Flaherty Unveils “Jobs & Growth Budget”

(Ottawa, ON)  Today in the House of Commons, Finance Minister Jim Flaherty, unveiled what he termed a “Jobs and Growth Budget.” The 2010 federal budget is Mr, Flaherty’s fifth. While saying that the government’s Economic Action Plan is working and that Canada has weathered the economic storm better than most, the economy remains the central concern. As a result, the government will provide further stimulus spending of nearly $20 billion by fully implementing the entire Economic Action Plan this year.

The budget also announced several initiatives aimed at modernizing Canada’s transportation infrastructure -- $10 million over three years to support the legal, financial and technical work for the new Windsor-Detroit bridge; $50.5 million over the next two years for capital improvements to the Jacques Cartier and Champlain bridges in Montreal; $175 million for Marine Atlantic; and $28 million for ferry services in Atlantic Canada. Also, $87 million will be invested over two years to help the Canada Border Services Agency improve its information systems and scanning equipment.

At the same time, the budget introduces a new era of restraint, or at least a slowing in the rate of government spending particularly in national defence, foreign aid and government administration. The plan is to reach a “near budget-balance” within five years, based on current projections.

There are no major tax increases or decreases in the budget. The budget proposes to expand the Capital Cost Allowance class for clean energy generation through specified heat recovery systems. The remaining tariffs on manufacturing machinery and equipment will be eliminated. The government will not reverse its previous commitments to reducing corporate income tax rates to the lowest in the G7 by 2012.

However, there was again no mention in the budget of the first promise made by the Prime Minister during the 2008 election campaign to reduce the excise tax on diesel fuel by 50 per cent, sometime during the government’s mandate. While it is possible that the government could still meet the commitment, no one in the trucking industry is holding their breath. In fact, last year the Canadian Trucking Alliance suggested that the government not reduce the tax, but instead earmark the revenue that would otherwise have been eliminated towards programs to help spur investment in new equipment by the industry as suggested in the CTA enviroTruck initiative.

“It appears we are back to where we were in 1984 and 1985, where the excise tax on diesel fuel serves no policy purpose other than to pay down the deficit,” says the CEO of CTA. “Not that paying down the deficit should not be a priority, it is. But is it fair that it be done on the back of the commercial transportation industry, relying upon an archaic and regressive form of tax on our members’ primary business input at the same time as the industry needs to re-tool and is being challenged to reduce its GHG emissions?”

Some other sectors – including forestry, agriculture, small business, tourism, shipbuilding and culture -- which were deemed to have been hard hit by the recession are in store for some modest support of $1.3 billion.

The Minister also announced further steps to reduce the paperwork burden on business, by establishing a commission of parliamentarians and private sector representatives to reduce red tape. Existing or recently terminated work-sharing agreements will be extended by an additional 26 weeks, to a maximum of 78 weeks.