Expect 'Modest' Cuts, No Housing-Market Moves In Budget: Flaherty
Next week’s federal budget will only contain “modest” spending reductions and will be primarily focused on longer-term issues like reforming Canada’s innovation and immigration programs, says Finance Minister Jim Flaherty.
Speaking to reporters Thursday exactly one week before he releases what is expected to be a weighty and wide-ranging federal budget, Mr. Flaherty portrayed the looming spending cuts as a relatively minor part of the March 29 budget.
The minister told reporters that if they concentrate on the savings section, “you’re going to miss most of what the budget is about.”
Mr. Flaherty’s comments, delivered outside a volunteer firefighter station in Ottawa’s west-end neighbourhood of Stittsville, comes as public sector unions are launching high-profile campaigns warning of the consequences of spending cuts.
On Wednesday, union leaders warned that the government is planning to bring in large cuts by “stealth” and predicted details won’t emerge until long after the budget is released.
Mr. Flaherty was at a fire station to highlight a previously announced tax credit for volunteer firefighters. Since becoming finance minister in 2006, Mr. Flaherty has introduced a wide range of new tax credits, covering areas such as children’s fitness and art lessons, as well as public transit and tools for construction workers.
This week the C.D. Howe Institute issued a report calling for Ottawa to review and phase out some of these credits – estimated to be worth over $100-billion – in an effort to simplify the tax code and bring in new revenue.
On the issue of Canada’s housing market, Mr. Flaherty made comments Thursday that suggest he is not preparing new measures in the budget to cool prices.
Mr. Flaherty said he would like to see if the market will “correct itself,” and noted that there are some signs that this is currently taking place.
Some Canadian banks are calling on Ottawa to intervene – either by lowering the maximum amortization period for insured mortgages or by raising the minimum required down payment.
Mr. Flaherty said he finds those suggestions “a bit much” given that the banks ultimately decide whether to approve a mortgage.
The federal government is currently spending more than $12-million on an advertising campaign promoting itself as being focused on “jobs and growth.” While the ads do not mention the federal budget, “jobs and growth” is clearly the dominant theme the Conservatives are trying to project. Unions say the message is at odds with the fact that federal departments are focused on implementing job reduction plans immediately after the budget is released.
Mr. Flaherty defended the spending and suggested Ottawa should probably be spending more on promotion.
“I think people are entitled to know how their money is being spent,” he said.