It's budget day
Today is budget day, and in a few hours Stephen Harper and the Conservative Party will deliver their fourth budget. We already know the budget will take Canada 34 billion dollars into the red. We know tax cuts are likely to be minimal as Ignatieff has said as recently as Friday that the Liberals will vote down the budget if it contains tax cuts that "will not stimulate the economy" or keep us in "permanent deficit". Despite the threat, some form of middle class tax relief will be included and obviously from a political perspective; it will be tough for Liberals to justify in an election campaign or coaliton government their opposition to tax cuts. 6 in 10 Canadians want the budget to pass, and it is largely expected in the media that the budget will in fact pass with Liberal support. Earlier polls show that the coalition has overwhelmingly been rejected by Canadians and it is clear that a majority of Canadians would rather see the Governor General call an election should the Conservatives be defeated as oppose to allow an unelected coalition to rule. Yesterday in the throne speech and through leaks from various ministers, it is obvious that Conservatives are bending over backwards to meet Iggy's conditions for support. The NDP and Bloc will vote against the budget regardless of what is in it. Here is what has already been announced according to the Toronto Star:
What's Known
Deficit
$64 billion projected over two years, including $34 billion in 2009-2010. The stimulus package is valued at about $21 billion for one year.
Infrastructure
$7 billion in spending including: $4 billion of the money over two years on shovel-ready provincial and municipal projects such as roads, bridges and sewer systems. $2 billion for repairs, maintenance and construction at colleges and universities and $1 billion for green infrastructure.
Social Housing
More than $2 billion in spending nationwide, including: $1 billion to renovate existing social housing; $600 million for on-reserve housing to help address a frequent call from aboriginal leaders to improve the state of housing; $400 million for seniors’ housing; and $75 million for housing those with disabilities.
Job Training
Spending of $2 billion, including: $1.5 billion for laid-off workers who are eligible to collect employment insurance, as well as for those who cannot access EI funds under current rules; $500 million for retraining workers who have been in the workforce for a long time but are too young to retire.
Industry
$1 billion to help single-industry towns such as mining, farming and forestry communities; $500 million to help modernize farms; $150 million for forestry. Plus, $50 million to expand slaughterhouses.
Arts & Culture
$160 million in culture spending, including: $100 million over two years for arts festivals, music and comedy across Canada; and $60 million, also spread over two years, for constructing or maintaining theatres, museums and other arts buildings under the Cultural Spaces Canada program.
Autos
In addition to a $2.7 billion bailout already announced for the Canadian arms of U.S. car makers General Motors and Chrysler, the government is expected to take steps to make consumer financing for car loans and leases easier to obtain.
What's expected
Taxes
Billions of dollars in tax breaks for the middle class, including incentives for home renovations, which could take the form of a refundable tax credit, and increased tax incentives to help companies invest in new technology and equipment, develop their research arms and pursue cutting-edge environmental products.
Banks & Lending
The government will take steps to increase access to credit by consumers and business, possibly including authorization of expanded financial support for business by the Business Development Bank of Canada and Export Development Canada. The throne speech pledged action to ensure the stability of Canada’s financial system. Finance Minister Jim Flaherty will seek authority to inject capital into Canada’s banks if needed.
Credit Cards
The budget will include legislative measures to expand Ottawa’s powers to regulate when credit-card companies slam customers with unforeseen rate hikes, forcing companies to be more transparent about rate changes, sources have said.
Michael Ignatieff has laid out three conditions for supporting the budget:
1, It must protect the most vulnerable
From what has already been leaked, it is clear that assistance will be provided for seniors, aboriginals, the unemployed, those in the arts, those who require EI but do not qualify and those in need of affordable housing. This condition has likely been satisfied.
2, It must save jobs
There will be bailouts for the auto industry, banks, forestry, mining communities, farmers and virtually every other industry. All of this is being done to "save jobs".
3, It must "create the jobs of tomorrow."
So far this condition hasn't been satisfied and will likely be revealed after the budget. Will research projects such as the National Centre for Medical Device Development being proposed for Markham be included? What will be done to create "green jobs"? Will there be assistance for small businesses? What will be done to address Canada's productivity? All of this will be interesting in today's budget.
4, It must not include tax cuts.
This could be the potential poision pill that leads to the defeat of the Conservative government. Defeating the government over Middle Class tax cuts could prove costly politically however for the Liberals. Some form of tax credits and cuts are likely for this budget. This issue will determine if Liberals support or oppose in the end.
Tomorrow morning, we will know officially if the budget will pass. Ignatieff wants to "sleep on it". The vote takes place at 6pm. If the budget does not pass, the Governor General will have to chose between coalition or election. Either way months will pass before a new budget is written and implemented meaning that political opportunism will prove costly to Canadians desparate for assistance and an economy desparate for stimulus. Like all budgets this one will produce winners and losers. At the end of the day Conservatives could prove to be both winners and losers. Conservatives might win because they will stay in power another day most likely. Conservatives also lose because survival will come at the high price of their traditional values and policy positions as many from the base have already dismissed this as a "Liberal or coalition budget". I should have an update later today once the budget is officially delivered at 4pm.
Thanks for reading...
Darryl
