Winnipeg Free Press

Winnipeg Free Press (Newspaper) - February 12, 2014, Winnipeg, Manitoba C M Y K PAGE A8 THE FEDERAL BUDGET ' There's nothing in this budget that will create jobs, and that's the issue because that's one of the first priorities for Canadians' �o THOMAS MULCAIR / NDP leader ' This government has run out of ideas and is demonstrating it once again' �o JUSTIN TRUDEAU / Liberal leader WEDNESDAY, FEBRUARY 12, 2014 FEDERAL FINANCE MINISTER Jim Flaherty A8 T HIS country desperately needs a frank discussion about government finances and the future of the Canadian economy. Unfortunately, as evidenced Tuesday in Ottawa when a new federal budget was tabled, there is no threat of that discussion taking place any time soon. As widely expected, Finance Minister Jim Flaherty delivered a budget with few new initiatives or impactful changes. The real focus was continued austerity and a prediction the deficit, which reached record levels a few years ago, will be eliminated next year. Many observers believe it will disappear in the current fiscal year. Spending will actually go down this year, quite an accomplishment given the relentless march of inflation. Eliminating the deficit is, however, a dubious accomplishment. Unemployment remains perilously high and infrastructure continues to crumble. Many sectors of the economy have simply not rebounded to prerecession levels. The gross majority of working Canadians are losing buying power to inflation. Young Canadians have fewer opportunities to earn living wages and the cost of post- secondary education continues to rise, sparking concerns graduates will face crippling debt. Most of these problems were not created by Flaherty or by Conservative fiscal policy in general. However, continued obsession with the deficit and austerity, to the exclusion of other needs, has made things worse. Since grudgingly providing stimulus spending in 2009, the Tories have been focused on deficit reduction. That goal has come at a tremendous cost. Austerity measures in the last four federal budgets have slowed the growth in Canada's economy. Again, government cutbacks are not the only culprit here but there is no doubt they have helped a bad situation last longer. The real legacy of the return- to- surplus strategies employed by Flaherty will be seen in the next few years as cuts to transfer payments put most provinces in a bind. Federal Tories have suggested the provinces do not have the intestinal fortitude to get their own budgets under control. The fact is Flaherty is just passing on his misery to his provincial counterparts. Kevin Page, the former parliamentary budget officer, reported last fall Ottawa was on target to be debt- free by 2044. However, the PBO estimated provinces and territories would ultimately see a combined public debt of more than 3.5 times GDP. In an ideal world, Flaherty would co- ordinate with provinces and municipalities to bring all governments to surplus at the same time. Any cuts to federal spending or major tax cuts would be done with the whole of the economy and public finances taken into consideration. Ultimately, this is the only way to ensure Canadians do not face higher municipal and provincial deficits and debt in the name of eliminating a federal deficit. Unfortunately, what we have is a federal government working diligently to fill one troublesome hole by digging several others. It should be noted federal opposition parties have done virtually nothing to raise the level of debate about fiscal policy. In terms of quality of their analysis and commentary, the NDP and the Liberals have been as simplistic and intellectually dishonest as the governing Conservatives. Their allegations were hollow and opportunistic, given the Tory deficit budgets were, for the most part, triggered by a combination of increased stimulus spending and lower revenues from a shrinking economy. The Tories can be criticized for a great many fiscal decisions, but they cannot be blamed for the size of the deficits accrued during the worst economic downturn since the Great Depression. Right now, we are stuck in a political quagmire, where the governing Tories continue to pursue a primary fiscal goal that does not make the country more economically stable. And we have opposition politicians more interested in blaming the Tories for anything and everything, regardless of the absurdity of the argument. In case you thought it couldn't get worse, consider this: Flaherty is already signalling a return to surplus will trigger a new array of tax cuts rather than a restoration of the money cut from transfers and other core government services. Many economists theorized shortterm austerity now would put the federal government in a good position later to deal with increased costs of programs such as health care. However, with the impact of austerity measures clearly evident now, lower taxation will mean even less money for health care, education, social services and infrastructure. There is a theory circulating that Flaherty elected to table his budget in the middle of the first week of the Winter Olympics to discourage Canadians from paying too much attention to his government's fiscal plan. Certainly, this week many Canadians are thinking more about skating and skiing than they are about deficits and transfer