The Conservative government has balanced the federal budget for 2015, but it is a delicate balance.
Tax cuts promised by Prime Minister Stephen Harper six months ago – including good news for seniors, small businesses and foreign investors – have left Canada’s budget in the black, but with almost no surplus to speak of.
West Vancouver-Sunshine Coast-Sea to Sky Country Member of Parliament John Weston told Glacier Media that the balanced budget is a big win for Canada.
“That was a major success when countries around the world are unable to do so,” Weston said. “The government has presided over an economy which has added 1.2 million net new jobs since July 2009 when the recession hit, making us one of the top performers in the world economically.”
Weston attributes this success to the Conservative government’s tax cuts to businesses, allowing them to hire more people.
“Today we saw — for instance — further reduction in the tax rate for small businesses from 11 to 9 per cent,” Weston said. “That’s the largest tax cut in more than 25 years for small business. We know that small business accounts for the lion’s share of employment — of jobs — around the country. If small businesses are thriving, it will be easier to find jobs.”
Not everyone agrees, however. A lot of the criticism from the public and political opposition centres around the precarious position that the diminished surplus has left Canada in.
In addition to eating through most of the $5 billion surplus for 2015/16 (there’s $1.4 billion left over), the government has also done away with the unforeseen events fund, typically about $3 billion.
Randall Bartlett, senior economist at TD Economics told media that the balanced budget is not as stable as the government is making it out to be.
“There’s a lot of things booked in here that are not based on economic fundamentals,” Bartlett said. “I wouldn’t necessarily call it the healthiest balance. Is it on the strength of the economy and the strength of revenues? It’s not.”
For seniors, there’s good news. A petition started on the Sunshine Coast by Brooke Campbell to remove the minimum withdrawal limit to Registered Retirement Investment Funds (RRIF) was successful.
In this case, seniors are allowed to leave their money in their RRIF longer, and they won’t be required to withdraw at the same higher rate that applies now.
“That means that as seniors are living longer lives than in 1982, and are receiving lower return on investment under current market conditions,” Weston said. “The money in their RRIF may last as long or longer than they do.”
Also of regional interest, $2 million has been promised to the Salish Sea Marine Survival Program, run by the Pacific Salmon Foundation. This will enable them to investigate the survival of juvenile salmon in the Georgia Straight.
Minister of State for Small Business and Tourism Maxine Bernier utilized a report put together by Weston and tourism industry leaders from around B.C. to successfully advocate for increased funding to the Canadian Tourism Commission.
A study by Nanos Research in the lead up to the finalized budget found that 32 per cent of Canadians would prefer to see government funding go to Canadian infrastructure, while less than half that number were in favour of tax cuts.
Although the Conservative argument is that tax incentives for small business and foreign investors will stimulate jobs in the economy, many – including NDP leader Thomas Mulcair – think that this may be an attempt to sway the vote in the upcoming election.
"I think that's probably the contingency they're worried about,” Mulcair told media. “The election.”
Both opposition parties would likely reverse some, if not all, of the tax cuts should either win the election.
Weston sees the opposition’s response as promising for another term with the Conservatives.
“The opposition parties are upset because the Conservatives have done a good job.” Weston said. “[They] have managed the economy well, and [the opposition’s] only resort is to say, they’re only doing this to get re-elected.”
Funding for Canadian security has increased significantly, including almost $300 million for the RCMP, CSIS and border patrol. Other items on the budget won’t take effect for a few years, including a new public transit fund that will help lower congestion in large cities.
