Winnipeg Free Press

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On Wednesday, however, Flaherty lobbed a grenade into the Conservative caucus room when he said he personally thinks blowing part of that money on a promise that's expected to cost upwards of $ 2.5 billion is not the way to go. " I would pay down public debt and reduce taxes more, myself, but I am only one person," he said in a post- budget interview. Prudent fiscal management has historically served Canada well, but federal governments lost their way over the last 50 years and became spendthrifts, Flaherty continued. " We've created a large public debt and we should deal with it and we should knock it down," he said. " Not for my sake, it won't make any difference to me, but it will make a big difference to the next generations." Opposition Leader Tom Mulcair pounced on Flaherty's comments, asking Prime Minister Stephen Harper if he agreed income splitting would provide no relief to the vast majority of Canadian families. " This government said in the last election, made a commitment, that when we balance the budget... one of the highest priorities of this government will be tax reduction for Canadian families," Harper said. But cracks had already started to appear within Tory ranks about whether they should abandon the promise. Treasury Board President Tony Clement and Employment Minister Jason Kenney said they back income splitting, while Maxime Bernier, minister of state for small business, seemed to side with Flaherty. " I know what our campaign commitments are and I stand by those commitments," Clement said. Echoed Kenney: " We made a platform commitment to introduce income splitting when we get to a balanced budget. We'll get to a balanced budget next year, that's very clear." Industry Minister James Moore, however, dodged direct questions about where he stands on income splitting. " You're talking about 2015. We have to get through 2014 first," Moore said. New Democrat MP Peter Julian could barely contain his glee as he described the " incoherence" within the federal cabinet and the Prime Minister's Office. " We now have a finance minister backtracking from what was a key Conservative commitment," he said. The C. D. Howe Institute has calculated it will cost federal coffers $ 2.7 billion a year - plus $ 1.7 billion from the provinces - to allow couples with young children to split up to $ 50,000 of their income for income tax purposes. And the Tories have yet to implement another costly campaign promise: doubling the original $ 5,000 annual limit on contributions to tax- free savings accounts. Critics say both policies would favour only a small segment of the population. With record household debt, many families can't afford to sock away $ 10,000 a year, they note. The institute has argued 85 per cent of households, particularly single parents, would gain nothing from the incomesplitting proposal. As well, it estimated 40 per cent of total benefits would go to families with income above $ 125,000, who could gain up to $ 6,400 from Ottawa, with more savings potentially coming from the provincial tax bill. Rajotte acknowledged the policy would likely benefit only a small percentage of the population. " It's a simple fact that there's a certain percentage of the population - those families with two parents that have incomes that are very disparate - benefit from it," Rajotte said. " Those situations where two people working outside the home, with incomes that are comparable, obviously they're not going to benefit nearly as much from a measure like this." University of Calgary economist Jack Mintz has argued those problems can be fixed if income- splitting is accompanied by other measures that would allow the benefits to be shared by other kinds of families. - The Canadian Press SCAN TO SEE VIDEO OF FLAHERTY'S DOUBTS OTTAWA - Employment Minister Jason Kenney says the federal government is " very close" to implementing the contentious Canada Job Grant on its own, but insists the provinces and territories are not being held at gunpoint. " My department has been working on prospective delivery of the Canada Job Grant through Service Canada for the better part of a year, so we are very close to being ready to deliver that if necessary," Kenney said Wednesday in an interview with The Canadian Press. " This is nothing like a threat, it's just a backup plan." Time is of the essence in negotiations between Ottawa and the provinces and territories because existing labourmarket agreements, which provide the federal funds used to train workers who are eligible for employment insurance, expire March 31. In its 2014- 2015 budget tabled Tuesday, Ottawa signalled its intention to go it alone - with or without any stragglers among the provinces and territories - if a deal isn't reached by April 1. That warning went over like a lead balloon in some provinces, particularly Quebec, where the Conservative government was likened to a " predator" and officials lamented anew the lack of an opting- out clause in the job- grant program. " We've been clear from the beginning that our preference is to work out provincial delivery of the job grant and the labour- market agreement," Kenney said. " But if certain provinces or territories refuse to participate, that's not the end of the world. We'll deliver the job grant, but there will continue to be base funding to the provinces through the labour- market agreements." That's a far more diplomatic tone than the one struck earlier Wednesday by Kenney's cabinet colleague, Finance Minister Jim Flaherty, who scoffed at provincial complaints about the grant program. " The money is being put into job creation. Job training in Canada is not provincial tax money; it's federal tax money," Flaherty said on his way into a Conservative cabinet meeting. " And it's not for a provincial government to tell the federal government how to spend federal tax money... The provincial governments have taxation powers; they can raise their own taxes." Kenney didn't comment on Flaherty's harsh rebuke, nor would he provide any details on the ongoing job- grant talks between the government and the provinces, saying it's " bad form" to negotiate through the media. He's yet to respond to a counter- offer put forth by the provinces earlier this month, but provincial officials have reported Kenney has been conciliatory and open to new ideas throughout the negotiations. The proposed Canada Job Grant aims to provide $ 15,000 for each eligible worker, divided equally among Ottawa, the provinces and employers. In the face of a hue and cry from the provinces, Kenney offered to cover the provincial portion of grant, upping the federal share to $ 10,000. But Kenney's provincial and territorial counterparts argue they'd still be forced to remove hundreds of millions of dollars in federal money from existing provincially run programs for youth, aboriginals and disabled citizens. Flaherty, meantime, says billions of dollars of federal money flow to the provinces each year and some don't even report the results, while others fail to use the cash for job training. " We don't even know what they do with the money; so we're going to do better than that," he said. " We will do it with the employers directly and the Government of Canada." Several provincial officials have taken issue with the April 1 deadline imposed in the budget. Theresa Oswald, Manitoba's jobs minister, called the deadline " arbitrary." She added that the programs funded through the labour market agreements have a high success rate. " To suggest that there was no evaluation, there was no accountability, just isn't so," Oswald said. " What they want to do is blow up a program that was having an 87 per cent success rate, which is pretty darn good." - The Canadian Press Income splitting splitting Tories Flaherty cool toward party's election vow By Maria Babbage Unilateral jobs grant ' backup plan': Kenney FRED CHARTRAND / THE CANADIAN PRESS Minister of Finance Jim Flaherty says paying off debt should be the top priority. By Lee- Anne Goodman ' We now have a finance minister backtracking from what was a key Conservative commitment' - NDP MP Peter Julian A_ 11_ Feb- 13- 14_ FP_ 01. indd A11 2/ 12/ 14 9: 44: 24 PM ;