“I think our economy is performing well,” Mr. Clement (Parry Sound-Muskoka, Ont.) told media following Question Period on Feb. 14, crediting the federal government’s handling of the 2009 recession for enabling the feds to begin scaling back stimulus spending while maintaining low tax rates. “We campaigned on, and have been acting on the belief that we have to continue to create new jobs in the private sector for our economy to expand and grow, and that includes being a low tax jurisdiction that spends within its means.”
Since the Conservatives formed their first majority government in the spring of 2011, much of the debate in Ottawa has focused on fiscal policy. The government plans to eliminate its $32.3-billion deficit through a combination of $11-billion in spending cuts over the next three years and increases in tax revenues as economic growth rebounds.
In a speech on Jan. 26, Mr. Clement suggested the government could cut more than $4-billion annually. “I have led a Cabinet committee to review the plans of federal departments and agencies to achieve savings of between five and 10 per cent in their program budgets; in other words, reductions of anywhere between $4-billion and $8-billion. My committee has been working around the clock reviewing individual proposals. After appropriate deliberations by Cabinet and caucus, the results of our efforts will found in 2012,” Mr. Clement said.
Since being appointed Treasury Board president in May 2011, Mr. Clement has helmed Cabinet’s Treasury Board strategic operating review, responsible for overseeing 67 departments’ proposals to identify between five and 10 per cent in savings to be implemented over the next three years.
Joining Minister Clement on the committee are Minister of State for Finance Ted Menzies (Macleod, Alta.), Government Senate lLeader Marjory LeBreton, Defence Minister Peter MacKay (Central Nova, N.S.), Human Resources Minister Diane Finley (Haldimand-Norfolk, Ont.), Industry Minister Christian Paradis (Mégantic-L’Érable, Que.), Labour Minister Lisa Raitt (Halton, Ont.) and Natural Resources Minister Joe Oliver (Eglinton-Lawrence, Ont.).
Ottawa is now bracing for Finance Minister Jim Flaherty’s (Whitby-Oshawa, Ont.) 2012-2013 budget. There is some speculation is that the budget could be unveiled on Tuesday, March 13, or Tuesday, March 27. The House will be in recess from March 19 until March 23, and the budget must be released before the end of March. A spokesperson for Minister Flaherty declined to comment on when the budget’s release date would be announced.
It is the most significant scaling back of the federal public service since the mid-nineties, when then-prime minister Jean Chrétien and finance minister Paul Martin eliminated 45,000 jobs over three years —11,000 in the National Capital Region alone. Between the 1994-1995 budget and 1998-1999 budget, the Liberal government of the time cut departmental spending by $14-billion. By 1998, the federal government had balanced the budget four years after inheriting a $38.5-billion deficit.
While the government has yet to release information on how many jobs will be eliminated over the course of its austerity program, the Conference Board of Canada predicts that “belt-tightening by the federal government will have a noticeable effect on Ottawa-Gatineau’s 2012 outlook.”
According to the Conference Board’s Metropolitan Outlook for Winter 2012, the National Capital Region may shed 9,000 jobs over the next two years.
The Canadian Association of Professional Employees has estimated that as many as 50,000 public service jobs could be lost to the government’s deficit elimination efforts. While the figure has been disputed, it is within the range of job losses during the Chrétien-Martin era.
Unemployment has risen half a percentage point in the last four months, and now sits at 7.6 per cent nationally. While the figure may dispute the Treasury Board President’s assertion that the economy is performing well, unemployment was significantly higher when the Liberal government of the mid-90s eliminated the deficit. Between 1994 and 1998 the unemployment rate was between nine and 10 per cent, before declining rapidly after the federal government of the time returned to balanced budgets.
The Liberals reformed entitlements such as EI, which the Conservatives are also in the process of doing, but they also raised corporate taxes, which the current government has adamantly refused to do. The Tories have steadily reduced the corporate tax rate to 15 per cent, and also reduced the GST by two percentage points since taking power in 2006.
Conference Board of Canada chief economist Glen Hodgson told The Hill Times that the time is right for the government to begin an incremental scaling back of stimulus spending.
“It’s really a matter of not putting your foot on the brake or the gas, and then designing the fiscal policy around that so you have a nice path back to balanced budgets in 2015-2016,” Mr. Hodgson said. “That’s the advice that I would give if I was sitting in the room with Jim Flaherty.”
But while Mr. Hodgson agreed with the government’s plan to begin tackling the deficit in 2012, he urged caution in cutting deeply in the beginning.
“You have to look at where the cuts are being incurred and the job impacts. If $3-billion or $4-billion a year is required, it’s better to be backend-loaded, because there needs to be signs of a stronger recovery.”
Mr. Hodgson also recommended that the government look at its tax expenditures just as closely as department spending in finding cost savings. He estimated that the government’s reduction of the GST alone has resulted in $12-billion in lost revenue annually—$1-billion more than the government says it must cut over the next three years.
NDP Finance Critic Peter Julian (Burnaby-New Westminster, B.C.) predicted the government may deliver a less drastic budget later in March, due in part to continued economic uncertainty, the unpopularity of the government’s plans to reform Old Age Security and the strengthening of law enforcement’s powers to monitor the online activity of the public.
“The last month in the House of Commons has not been good for them. They have been very sloppy on a number of issues,” said Mr. Julian, counting OAS reform, the ballooning cost of the F-35 fighter jet, and the recently introduced Protecting Children From Internet Predators Act among recent government miscues. “I would suspect that the government is rethinking its whole approach on the budget. Slashing jobs and services at this time when they’ve been advised not to would be the worst possible approach they could take. It may mean a later budget if calmer, wiser heads prevail.”
A similar observation was made by Chantál Hebert in a Feb. 1 Toronto Star column that suggests the government may be “orchestrating pre-budget debate” that would prepare Canadians for the worst before cutting less drastically with the 2012-2013 budget.
“By comparison to opposition suggestions that elderly Canadians are about to be reduced to lining up in soup kitchens by an uncaring government, it is hard to think of an actual policy that will not come across as benevolent,” Ms. Hébert observed.
Original Article
Source: hill times
Author: Chris Plecash
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