Flaherty puts brakes on spending

OTTAWA—When Jim Flaherty was a young man, they called it a brake stand—one foot on the gas and one on the brake, creating lots of noise and plumes of blue smoke but moving the vehicle sideways, if at all.
Stephen Harper’s finance minister is banking that all the torque in his eighth federal budget, delivered yesterday, will propel the Canadian economy forward in a burst sometime next year.

It’s all geared to a fall 2015 election date, when Prime Minister Stephen Harper hopes to woo Canadian voters with the first balanced federal budget since 2008.
In the meantime, Flaherty’s foot remains firmly on the government spending brake in a 2013-14 fiscal blueprint that shuffles priorities, re-allocates resources, and cracks down on tax cheats but adds no new money while continuing dramatic cuts to direct program expenses.
Canadians have faith, Flaherty told the House of Commons in his budget speech, “that their government will be a benign and silent partner in their enterprise, not an overbearing behemoth squeezing them at every turn.”
The deficit for the current fiscal year that ends in two weeks is projected to be $25.9 billion—exactly as forecast in the fall fiscal update but up significantly from the $21.1 billion posited by Flaherty in last March’s budget.
Part of that bump comes from a one-time, $2.4-billion increase in Ottawa’s nuclear clean-up liability.
Total spending, including debt-servicing charges, will rise to $282.6 billion this year—up less than one percent on the 2012-13 spending envelope of $280.1 billion.
That’s effectively a cut after inflation and population growth are factored in.
More significantly, direct program expenses—which exclude major transfers to other levels of government—are projected to plunge almost $4 billion this year and another $2.5 billion in 2014-15.
The exact nature of those program cuts remains something of a mystery.
The budget was delivered the same day the departing parliamentary budget officer, Kevin Page, was in Federal Court trying to force the government to release departmental details of spending cuts announced in last year’s budget.
“It’s very much a status quo budget,” said economist Derek Burleton of TD Bank.
“Reallocation is a key theme.”
Political opponents of the government were less kind.
NDP leader Tom Mulcair called it a “shell-game con job” while Green Party leader Elizabeth May dubbed it the “fudge-it budget.”
“The propaganda machine is going to be working overtime because they’ve re-packaged and put together some old programs and given them new names,” groused Bob Rae, the interim Liberal leader.
The centrepiece of the document is a revamped plan for skills training to better align the Canadian workforce with employer needs.
“For the first time, the Canada Job Grant will take skills training choices out of the hands of government and put them where they belong—in the hands of employers and Canadians who want to work,” Flaherty told the House of Commons.
The plan won’t kick in until April, 2014 and is contingent on negotiations with the provinces, who are expected to foot the bill for a third of each $15,000 training grant, with Ottawa and the employer also chipping in $5,000 each.