ll talk about that with our caucus.”

Only Bloc Quebecois Leader Gilles Duceppe was categorical about his party’s opposition to the budget, which he maintained shortchanges Quebec on a host of fronts. He said Bloquistes will vote against it, regardless of the consequences.

“The question has never been for us to be in favour or not of an election but are we supporting a measure or not and then facing the consequences,” Duceppe said.

“It happened in the past that we supported the budgets.

“But that (latest) budget certainly not and not only we’re not supporting it but we’ll be voting against it.”

Deficit-slashing plan needs luck

OTTAWA — Call it the cross-your-fingers deficit elimination plan.

Finance Minister Jim Flaherty’s plan to largely get rid of the deficit in five years depends on a trifecta of happy news — uninterrupted economic growth, historically low interest rates and uncharacteristic spending restraint.

Even so, Flaherty still has yet to project a balanced budget — a notable omission for a Conservative government that has prided itself on sound economic management.

The plan outlined on Thursday still leaves a $1.8 billion deficit in the final year of the projection period — 2014-15 — by which time Ottawa will have added $158 billion to the national debt.

But as if channelling former Liberal finance minister Paul Martin’s “come hell or high water” declaration of war on the deficit in the 1990s, Flaherty insisted the country will return to surplus, just beyond the budget’s horizon — in 2015-16.

“If the economy did not grow as anticipated by the private sector economists, we could do more if we had to,” he said. “But we are getting to balance, we are committed to returning to surpluses. This government will return to balanced budgets.”

Analysts said the government numbers only work if the recovery continues apace with no surprises, keeping government revenues pouring in reliably from now until mid-decade.

As well, the budget is counting on Treasury Board President Stockwell Day to limit spending growth to 1.5 per cent in 2012-13 and 2.5 per cent in the subsequent two years — about the rate of projected inflation.

Military cuts loom in 2012-13

OTTAWA — The Canadian military dodged a bullet in Thursday’s federal budget, but will still see a total of $2.5 billion carved out of future defence spending after troops withdraw from Afghanistan next year.

Funding will remain largely stable in the current year, but the Conservative government plans to take away $525 million in planned increases in 2012-13, $1 billion in 2013-14 and another $1 billion the following year.

With Ottawa facing an estimated $53-billion deficit this year and $49 billion next year, there have been calls by social welfare groups for cuts to defence spending.

The military’s budget has increased by $3 billion annually since the Tories came to power four years ago.

It is expected to crest above $20 billion this year.

Finance Minister Jim Flaherty said restraining defence spending is one pillar in his government’s strategy to cut $17.6 billion from the federal budget over the next few years.

Thursday’s budget raises questions about whether the Harper government will be able to deliver planned big-ticket purchases, including new naval supply ships, search-and-rescue planes, and armoured vehicles to replace those worn out by the Afghan war.

“We do not know right now if there will be an impact on those major capital projects,” said Vice-Admiral Denis Rouleau, second-in-command for the military.

“We’re certainly hoping to be able to move forward.”

Just 18 months ago, Defence Minister Peter MacKay drew up a list of equipment the Conservatives planned to buy, and pledged to modernize the military, which he said had been starved under Liberals.

Little for environment, arts, the poor

OTTAWA — If tough economic times force governments to focus on their top priorities, they also make it crystal clear which areas are left at the bottom of the heap.

The environment, the arts, poverty and international aid are among the files that get short shrift in this year’s budget.

In the case of the environment, Equiterre’s Stephen Guilbeault is crying false advertising.

Although Wednesday’s speech from the throne said:

“Nowhere is a commitment to principled policy, backed by action, needed more than in addressing climate change,” there are few budget measures directly related to reducing Canada or the world’s greenhouse gas emissions.

“I thought last year we’d hit rock bottom. I think I was wrong,” said Guilbeault.

A high-profile Harper promise to focus international aid on maternal and child health while hosting the G-8 and G-20 summits is not matched with any extra aid funding.

Like the environmental file, arts funding is another area where the government spent money in previous budgets but has now shut off the taps.

There are only passing references to cultural and heritage institutions in the throne speech and budget. The government announced $540 million of arts, culture and heritage funding last year, spread over two years.

There are also few measures to help the poor.

Single parents will get a tax break that allows them to keep more of the $100 cheque they receive every month for each child under six.

There is also an easing of the rules on charities, although it is unclear whether that will ultimately mean more money gets to those in need.

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