Thursday, March 4, 2010

Budget Day

Source: CTV News: Budget Fights Deficit with Freeze on Future Spending
Source: CTV News: Text of Finance Minister Jim Flaherty's Speech
Source: CTV News: Tory Deficit-Slashing Plan Needs a lot of Luck
Source: CBC News: Kenney Responsible for Removing Gay Reference

Alright, before we move on to the bulk of Budget Day 2010, there's a small update to yesterday's blog post. After I posted the post, a CTV News story came out with Kenney saying that he was not personally responsible for the editing of the Immigration Handbook, as such, he denied any responsibility for it. Today, Minister Kenney has stepped forward and taken 'full responsibility' for the content of the handbook. Although, Kenney has refused to answer whether he personally ordered the edit (as has been reported) or if a senior aide in his office did. So, take this new information as you will in conjunction with the information from yesterday's post.

And now, for something completely different...Which is to say, something completely the same. Since we knew the Budget was coming, there has been numerous little snippets coming out of the Finance Ministry about what Canadians could expect in the Budget; and of course, it was a budget with no real surprises.

And I say no real surprises, because the budget falls in to true Harper Conservative nature: Try to please everyone, don't step on too many toes, and hope to God we sway some voters with it. The Harper Government avoided tax increases and spending cuts, instead favouring 'spending freezes' and allowing one-shot programs, like the Renovation Home Tax Credit, to expire as opposed to being renewed.

And of course, like any true Conservative Government, the budget is mostly symbolic as the target dates are well down in the future. Furthermore, most of the target dates exist outside of the election window, which means, if the Conservatives are not re-elected, they have created a means of automatically attacking the next government.
Example: We had planned for this with out 2010 budget, but the government, blah blah blah blah...

So, let's take a bit of a closer look at this budget.

The first issue, is something near and dear to my heart, departmental budgets. The Budget calls for the departments to have their budgets frozen, as well as having mandated pay increases financed from the departmental budget.

Allow me to explain the problem with this. Currently, departments operate under a type of quota system. A department is given so much money for their fiscal year, and at the end of the year, any money not spent is returned to the government at large and their budget for next year is reduced, because they had money left over.

So, departments that manage their money well are penalized next year for coming in under budget. There was an article in Maclean's a few months back, explaining how an independent contract was able to bilk a department out of $100,000+ for little to no work, simply because no one asked enough questions and was happy to simply be spending their budget.

So, there's problem number one. Freezing a department's budget will prevent increases in spending and should promote wiser spending, but if departments are still running a risk of having their departmental budget reduced for coming in under budget, we are still going to see a large increase of wasteful spending. As such, if our finance minister was really concerned with departmental waste, he would push to reform the budget system of the departments by removing the taking back of a surplus from departments and instead allowing those departments to carry over any remainder into their next fiscal year.

Furthermore, by freezing pay increases in the department from the Federal Coffers and instead making these increases come directly from the department's operating budget, a number of things are going to happen. One, we're going to see numerous lay offs in many smaller departments who cannot afford to keep their present staff and maintain wage increases. Two, we're going to see departments scale back funding to programs in order to ensure that they can support their staff.

If one happens, the Conservatives are happy because they get to appeal to 'Small-Government Conservatives' who see a shrinking bureaucracy as a good thing. If number two happens, the Conservatives are happy because they will be able to accuse the bureaucracy of not doing their jobs and prompting lay off on their own, again appeasing small-government conservatives. Effectively, the Conservatives have cannibalized the bureaucracy through this departmental freeze, and either way, they will be able to shrink the civil service to appease their party base.

Then of course, comes tax cuts. That's right, a record deficit and growing, yet the Finance Minister announces, proudly, that the government will continue offering tax cuts to businesses, and announces the goal is to have the lowest corporate tax rate of all the G7 countries by 2012. While this may help smaller businesses launch themselves and have a better chance of succeeding, larger companies are getting away with paying less than their fair share.

So, despite these companies (who since the Martin Liberals) have been getting tax cut after tax cut, and our country having a growing deficit, our Finance Minister announces that rather than freeze tax levels at their current level or roll back some of the tax levels on business; the Government of Canada will instead continue to decrease the corporate tax rate and further reduce government income.

Also announced in the Budget were freezes to Defense spending, the freezing of Member of Parliament salaries (as well as Ministers, the Prime Minister and Senators), and the production of most cost-efficient Canadian currency.

And of course, after our performance, $22 million to the "Own the Podium" program that helps athletes in winter sports. I would, however, like to point out the small problem with this. While it's true that Canada did have it's best performance in a Winter Olympics this year, the so-called "Own the Podium" program, was indeed a failure.

After all, the stated goal of the program was for Canada to have the HIGHEST MEDAL count overall, not just the most gold medals. Also, take into account that their was extra motivation for our athletes as they were competing on 'home territory'. While the program may have made a difference, there are numerous other factors that also help explain Canadian athlete's performances. As such, since "Own the Podium" did not achieve the program's goal, it seems odd that we're willing to increase funding to it anyways, especially doubling the funding.

Not that I'm being down on our athletes, or our need to help support them, it's just that the program itself did not work as intended, and we should explore other options as opposed to just increasing funding to a program that did not meet its objective.

Now, as for the rest of the budget, it's a bit of a mystery. There's a lot of talk from the government, but the budget does not really provide any details as to how the government plans to achieve most of the goals set out; especially the lofty goal of conquering the growing deficit. Add to that that Kevin Page, the thorn in Harper's side...I mean, the Parliamentary Budget Officer, keeps insisting that this budget cannot scale back the deficit without raising taxes or executive massive spending cuts.

And let's all remember, Mr. Page has a better economic track record at the moment than Jim 'I will not produce a deficit' Flaherty and Stephen 'Canada is not on track to a recession' Harper. Add to that, the fact that if inflation rates rise by more than the projected 2% accounted for in the budget, all of these numbers are instantly wrong.

So, in a time of economic uncertainty, when we have two 'leaders' who have constantly shown how inept they are at managing an economy, despite calling themselves the 'best option for financial stewardship', can we really trust them to accurately predict what is going to happen in 2015; when in 2009, they couldn't see the writing on the wall over the growing economic uncertainty?

I think we all know the answer to that one.

No comments: