Finance Minister Jim Flaherty tabled the 2014 federal budget in Parliament on Tuesday. Here are the highlights.
Finding a balance
“We’re not quite there yet, but we’re almost there,” Mr. Flaherty said Tuesday.
The budget projections, including a cushion of reserve cash, show a deficit of $2.9-billion for the 2014-2015 year, and a $6.4-billion surplus the year after.
To get there, Ottawa is delaying $3-billion in defence spending; saving more than $1-billion annually by clawing back its share of health benefits for public-sector retirees; accruing $14-billion in EI surpluses between 2013 and 2017; and hiking tobacco taxes to bring in more than $600-million a year. Several spending projects are also stretched over several years.
That cocktail of measures appears set to send Canada back to surplus for the first time since the 2007-2008 fiscal year.
The balanced budget would come just in time for the Conservatives, as the next federal election is expected in the fall of 2015.
Jobs, jobs, jobs
Included in the budget is notice that Ottawa is pushing ahead with the Canada Jobs Grant program, regardless of a host of provincial complaints. The program, a centrepiece of last year’s budget, will see roughly $300-million of $500-million in current federal job-training transfers redirected by the time it’s fully implemented. According to the budget, Ottawa will now take on the provincial share of the program and launch it April 1 in provinces where a deal isn’t reached soon. No province has yet signed on.
The budget includes $11-million over two years in new funding for the Labour Market Opinion process, a document required for the much-maligned Temporary Foreign Worker Program. The new funding comes as employers have complained LMO wait-times have soared.
The budget also includes millions for training and internship programs.
The Brazeau, Duffy and Wallin rule
The budget wades into the messy Senate scandal: Patrick Brazeau, Mike Duffy and Pamela Wallin have all been suspended from the Senate, but continue to accrue pensionable years of service while suspended. The budget announced that the government will soon introduce a bill to change that, if a Member of Parliament or senator has been suspended by their peers. The provision doesn’t mention any senators by name. All three are eligible to return to the Senate after the next election, and resume collecting a paycheque unless suspended again.
Beer gets a break, smokers get hit
Cigarette taxes are going up, but beer regulations are loosening.
The tobacco tax, unchanged since 2002, will be increased to account for inflation – amounting to a tax hike of roughly $4 per carton. The lower price paid for tobacco at duty-free stores is also being cancelled. The tobacco changes will bring government over $685-million next year, and slightly less each year after, for a total of $3-billion in new tax revenue over five years.
Beer prices aren’t changing, but the definition of beer is: Current rules make it tough for some craft beers to be called “beer.” The budget cites the case of Rickard’s Cardigan Autumn Spiced Lager, which wasn’t allowed to be branded as beer because it contained a flavor-enhancing ingredient: nutmeg. The government will expand the definition to “reflect innovation” in Canada’s beer industry.
More funding for food safety
The budget promises a total of $390-million over five years to improve the food safety system, including new cash for inspections and the creation of a new Food Safety Information Network. The database will allow for real-time sharing and analysis of food safety data. More than $200-milllion will go toward a program aimed at dealing with the risk of bovine spongiform encephalopathy (BSE), or mad cow disease. The changes follow an Auditor-General report that identified “significant gaps” in the federal system for handling food recalls.
Energy gets a modest boost
The agency that reviews pipeline projects is getting a cash infusion. The budget allocates $28-million over two years for the National Energy Board regulatory body. The money is specifically for project reviews, “such as TransCanada Pipelines Limited’s Energy Easy Pipeline Project,” the budget says, and will be “fully cost-recovered” from industry. The budget also permanently axes tariffs on mobile offshore drilling units, which had already had temporary duty-free status. It’s expected to “lower business costs” by $13-million annually and stoke the fortunes of Canadian offshore energy projects.
Infrastructure, old and new
The budget rolls out cash for infrastructure projects, some new and some already announced. Montreal is getting roughly $500-million for both bridge refurbishment and the construction of a new bridge across the St. Lawrence, which had already been announced and is due to open in 2018. The budget also allocates $470-million in new money towards the bridge project between Windsor, Ont., and Detroit, Michigan, a $631-million effort already announced.
Atomic Energy of Canada Ltd.’s Chalk River reactor will receive $117-million over two years – nearly all of it on the books next year – to ensure ongoing production of medical isotopes while government prepares to hand off operation of the facility to a contractor.
New justice programs
Ottawa says it plans to create a new DNA database to help identify human remains and bring closure to the families of people who have disappeared. The idea is among several justice-related initiatives, including new money to deal with the growing problem of provincial court delays and to address persistent concerns about missing and murdered aboriginal women. In another effort to make it easier for victims to navigate the justice process, the government says it plans to create an online portal that would allow people to access information about a particular offender, including a photograph, before the person is released from custody.
Funeral funding for veterans
With calls for Veterans Affairs Minister Julian Fantino’s resignation following a botched meeting with veterans and the recent closure of several services offices still fresh, the budget touts spending to honour veterans – and get them jobs. It proposes $108.2-million over three years to ensure veterans of modest means get a proper funeral and burial. For living veterans medically released from the Forces, the government wants to make it easier to land jobs in the public service, including by giving preference to eligible veterans in external job competitions. The budget also allots $2.1-million in 2014-2015 to improve online access to Veterans Affairs services – a concept that’s been roundly criticized as unhelpful to those aging veterans who don’t have computer access or skills.
Parks tomorrow, not today?
Although the budget allots $391.5-million over five years to Parks Canada for infrastructure improvements, the accounting will be deferred far beyond that timeframe. Five million dollars will be spent over the next two fiscal years. Proposed projects include structural repairs to Ontario’s Crow Bay Dam, and fixing up a section of the Trans-Canada Highway that passes through B.C.’s Glacier National Park.
On the heels of major summer floods in Ontario and Alberta, the government has its sights set on a national approach to residential flood insurance – a move that would align it with other G8 countries. The budget proposes consultations with the insurance industry, provinces and territories to explore options. But instead of solely reacting to natural disasters, the fiscal plan also proposes money to get proactive. Beginning in 2015-2016, the government will provide $200-million over five years to launch a National Disaster Mitigation Program that will invest in structural mitigation projects, including for infrastructure to control floods. A further $40-million over five years, beginning in 2015-2016, will go toward on-reserve emergency management for First Nations.
Hefty innovation items
At more than $1.6-billion in funding over the next five years, research and innovation is among the heftiest new spending items in this year’s budget. The plan proposes to create a Canada First Research Excellence Fund for post-secondary institutions, though only $50-million of the $1.5-billion over 10 years will be dispersed starting in 2015-2016. Some $46-million annually will go to four granting councils – including the Canadian Institutes of Health Research and the Natural Sciences and Engineering Research Council. Money will also flow to physics and quantum computing research, as well as innovation in the automotive sector.
In the Conservatives’ bid to assert Canada’s sovereignty in the North, the government pledges to continue trying to secure international recognition of Canada’s extended continental shelf –including the North Pole – by obtaining key data to support its claim. The budget also proposes $40-million over two years to renew a program that, among other things, focuses on promoting economic diversification. The plan supports health services in the three territories, too, by providing $70-million over three years in funding, and commits to enhancing funding for a program that subsidizes retailers in remote communities that supply people with nutritious food.