It was federal Finance Minster Jim Flaherty's first true opportunity to wield the axe with the strength of a majority government behind him and he did so to the tune of $5.2 billion on Thursday, cutting more than 19,000 civil servant jobs over the next three years, raising the age to qualify for Old Age Security (OAS) from 65 to 67, and eliminating the hapless penny.
Dubbed the "Economic Action Plan 2012", the budget will see the eligibility for OAS -- a benefit worth more than $6,000 annually -- bumped up to the age of 67 beginning in 2023. Eligible Canadians can also defer OAS payments for a maximum of five years beginning in 2013 in exchange for higher benefits. These changes will affect Canucks under the age of 54.
"Today it is clear we must take action to ensure the sustainability of the Old Age Security program, which is the largest spending program of the federal government," Flaherty said in his speech.
Jobs growth a key element
Jobs growth was a key element highlighted in the budget and Ottawa will boost its investment over the next two years with $3 billion and that includes $50 million for job skills training for youth. "We need to promote innovation more effectively, to keep creating good-quality jobs," Flaherty said.
Also noteworthy for consumers, there are no significant tax changes for individuals, our national broadcaster, the CBC, will see its funding slashed by 10 per cent, and duty-free cross border shopping limits will be raised to $200 for 24 hour trips stateside and $800 for trips of 48 hours or more.
This budget was heavy on changes promoting research and development (R&D) for businesses (most notably in the resource sector), and light on offerings for families and interest groups.
"In response to the Jenkins Report on innovation, we will provide substantial new funding to make it easier for entrepreneurs to access venture capital. We will extend our efforts to promote small business innovation, through government procurement contracts. We will provide new investments to support innovation and market development in the forestry sector," Flaherty said in his speech.
The Conservative Stephen Harper government would prefer you don't focus on what's being cut but instead zero-in on what it's calling a long-term growth plan. Flaherty had previously stated there would be 'modest' government spending reductions and an effort to reform Canada's innovation and immigration programs.
"We will have modest savings-reductions in order to stay on track to a balanced budget in the medium term," the Financial Post quoted Flaherty on March 22nd. "More importantly -- and this really is the focus of the budget -- if you concentrate on the savings, you're going to miss most of what the budget is about. (It's) about long-term sustainability for jobs, growth and prosperity, looking at retirement income, making sure our social programs are sustainable in the long-term for Canada."
It's important not to lose sight of Ottawa's goal to eliminate our federal deficit, estimated to be approximately $20 billion this year (down from a $31 billion estimate last November) and the government is aiming to do so before the 42nd federal election that is tentatively scheduled for October 2015.
The Canadian Taxpayers Federation released a statement calling the budget a lost opportunity for Ottawa to rein in spending and reverse runaway growth in government payrolls.
"Annual program spending will rise $20 billion by the end of the Harper government's majority mandate in 2015,. Annual spending will rise $86 billion since the Harper government took office in 2006," says federal director Gregory Thomas. "Spending cuts announced today are a drop in the bucket. Program spending will rise $3.4 billion in the coming year and $4.1 billion in 2013-14. Somebody should remind Jim Flaherty that Stephen Harper promised to balance the budget by 2014-15, because this budget won't get the job done."