The first federal budget from the Justin Trudeau-led Liberal government was released on March 22 to mixed reviews.
Proponents of the 269-page document point to a number of key programs they say are aimed at aiding low- and middle-income earners, while opponents have criticized the budget for what they say is excessive spending.
The budget includes a $29.4-billion deficit this year and $29 billion the following year. The nation’s debt is expected to grow by $113 billion by 2020-21.
Highlights of the 2016 federal budget include:
– major investments in infrastructure;
– an immediate investment of $11.9 billion in public transit, water and wastewater systems, affordable housing, and in retrofits and repairs to protect existing projects from the effects of climate change;
– spending on youth for jobs and post secondary education;
– investments in First Nations, Inuit Peoples, and the Métis Nation – totalling $8.4 billion over five years – in areas that include education, infrastructure, and skills training;
– returning the age for collecting Old Age Security benefits to 65 from 67; and
– changes to employment insurance (EI) in an attempt to make it more accessible.
Guelph Liberal MP Lloyd Longfield explained planned deficits are necessary for two reasons – the first is reducing the gap between middle- to low-income earners and the high-income earners.
“We’re increasing taxes on people over $200,000 and reducing taxes on people between [$45,000] and [$90,000] to try and address the gap,” Longfield explained.
He said the Canada Child Benefit would also help address the income gap. Longfield said approximately nine out of 10 Canadians will see an increase in tax-free contributions under the government’s new system.
Secondly, he said the deficit is necessary to help create jobs and encourage economic growth.
Wellington-Halton Hills MP Michael Chong, who did not mince his words in his assessment of the Liberal budget, said the budget is “reckless” in its amount of spending.
“The Liberal government is spending like drunken sailors and ultimately we’ll all pay for the hangover,” Chong said in an interview the day after the budget was released.
During the election, the Liberals promised to accumulate no more than $25 billion in deficits over the next four years. However, the budget came in with a prediction of $100 billion in deficits over that time period.
Perth-Wellington MP John Nater, was also critical of deficit projections in the budget.
“Canadians expect [the government] to live within our means,” Nater said in a March 23 telephone interview.
Longfield said the Liberal government carefully considered all expenditures – specifically mentioning infrastructure spending – while also looking at the bottom line.
“We have to balance the need for infrastructure investment with trying to maintain a sustainable debt load, so we’re trying to keep the debt-to-GDP ratios constant at the level where they are now and not have them increase,” he told the Advertiser.
“So we need to be responsible with the investments that we’re making, that we are making investments, but that we also know that we don’t have unlimited resources.”
However, Chong said the Liberals had promised during the election to lower the debt-to-GDP ratio to 27% by 2019, but “reckless spending” means the ratio will climb to 32% at the end of the term.
“It’s pretty astounding how far out, and completely they have broken their promises,” said Chong, who is considering running for the leadership of the Conservative party.
He added that the last time Canada incurred significant deficits was in 2008 and 2009 during the height of the global financial crisis – “the worst since the Great Depression of 1929” and “that is not the situation we have today.”
Infrastructure funding
The budget includes infrastructure spending of more than $120 billion over the next decade, which Longfield says is crucial for rural municipalities.
“Our economic growth hasn’t been there so we’re looking at things like the infrastructure investment to stimulate jobs in our local economy,” Longfield said.
“We’re also looking at trying to pay down some of the infrastructure deficit that’s been growing since the seventies.
“Examples in Wellington County might be the bridges.”
Longfield said one of the key factors when investing in infrastructure is cooperation between all levels of government.
“It really takes the three levels of government working together to make sure that we’ve got the right priorities and that it isn’t just somebody from Ottawa guessing,” he said.
“I sit on the national caucus for rural (issues) and we’re looking at particularly communities … that might not have the resources to apply for funding for projects within their communities … being able to access funding for things that might help out with … say retirement infrastructure or help with daycare spaces being created,” Longfield said.
“Rural was mentioned specifically within the budget, so we know that the rural areas have to be treated differently than they have been in the past so that we have a fair investment across the board not just in the big cities.”
