THE CANADIAN PRESS/Sean Kilpatrick
OTTAWA A penny-pinching Conservative government is loosening the reins on Canada’s business community in a budget it says will position the country for unbridled commercial opportunity.
With an eye to the long game after years of politically attractive, minority budgets, Finance Minister Jim Flaherty is trimming $5.2 billion in annual federal spending — scrapping the money-losing penny in the process — while raising the age of eligibility for old age security to 67 from 65, starting a decade from now.
Thursday’s federal budget, the seventh since Stephen Harper took office, is the first with an overtly pro-trade and resource development bent and a dearth of voter-friendly goodies.
“We are a moderate, pragmatic government that responds to the facts as they are, and not as we might wish them to be,” Flaherty said in the budget lock-up Thursday.
“We are fiscal conservatives, we are a majority now, the economy is growing — albeit modestly ... We’re looking to the future.”
Flaherty said Canada “wants to be in the next league. We want to be with the emerging economies. We want to be with the economies of Asia and South America that are growing, and we’re in a position in this country to get there.”
The blowback was immediate: a noisy group of protesters perched in the House of Commons public gallery began to chant slogans as Flaherty delivered his speech.
“Where are we in your budget? This is not our budget!” they shouted before being led out by security guards.
The budget’s business-friendly measures include streamlining environmental assessments to speed major resource projects — think pipelines — into existence; recasting research and development funds; tailoring the labour market, including immigration, to specific job shortages; and a focus on new free-trade deals.
There’s $500 million in government largesse for venture capital, $1.1 billion in directed research and development funding, and $205 million for a one-year extension of a temporary hiring credit for small businesses.
“What the budget is doing is handing off the baton from government to the private sector to carry economic growth,” said Craig Alexander, chief economist at Toronto Dominion Bank.
The transformation will come from a shuffling of priorities, not big new spending programs. Research funding, for instance, will be shifted dramatically away from pure science to more commercial applications.
“It’s a whole bunch of little things around the edges,” said Alexander.
Not so, said Greenpeace Canada, which issued a release claiming “big oil is the big winner in today’s budget.”
It’s also an austerity budget, whatever the government claims.
Total spending, including debt servicing charges, will rise to $276.1 billion in 2012-13, a marginal increase of 0.11 per cent on the current $272.9 billion envelope. Program spending is projected to rise just 2.1 per cent annually for years, effectively flatlining in real terms after inflation and population growth.
“It’s going to take an awful lot of tough decisions to restrain to that degree on such a long period of time,” said Alexander.
“In actual fact, it’s more fiscal restraint than we had in the 1990s (under the former Liberal government) because in that period we had very sharp cuts followed by a rebound in spending. This time it’s going to be slow spending for many years.
“It’s easy to say, extraordinarily difficult to do.”
The Conservatives had been signalling even deeper cuts, but Flaherty rejected recommendations from cabinet’s strategic operating review committee for cuts totalling $7.5 billion. An improving economy that lowered deficit projections convinced Flaherty and Harper more draconian cuts weren’t needed.
Thomas Mulcair, the newly installed NDP leader, nonetheless likened the budget to a “clear cut.”
Conservatives, said Mulcair, “like being in power, but they’re not very good ... managers, so they’re not going to go at this with a scalpel. They’ll always go at it with a rusty machete.”
Liberals said the spending blueprint sets the country on a collision course.
“This is a budget of division that not only pits one generation against another, but also prosperous regions against regions that are suffering,” said Liberal finance critic Scott Brison.
But others were equally adamant the government didn’t go far enough.
“Spending cuts announced today are a drop in the bucket,” sniffed Gregory Thomas of the Canadian Taxpayers Federation.
The Canadian Press