WATCH ABOVE: Fresh out of lockup, Global’s Jacques Bourbeau breaks down exactly what’s in the 2015 budget – and what was left out.
OTTAWA – It was no secret the Conservatives planned to balance the books. But how they did so came as a surprise.
With this document, Stephen Harper’s Conservatives will seek to trumpet themselves as steering the country through harsh economic times and getting the federal books back in black, albeit barely. They can reap the political benefits of promising to (eventually) invest in infrastructure, helping dual-income Canadian families keep more cash for themselves and reining in sick public servants; and, if touting a fragile economy becomes unpalatable, they can wave a patriotic banner highlighting their dedication to fighting terror.
Here’s a look at some of what the government is proposing – and what’s missing – in this year’s budget:
They promised it, and here it is – though the$1.4 billion surplus doesn’t look exactly how the Conservatives had said it might.
For starters, last year’s budget projected a surplus of $6.4 billion for 2015-16 – a difference of $5 billion. Second, were it not for an accounting adjustment, this budget would actually project a $600-million deficit.
The Conservative government achieved a balanced budget by clawing back the federal emergency fund, a pool of money traditionally ignored in surplus and deficit calculations, to $1 billion from $3 billion, giving them an extra $2 billion.
“They changed the risk adjustments and we’re in surplus,” said David Macdonald, an economist from the Canadian Centre for Policy Alternatives. “But we’re very tight to the balance line … It’s very possible that, if re-elected, this government would get caught up in its own balanced-budget laws.”
The surplus was also contingent on additional money coming from Employment Insurance, the sale of the government’s shares in General Motors this month and what’s anticipated to be record high levels of lapsed funding from a number of departments.
Infrastructure spending was a big question mark ahead of the budget. The chapter devoted to infrastructure spending runs 20 pages, but there is little new material to digest; most of the ink is devoted to highlighting the pledges of past budgets, including the Building Canada Fund, New Building Canada Fund and the Federal Gas Tax Fund.
What new spending there is, won’t come down the pipes for at least a couple of years.
“This budget is not a stimulus budget. The surplus is far more important than infrastructure spending, which is explicitly backend loaded,” Macdonald said.
“The real infrastructure spending wont’ hit for five years – in fact, we’re not going to see any real infrastructure spending until 2020.”
In two years, the budget proposes a $750 million investment for a new public transit fund. The initial investment would be spread over two years, then jump to $1 billion per year going forward.
Although the funding is earmarked for 2017-18, there is a strong likelihood that federal funds will require partnerships with the private sector as well as a submission process, two impediments that could delaying money getting out the door and into municipal projects.
There is an unmistakable consumer-friendly angle to this budget, which the Conservatives have been slowly disclosing over the past six months.
Commitments unveiled throughout that period, including boosting the Universal Childcare Benefit, doubling a tax credit for youth fitness and income splitting, were all included in Tuesday’s budget.
Those measures are among a short list promised to Canadians in 2011, when Prime Minister Stephen Harper campaigned on them, promising to implement then so long as the government was able to balance its books.
The budget has the Conservatives coming through on their pledge to increase the Tax Free Savings Account ceiling to $10,000 from $5,500.
The promised fitness tax credit for adults, however, still isn’t on the books; the government has only committed to pulling together a panel to discuss the potential benefits of the tax measure.
Throughout their time leading the government, the Conservatives have kept a steady eye on the trade file, wrapping up negotiations for the Canadian-European Union agreement, signing the Canada-Korea Free Trade Agreement and the Canada-China Foreign Investment Promotion and Protection Agreement.
This budget focuses inside the country’s borders, proposing measures intended to help Canadian businesses capitalize on opportunities at home and abroad.
In that vein, the Conservatives have proposed an investment of $18.1 million spread over two years beginning next year to help promote competition and trade opportunities for the country’s agriculture and agri-food sector.
On top of that, there’s a proposed investment of $12 million over two years beginning that same year to market Canadian agriculture and agri-foods around the world.
There is also a small investment proposal of $5.7 million over five years to help secure new market access for Canadian seal products, which have taken a hit in recent years.
The prickly relationship between the Conservative government and the public service has been simmering for years, with steady cuts to the public service numbers and budgets.
Now, one measure in the 2015 budget aimed squarely at the civil servants sick and disability leave programs could easily result in a strike, said Lee.
The public service unions are on the record, over and over, saying they will strike if the government goes after their sick day benefits – a program the government says is currently too generous and too expensive.
Still, the budget document says, “The government will make every effort to reach an agreement with bargaining with agents … In the event that agreement cannot be reached, the government will take the steps required to implement a modernized disability and sick leave management system.”
To Lee, that excerpt clearly spells forcing the public services hand into a deal or giving the federal workforce little option but to strike.
The government is hoping to help pad its coffers by cracking down on tax cheats, proposing $118.2 million over five years for the Canada Revenue Agency’s underground economy investigation teams (primarily looking at individuals and companies dealing in cash only).
The plan also proposes a $25.3 million investment over five years to CRA to help target international tax evasion, and $58.2 million over five years to help fight “aggressive tax avoidance” within Canada’s borders.
The budget seems to hold a little bit of something for everyone – except environmentalists.
The 518-page document makes no mention of “carbon tax,” “climate change,” or “global warming.”
“If anything, this is a pro-climate change budget,” Macdonald said, noting the only mentions of anything to do with climate change run against environmental protection – accelerated cost allowance for natural gas and new funding for pipelines, for example.