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budget

Carlos Leitao reveals budget updateQuebec Finance Minister Carlos Leitao announced Quebec’s budget update today, setting off what is sure to be a continuing series of protests against the cuts, austerity measures and fee increases. The Liberal government claims that this sort of painful pruning is necessary in order to rein in Quebec’s out-of-control finances and balance the budget. The opposition and those affected, of course, will claim otherwise.

But, cutting through the slogans and rhetoric, what does this update actually contain? The details are still pending, of course, but at first glance it reads to me as surprisingly… balanced.

The good

For one thing, the rich and corporations are being asked to shoulder the lion’s share of the cuts. This is far from a conservative approach. The budget includes such measures as suspended bonuses to senior executives, reduction in tax credits to large corporations, and added taxes on financial institutions, insurance companies and oil companies. Small and medium business, meanwhile, are getting some tax breaks.

Even the much-decried increase in daycare fees is largely limited to households making over $75,000 per year, and even that is an increase from $7 to $8. Most families will see an increase of only 30 cents per day, to $7.30. The only families who will pay the $20/day maximum are those with household incomes of $155,000 and above. The current system was very tough on lower income families stuck on long waiting lists — sometimes for years — for a $7/day spot. The updated pricing will be more expensive for wealthier families, to be sure, and might drive more of them to the private system, but this would mean the coveted public system spots will be more available to the people who need them most. Again, hardly Attila the Hun policy.

The budget update also contains a number of environmental measures, including registration fee increases for large vehicles, insurance fee premium increases for drivers, added taxes on fuel at the pump, and several green energy and anti-climate change initiatives.

The not-so-good

Yes, the general population will shoulder some of the burden, too. The most contentious austerity measures aim to trim back public sector pensions, which arguably needs to be done, but the government’s heavy-handed approach here is backfiring. Someone who has worked in a public sector job for their entire career on the promise of a certain pension should not be told, now that they’re close to retirement, that they won’t be getting what was promised. There simply isn’t enough time for them to go back in time and save more money. In addition, the MNAs had to be shamed into scaling back their own ridiculous pensions — something that should’ve been a no-brainer in “austerity” times. They did it, but kicking and screaming. However, on the whole, the private sector can’t afford to indefinitely shoulder the burden of such high public pensions, especially when the taxpayers supporting them largely have no pensions and insufficient retirement savings themselves.

The politically questionable

To make matters worse, the government has picked a fight with unions by reducing the tax credits for union dues. This will cost union members a mere $70 or $80 each on average per year, but the unions are powerful foes and are already angry about Bill 3. The last election saw many unionists break with the PQ in anger over Pierre-Karl Peladeau, the Charter of Values and a whole host of other things. But the unions and the PQ are traditional allies, and the small amount of savings that the Liberals will get from this tax credit scaleback (estimated at about $112 million per year) probably isn’t worth the political cost of driving them back together.

The bottom line

On the whole, this budget update reads refreshingly Liberal by Canadian standards, though perhaps not by Quebec ones. It’s not a Tory reward-the-rich-and-oil-companies-at-the-expense-of-everyone-else budget.

But the actual provisions may end up mattering very little when compared to the visceral opposition to the A-word: Austerity. A lot of people are angry.

The Liberals have little choice but to do their deepest cutting early on in their mandate, hoping that by the time the next election rolls around in four years, there will be enough of a recovery to shower the population with pre-election gifts. But in the meantime, it may not be pretty.

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Budget Day

03.19.07

Bribery money for Quebec, tokens to the environmentalists, money for families and small business incentives were some of the highlights of today’s spend-happy, tax-cuts-devoid federal budget, announced by Tory Finance Minister Jim Flaherty.

The Bloc Quebecois banded together with the Tories to avoid a government collapse. But most people don’t believe this minority government will last more than a few months longer. A friend of mine was just hired by Elections Canada, so if you’re the betting type, you might want to put your money on spring or summer.

All that the Tories have managed to do with this budget is to legitimatize the Quebecois claim of a “fiscal imbalance” and to make an attempt at social engineering. The Tories seem to have forgotten their promises to balance the budget, cut taxes and grow the economy, preferring to tell people that they should drive greener cars, get married, have more babies, and own businesses that don’t grow too big. From a financial management perspective, based on initial impressions, I’d give it a D.

The key question is, will the extra $2.3 billion be enough to elect Jean Charest next week?

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Minority rights for sale

06.16.2005

That’s the greater implication of this proposed blackmail by the Conservatives: The Opposition Conservatives are willing to support the NDP’s $4.6-billion budget amendment, but only if the Liberals agree to delay same-sex marriage legislation. The Liberals have the numbers to pass the budget even without Conservative support. So did the Liberals grow a backbone and […]

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De facto NDP government

05.25.2005

Coming soon to a Canada near you: a de facto NDP government: The NDP could seek a long-term agreement to prop up the Liberal government in exchange for a handful of concessions, party officials said Wednesday. Fresh from winning $4.6 billion more for its priorities in return for helping the Liberals survive a confidence vote, […]

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Martin deals with Layton

04.26.2005

Once again demonstrating his perpetual spinelessness and willingness to do anything to hang onto power, Paul Martin struck a deal with Jack Layton, making “concessions” in exchange for an NDP promise to vote for the budget. What sort of “concessions”? The usual NDP mixed bag. Deferring corporate tax cuts in favour of $4.6 billion in […]

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Martin caves to NDP bribery

04.25.2005

Is it just me, or are our politicians holding a contest these days for “most spineless”? Martin may succumb to Layton’s blackmail by agreeing to defer corporate tax cuts in the federal budget in exchange for a promise for the NDP to support the budget: The apparent concession came just hours after Prime Minister Paul […]

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Quebec’s snoozer budget

04.21.2005

The embattled Charest government released its provincial budget this afternoon. So-called “highlights” include tax cuts – which will basically give me an extra loonie a year – as well as small increases in spending for health and education. Overall this doesn’t seem too bad. The budget is balanced and avoids excessive spending increases in nonsensical […]

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While I was gone…

02.25.2005

…a bunch of stuff happened. For one thing, the Martin government released a federal budget, which was another snoozer. Lots of promises to everyone that will deliver not a whole helluvalot to anyone. By my calculation, the “massive tax cuts” promised will save me exactly $14 in income tax next year. That’s two movie tickets […]

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Not payback? Yeah right.

11.25.2004

The latest Montreal megacity budget has tax decreases for most of the central and eastern portions of the islands… and tax increases for most of the West Island, including 14 of the 15 municipalities who voted to demerge. Mayor Tremblay says it’s “not payback” for their votes to demerge… but the map rather belies that […]

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Budget 2004: One Canadian’s viewpoint

03.23.2004

Paul Martin’s finance minister, Ralph Goodale, announced the Federal Budget today. And of course, the media began to immediately analyse, spin, and dissect it seventeen ways from Sunday. So here’s my ten-second breakdown. Healthcare: Mainly a provincial issue, but very little new money to help bail out the provinces. Instead of spending it on medicare […]

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