payments. Unfortunately, that means we're in for a rude awakening when Olympic medals are but a distant memory and our fiscal nightmares come to fruition. dan. lett@ freepress. mb. ca Focus on deficit reduction comes at tremendous cost DAN LETT O TTAWA - The Conservative government continues to ratchet in the iron corset that will squeeze an eye- catching election- year surplus for the Canadian body politic. Finance Minister Jim Flaherty's 10th federal budget all but balances the books this fiscal year, leaving a negligible $ 2.9- billion shortfall heading into the 2015- 16 election year, when Prime Minister Stephen Harper will go to the electorate sporting a surplus that could exceed $ 6 billion. It's the fourth consecutive belt- tightening blueprint for Flaherty, who used Tuesday's budget speech in the Commons to echo the words of Canada's 1868 finance minister: " I say that we ought to be most careful in our outlay, and consider well every shilling we expend," quoth Flaherty. But amid leaks of a 2015 Conservative electioneering strategy that already appears well developed, the 2014- 15 austerity budget is also stuffed with low- or zero- cost promises that wink toward the coming campaign. Constituencies perceived to be complementary to the Conservative brand get a break - including veterans, recreational fisheries, rural web surfers and snowmobilers - while smokers and public servants take it on the chin. It's all done on the cheap. " Some people will say this budget is boring; I consider that a compliment," Flaherty said at a news conference, tipping his hat to former Ontario Progressive Conservative premier Bill Davis. " It doesn't have flashy spending in it for this and for that and the other baubles that some people might want." The budget's lack of specifics left critics of the Conservatives firing wildly at an amorphous, moving target. " This is not a do- nothing budget, it's an intentional assault on the public interest," spokesman Brent Patterson of the left- leaning Council of Canadians thundered in a release. Actual new spending amounts to a total of just $ 700 million - exactly the sum the government expects to raise from new tobacco taxes - against spending cuts that top $ 2 billion. The net result is total government spending, including debt- servicing charges, actually falls slightly in 2014- 15, to $ 279.2 billion. That's down from $ 280.5 billion in the fiscal year just ended and marks a dramatic decrease when inflation and population growth are factored in. Total government spending is expected to rebound somewhat to $ 286.9 billion in the 2015- 16 election year. When the Conservatives came to office in 2006, Canada was spending 17 cents of every tax dollar on debt, down from more than 30 cents in the early 1990s. Last year, that was down to 11 cents and it should hit 10.5 cents this year. " They're trying to put things back on a sustainable path," said Mary Webb, senior economist at Scotiabank. " Is there a lot of pain and dislocation? Of course there is. Austerity is never easy... " A new poll from Harris- Decima shows an overwhelming 57- 34 Canadian consensus in favour of clearing up the deficit before any new spending occurs. The telephone survey of 1,008 respondents found the consensus crossed regional and party lines. The Conservative government's march toward balanced budgets cuts directly through the federal public service. Of all the line items in the balance sheet of spending and squeezing, one clearly overshadows the rest - $ 7.4 billion in savings estimated over six years from cutting public- service compensation. By comparison, the budget estimates only $ 1.8 billion in savings from other measures. The public service will also shoulder a two- year freeze in government spending announced last fall, representing savings of $ 1.6 billion. That's likely to translate into the loss of more positions and programs inside government; salaries account for well over half of departmental spending. The freeze will apply across government, although not to transfer payments, making a potentially difficult situation for departments already adjusting to several years of spending reductions. There were some spoonfuls of sugar with the harsh medicine. The Conservatives are moving to staunch a gaping political wound by topping up the Last Post funeral fund for veterans and expanding the eligibility criteria to veterans of modern conflicts such as Afghanistan. There's a promise of $ 305 million over five years to expand rural and northern broadband Internet service and almost $ 400 million over five years to help fix Parks Canada's crumbling infrastructure. The government will spend another $ 10 million on snowmobile trails, while giving anglers a say in the conservation of fish stocks. - The Canadian Press BUDGET BALANCE $ BILLIONS 08- 09 09- 10 10- 11 11- 12 12- 13 13- 14 14- 15 15- 16 16- 17 17- 18 18- 19 - 16.6 - 2.9 - 18.9 - 26.3 - 5.8 6.4 8.1 8.1 10.3 - 33.4 - 55.6 PROJECTED Tories batten down hatches Aim is big surplus for 2015 election By Bruce Cheadle SCAN PAGE TO SEE BUDGET WINNERS/ LOSERS GRAPHIC PATRICK DOYLE / THE CANADIAN PRESS Finance Minister Jim Flaherty and Prime Minister Stephen Harper enter the House of Commons to present the government's budget on Tuesday. A_ 08_ Feb- 12- 14_ FP_ 01. indd A8 2/ 11/ 14 9: 20: 16 PM ;