However, Nater took the exact opposite stance, stating the infrastructure spending is a boon almost exclusively for large urban centres.
“There doesn’t actually appear to be any new infrastructure spending for roads and bridges,” said Nater. “Rather what they’re doing is they’re just maintaining current spending through the new Building Canada Fund.”
He added actual “new” infrastructure spending in the budget amounts to $11.9 billion over five years and, “When you take three or four billion off the top to fund mass transit in Toronto, Montreal, Vancouver, it doesn’t leave a lot for the regular, smaller communities.”
Chong agreed, but said he does expect “there will be infrastructure funds for local municipalities in Wellington County.” He added, “We’ll have to wait and see where the money is going to be spent.”
Nater said he is pleased the budget contains a $2-billion investment in water and wastewater treatment facilities.
“I really look forward to working with places like Mapleton, places like Wellington North, to make sure that we get that funding to their wastewater treatment facilities so that they can expand both in terms of home development – new home building – and also the industry side of things as well,” he said.
Nater added he would have liked to see investment in VIA Rail in the southern part of riding and “some kinds of feeder routes, whether it be through buses or ride shares or individual transportation options that we can connect the different communities.”
Students/families
Investing in education is another way Longfield said the government is investing in economic growth.
“For people across Canada that are looking at getting into university, we’re increasing the tuition credit to $3,000 for low income people and $1,000 for middle income people and hopefully getting 360,000 more students going to university and college that will again help with training people for the jobs that we’re trying to create,” he said.
Chong did not specifically address the student grants, but stated a number of things that local families have come to rely on have been cancelled in the budget, such as the children’s fitness tax credit, children’s art tax credit and tax credits for post secondary education textbooks.
“For families who use those funds to offset the cost of hockey, soccer or piano lessons, they’ll find those funds no longer available on this year’s tax return.”
Nater agreed, stating families will be hit with higher taxes through the cancellation of income splitting for families as well as the programs mentioned by Chong.
“The cancellation of these programs has the effect of raising taxes on families by as much as $2,000 annually,” said Nater.
Chong said the Liberals “are introducing an enhanced Canada child benefit, which consists of monthly tax repayments beginning July 1.”
He explained this replaces the universal child care benefit and other tax measures, “But it is not universal and begins to be clawed back for households with incomes over $30,000 and completely eliminated when households reach a certain threshold.”
Rural broadband
Another area of the budget that Longfield highlighted is the $500 million over five years in spending on rural broadband.
“We know in areas even just a short distance outside Guelph sometimes it’s hard to get signals and it’s hard to get speed that you need for our rural-based businesses,” he said.
“So hopefully we’ll see some of that implemented in Wellington County over the next while.”
Longfield explained that broadband is a joint federal and provincial service.
“It’s going to be going though different municipalities so you can’t expect any one municipality to cover the cost,” he said.
“The capital investment is high to get the broadband into the rural areas where there isn’t the population density, but everybody should have the same access to electricity and water – and we’re saying broadband as well because it’s a necessity now, it’s not a ‘nice to have’ it’s a ‘need to have.’”
He also said changes to the farm landscape make broadband access in rural areas indispensable.
“We also look at things like the farm-based business and the increased technology on things like, say milking stations and even on the mobile equipment, there’s wifi on a lot of the new farm equipment and we need to support that,” he said.
Nater said a commitment to improving internet service for rural areas is one of the items he likes in the Liberal budget.
“The one big thing that I think benefits residents in Wellington County is the continued investment in rural broadband … (it’s) absolutely essential for our communities to move forward.”
Agriculture
Nater said the budget barely mentions new support for Canadian farmers.
“While I was pleased that the Liberal government continued the Growing Forward 2 program that was introduced under the former Conservative government, I am disappointed that the Liberals have not addressed emerging concerns, including those related to expanded market access,” said Nater.
“In fact, the only new support for agriculture is funding for Ottawa bureaucrats.
“There’s nothing new in terms of business expansion programs, efforts on expanding markets internationally, efforts on the research side of things … there was $30 million set aside in the budget over I believe six years … for an Ottawa research project, based in Ottawa but not directly related to development of technologies and research for the agriculture industries.”
