Federal Budget Verdict: 2012

It was a two-budget week for Ontario.  Tuesday Dwight Duncan presented the provincial budget, while Thursday it was Finance Minister Jim Flaherty’s turn.  Flaherty  brought down a budget I’d call surprising given this is his government’s first with no Opposition breathing down their necks.

It wasn’t bad, I just have doubts as to whether it went far enough.  It went big on saving money, small on spending. They cut Civil Service by 19 thousand, and are going to stop making the penny this fall.  They raised retirement age by two years, and changed the environmental reviews process for resource projects. 

The approval process for a resource project- the Northern Gateway pipeline for example can take up to 6 years to complete.  The measure spoken of in the budget will shorten that to 24 months in what Flaherty calls an “accelerated regulatory process”.  Hand-in-Hand with this is are measures to grant Revenue Canada greater auditing powers to make sure that “Green” charities are in fact sticking to a limit of 10% of their overall budget when they lobby politicians.  At the core of this is a realization that a lot of Canada’s jobs are going to come from t he resource sector.  This could be bad for the environment, but I think we should wait to see how this plays out before we offer a final verdict on this one.

The budget also raised the amount Canadians can bring back into the country from the United States from $50 over a 24 hour period to $200 starting in June, 2012.  On the one hand this helps people who spend a lot of time down south, on the other it could backfire as people begin doing more of their shopping in the United States.  What happened to the noises Flaherty was making late last year when he talked about asking Canadian retailers to lower their prices to the same levels as their American counterparts? I’d find a way to include a statement to that effect in the budget.  Perhaps some tax cuts for those that do??

Part of the Conservatives’ job creation plan appears directed towards innovation.  The Conservatives propose reforming the current system of indirect tax credits to one based around innovation, and productivity.  The grand scheme is to dedicate $1.1 billion over the next five years to support research and development; $500 will go to fund innovative companies already in existence.  Additionally, the government is working on free-trade agreements that will increase the marketplace for Canadian goods, services, and labour.

Here’s where it didn’t quite go far enough. The ideas on free-trade and innovation are great ideas which, are going to end up helping the Canadian economy.  But in my limited exposure to the business community, I’ve come to the conclusion that Canadian towns, and cities are fueled by their small businesses.  The free-trade agreements, and the tax system reform will help them at some point, as will the $1000 hiring credit for new employees.  But a lot of these smaller businesses- I speak of the mom& pop shops, need more direct help now more than just the  $1000 hiring credit.  Flaherty had a chance to address some of the concerns, but didn’t.

And so, I return to Old Age Security.  The age goes up by 2 years from 65-67, which affects those 54 years of age or younger.  I see the need to do that, and I agree with it.  But the whole thing is that as the older workers are in the labour force longer, there are fewer jobs for younger people.  I would’ve loved to see this measure implemented with some sense  of balance- raising the OAS age, while including measures to help younger people get into the work force.. and that didn’t happen.

My verdict: Not a bad budget for a first one as a Conservative majority.  It just didn’t go far enough in a few areas.

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Filed under . federal politics, conservative majority, federal budget 2012, Jim Flaherty

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