Today, the Canadian federal government (have they finally dropped the ridiculous “new government” moniker?) introduced their annual budget for fiscal 2008-2009 (April 1, 2008 – March 31, 2009).
Among the major highlights:
- Tax free savings account which allows individuals to invest up to $5000 per year (with carry forward of unused room) and receive tax free growth whether that growth is from interest, dividends or capital gains.
- Reduction of debt by $10.2 billion this year with planned debt reductions of $2.3 billion in 2008-2009 and $1.3 billion in 2009-2010
- $350 million in 08-09 for the Canada Student Grant Program (which is really simply a renaming and extension of the existing Canadian Millennium Scholarship program which handed out just under $300 million per year to students)
- $250 million over five years for an Automotive Innovation Fund which is targeted to develop fuel efficient vehicles.
- An independent board to manage the Employment Insurance Fund and invest any surpluses as well as set rates for EI premiums.
The budget appears to try to appease everybody with a little something for every sector and as the Liberal leader stated, the budget was “one mile wide and one inch deep”.
Tax-free Savings Plan
I do like the savings account though it is not very useful for a large percentage of citizens that have trouble getting by and do not have enough income to set some aside. The tax savings are also minimal unless there is a large amount of savings in the account which is a pipe dream for some.
Employment Insurance finally separated
The segmenting of the Employment Insurance Fund from general revenues is a great move in my opinion as it prevents governments from using EI premiums as general income and not being accountable for how funds collected through EI premiums are spent.
The Automotive Fund : Targeting a region and a sector
The Automotive Fund is directed directly at a specific, albeit and important economic sector in Central Canada. I don’t really agree with most of these directed initiative however as they typically favour specific regions and specific companies. For example, in this case since the automotive sector is effectively situated entirely in Ontario, this is a specific measure for that province. We don’t see any direct benefits in New Brunswick from these measures nor do I ever imagine a similar large program directed at challenges faced in the New Brunswick economy. In addition, why should the automotive sector receive favourable treatment compared to other general manufacturing or other industries such as forestry which are also hurting due to economic factors mostly beyond their control?
Smaller interesting budget items
There are some other smaller initiative in the budget including:
- Starting in 2011, new electronic passports will be valid for 10 years instead of the current 5 years. YEAH!!!!
- $43 million for the Communication Security Establishment to keep pace with rapid advances in technology
- $720 million allocated for a new icebreaker to replace the aging Louis S. St-Laurent
- Discontinuing of the ecoAUTO Rebate program (effective March 2009) which gives rebates for fuel efficient vehicles while charging an additional fees to gas-guzzlers
- An additional $80 million per year to the three research granting councils (NSERC, CIHR and SSHRC) “in support of industrial innovation, health priorities, and social and economic development in the North”
- An additional $140 million for Genome Canada
- $24 million over two years for tourism development along the Saguenay and St. Lawrence rivers.
Disappointment and puzzlement
I’m really disappointed with the discontinuance of the ecoAUTO rebate. As somebody who was looking to buy a new car in the next couple of years, I was looking forward to a nice rebate from the federal government. Guess I’ll have to buy a gas-guzzler instead!
The $24 million in tourism development certainly seems out of place to me. I guess that it is just another bone to throw in order to entice Quebec voters. Now if only the Conservatives tried to get New Brunswick votes instead….
What’s in it for me???
As far as I can tell, New Brunswick and New Brunswickers in general do not gain much from this budget. There appears to be little investment directed specifically to the Atlantic region. Although some might argue that some of the infrastructure funding will make its way to NB and the Maritimes, this is infrastructure funding that we have been fighting over for ages already. How long have we waited for help cleaning up Saint John harbour?
On a more personal level I am disappointed that there is barely a mention of environmental issues or any plans to tackle some of the major environmental problems such as global warming, pollution and smog. Then again, I wasn’t expecting much in way of environmental plan to begin with….