However, the Ontario Federation of Agriculture (OFA) applauded that specific funding, as well as “$139 million over the same six-year time frame” for “federal laboratories and other related facilities supporting science, research and innovation.”
The OFA also lauded the budget’s inclusion of $500 million over five years for rural broadband internet service and $75 million for municipality-led projects to reduce greenhouse gases.
Environment
The government is providing $2 billion over two years for a low-carbon economy fund and another $1 billion over four years to support clean technology investments as well as $130 million over five years to support clean technology research and development.
Chong said he believes money directed to the environment is being spent in the wrong areas.
“I’m increasingly of the view that if we want to improve our environmental outcomes, we need to put a price on carbon,” he said. “We need to make sure pollution is paid for and then let the private sector and marketplace sort it out.”
Chong said “what the government is doing is raising taxes and using that to subsidize renewable and environmentally-friendly technologies. … and governments do not have a good record at doing that.”
Pointing to Ontario’s Green Energy Act, Chong said “this approach comes at an extremely high cost and will ultimately cost consumers and taxpayers a lot more money than if the private sector and marketplace had achieved these outcomes.”
Nater agreed, stating, “when we look at what’s happened in Ontario, with what’s happened with the Green Energy Act, that’s just going to make a certain small number of people very rich while doing nothing to address the real concerns of communities.”
Seniors/veterans
Other items that Longfield highlighted are assistance to seniors and increasing old age security by 10 per cent, as well as the reopening of eight veterans affairs offices across Canada and investing in the mental health of veterans.
Longfield explained that the details about how these programs will be rolled out will be released over the next few months.
Chong agreed more money is being put into Veteran Affairs. Specifically, the disability award for vets will increase to $360,000 (retroactive to 2006).
“But they did not deliver on their promise to restore the pension for more recent veterans,” he said of the Liberals.
However Tom Eagles, Dominion President of The Royal Canadian Legion, said he was “optimistic” with the level of progress being made regarding 15 priorities listed in a “mandate letter” from the prime minister to veteran’s affairs minister Kent Hehr last November.
In a press release, Eagles adi the budget “addresses five of these priorities (e.g. increase in the Disability Award under the New Veterans Charter which will be indexed and retroactive to 2006, increasing access to Permanent Impairment Allowance – now called the Career Impact Allowance, improving the ratio of case managers to clients, greater access to the Last Post Fund, and re-opening all of the VAC offices that were closed recently plus a new one in Surrey, BC).”
Eagles stated thee Legion is also pleased with the increase in affordable housing that will assist our low income, homeless and near homeless veterans and their families.
“The increase in the GIS for seniors is also welcomed,” Eagles said.
In regard to seniors, Chong said the guaranteed income supplement will be increased “over and above the rate of inflation increase.”
That will be based on the income level of the senior or couple, he said.
Overall
Longfield summarized the 2016 federal budget as “an all-of-government approach” to “try and stimulate the economy, get jobs going and get more money into the pockets of families and the middle class and people struggling to get into the middle class.”
Chong noted small businesses will lose with the budget, as a plan to reduce the small business tax rate from 11% to 9% was cancelled by the Liberals.
He said a lot of the budget spending “is not going to ordinary Canadians and their families,” but instead to “increasing government bureaucracy” and to funding for “special interest groups” that “were supportive of the Liberals during the election campaign.”
Nater said he did not believe the tax relief measures announced in the budget, including enhanced child benefits, education grants and a so-called “middle class tax cut” would balance the scales.
“At the end of the day I think Canadians are going to be paying more in taxes,” he stated.
In addition, he said, “As many as 80,000 residents in Perth-Wellington will not see any change in their taxes based on the middle class tax cut. It affects a very small number of people despite the appearance of it helping the middle class.”
However Nater did say there are some things to like in the Liberal budget.
“I don’t want people to think it’s a negative on the whole,” he concluded. “We’re just concerned with the overall direction of the spending commitments.”
For more information on the 2016 federal budget, visit www.budget.gc.ca.
