Hard decisions on wrestling a monstrous deficit have been punted one year down
the road by a Conservative budget that promises dramatic future cuts but leaves
the punishing ground game for later.
The two-month suspension of
Parliament that Prime Minister Stephen Harper said he required to recalibrate
his government's agenda now comes down to just five words: Over to you,
Stockwell Day.
The Treasury Board president was
positioned as Harper's "Dr. No" when he was appointed to his new cabinet post in
January.
Day may have to shave his head, get a
cat and wear a death's head pinky ring if the budget plan presented Thursday by
Finance Minister Jim Flaherty is to come to fruition.
Total federal spending in 2010-11,
including debt charges, will hit $280.5 billion, up almost $13 billion over the
fiscal year that ends March 31. But program spending is projected to plunge
almost $8 billion in 2011-12 before rebounding slightly the following year.
"We can see our destination on the
horizon," Flaherty told the House of Commons, conjuring images of a future flat
line.
The budget forecasts a deficit of
$53.8 billion this year, down slightly from the most recent $56 billion
projection, and red ink totalling $49.2 billion in 2010-11.
Flaherty says deficits will plunge
dramatically after that, falling to a modest $1.8 billion budgetary shortfall in
2014-15.
"Listen, this is a very tough
budget," Flaherty insisted during a budget lock-up news conference prior to his
speech.
He said there are fewer new spending
measures in the document than in any federal budget in the last decade.
"Some very difficult decisions have
been made. Most of the answers to requests for funding were 'no."'
Independent analysts were unusually
cautious in their assessment of the budget.
"It's hard to give this budget a
grade now because you can't really grade it until you see if they can actually
do it," Kevin Dancey, president and CEO of the Canadian Institute of Chartered
Accountants and a former senior bureaucrat in the Finance department, told The
Canadian Press.
Dancey was part of the bureaucracy
during former Liberal finance minister Paul Martin's "come hell or high water"
battle against deficits in the mid-1990s and worries about unforeseeable shocks
knocking the Conservative blueprint askew.
"There's no real contingency built
into the budget," said Dancey.
But a senior Finance Department
official said government revenues will likely be slightly higher than projected
in the coming year or two, giving the Conservatives some small room for
unforeseen contingencies.
Hard decisions will still be
required. They may not have to become public until after another federal
election, which could be precipitated by the budget vote but is more widely
predicted to come sometime next fall.
Critics complained the Tory budget
signals restraint without detailing specifics, while scattering baubles across
the fiscal landscape.
-An extra $44 million over two years
for Canada's elite athletes.
-Eliminating the tax deduction for
cosmetic surgery.
-New rules for banks that reduce the
hold period for cheques to four days.
-A freeze on the EI premium rate
(paid by workers and employers) until the end of 2010.
-$4 billion for extra EI benefits and
training.
"They're still trying to be all
things to all people," said Kevin Gaudet of the Canadian Taxpayers Federation.
The Conservatives say
recession-fighting stimulus spending announced a year ago will come to an end
next March, a figure the government put at $19 billion.
But that stimulus figure includes a
number of measures that won't actually fold back into the government's books.
Once Employment Insurance measures and previously scheduled tax cuts are removed
from the equation, the total savings realized in 2011-12 are essentially the
$7.7 billion in infrastructure spending.
Other budget measures did leap out at
analysts, including the previously announced but uncosted final elimination of
tariffs on manufacturing inputs. The government says this will save businesses
$300 million annually by 2015.
The Tories are also closing a tax
loophole for companies and executives who receive stock options, pulling an
extra $270 million into the federal treasury in 2010-11.
The benefit to both the government's
bottom line and to Conservative electoral fortunes of this last measure is
undeniable.
"That executive with the nose job is
really in for a shock," joked Dancey.
With no tax increases and government
promises not to touch government transfers to provinces, pensions, health care
or Defence spending, finding savings is going to be a huge challenge.
"The jury's out on how the government
will achieve spending and saving targets," said economist Derek Burleton of TD
Bank. "But it is quite a shift from the status quo."