Thursday, February 24, 2005

The Budget - The Good, the Bad and the Ugly

To be fair the Paul Martin I didn't wholly despise of 5 years ago seems to have briefly popped up around budget time to make a few good decisions. This year's budget has some positive announcements regarding personal and corporate taxation and military spending, that while being wholly insufficient are a step in the right direction. A few of the other iniatives in the budget aren't terribly unproductive. Several of the decisions were patently stupid and a few more outrageously so. Thus I've broken down the budget into "the good", "the bad" and "the ugly".

The Good

Their were a number of initiatives which improved people's fiscal status. The foreign content restrictions on RRSPs were removed which were previously set at 30%. I'm in favour of anything which improves people's economic freedom, so again this is a small step in the right direction. While allowable RRSP contributions have risen to $22,000 a year from $18,000 considering Canada's low rate of saving this is also a fairly smart move. While over years people will recieve a tax break of $195 as the amount of non-taxable income rises to $10,000 from $8,000. I can't say no to a tax cut, however, one can wish that it was somewhat more substantial than the price of a PS2 over five years or the cost of airfare when WestJet has a seat sale.. Canadians face a crippling tax burden and the best you can come up with as a rebate is about $40 bucks a year over five years? Apparantly this is the 24 rebate designed to encourage people to buy that "extra case of Molson's a year". Tens of billions of dollars are being allocated and this is the best you can do!

Corporate taxes were cut by 2% to lower to 19%, and a surcharge was removed which was the equivalent of a 1.12% tax cut. Not a bad move cutting corporate taxes as encouraging private investment and business relocation in Canada brings jobs into the country and spurs on economic growth. However, we may now have a 4.5% tax incentive to business as opposed to the United States as is quoted in the budget. Accepting these figures we also must recognize that we have a geographical disadvantage and all sorts of regulatory disadvantages visa via the states. A corporation locating in the US is nearer its markets and in many cases the government regulations aren't nearly as intrusive as they are here in Canada. If we were serious about attractiving investment we would have slashed corporate taxes by 10% and reached an 11% level comparable to Ireland, which has successfully lured many businesses away from its European neighbours and experienced high growth as a result.

Defense spending is slated to recieve an additonal $12.7 billion dollars, to which I can only say about bloody time. However, unfortunately the money is coming in a trickle at first with only $1.1 billion coming in the next two years. Many military analysts have stated in the past that an immediate infusion of $1.5 billion was needed this year to simply stop the hemoraging and degredation of materials. Thus the relative sloth of this increase is worisome. Furthermore, I tend to be suspect of promises made far into the future and over this five year term its debatable how seriously we can take this Liberal pledge as its quite plausible they'll declare something else such as health care an "emergency for a generation" and loot any other commitments.

Research the government is granting $375 million to various councils to increase research being done in Canadian universities, knowledge is never a bad investment.

The Bad

Aboriginal funding , the budget offers up $735 million towards areas such as Aboriginal housing, education, and social programs on Aboriginal reserves over a five year period. This continues the fine Liberal tradition of throwing money at a problem and hoping it will go away rather than dealing with the problem itself. The problem is not that the federal government doesn't give enough money to Aboriginal reserves, its that Aboriginal reserves don't work. They cause more socio-economic problems then they solve, the Aboriginal community needs to be assisted in taking a step forward towards integration into the Canadian economy and the mainstream rather than being coddled further.

The Gas Tax for Cities a $600 million dollar committment to the cities which will grow to a $2 billion dollar commitment or 5 cents per litre of the gas tax. I'm really not sure if this arrangment is even constitutional. Cities are provincially created and controlled jurisdictions and derive all their powers from the provinces. This makes this sort of arrangement without a provincial blessing potentially subject to legal challenge should any of the provinces become jealous of their legislative integrity.

Sports Canada/Olympic Games/Paraolympic Games funding apparantly we're now committing another $429 million dollars to funding the venues and athletes who compete in sports which none of us watch and care about because losing horrible regularly in the Olympic is shameful too us. Quite frankly, I could take a little more shaming if this $429 billion dollars found its way into the "tax cut column". I really don't feel our pride as a nation has suffered a great blow if we lose at free style gymnastics, competitive trampolining, ball room dancing or whatever ridiculous "sports" the Olympics awards medals for.

Healthcare another $800 million or so dollars are to be thrown at the problem ontop of Martin's "concession for a generation" earlier last year. Again this money is being spent with no eye to actually resolving the fundamental underlaying problems plaguing health care. At best its fighting a rear guard action against inevitable collapse of the system lacking any institutional changes. Change is needed as we already spend more per capita for less performance than in many European nations.

The Ugly

Foreign Aid apparantly while we can only afford to cut the taxes of the middle class here in Canada by $200 over 5 years we can give away $3.4 billion dollars in aid to foreigners, doubling our budget to do so. Quite franklyI never signed up for the World Vision package of taxation. If there are people who want to give their money away to the less fortunate kudos to them, but don't do it with my tax dollars. This is "charity" not a legitimate government function that in any way serves my interest.

Heritage Funding another $1.6 billion dollars to support culture, heritage and sport. All of which goes vaguely to celebrations, artists and mulitculturalism. Quite frankly this is wholly unnecessary, if people care about what the elites have determined to be "Canadian culture" they will pay for it. If not they obviously don't care or consciously reject your notion of Canadian culture. Again cut taxes and I'll even promise to buy a Group of 7 print, rather than having this money spent on whatever suspect "cause" it finds it way too.

$5 billion dollars for the Environment considering there is still billions of dollars sitting in a government account from the Chretien budgets where money was vaguely allocated to combat "climate change" and that money has only gone into a few councils, studies and commercials is another 5 billion dollars REALLY necessary. Our environmental strategy currently seems to consist of hiring B level celebrities to exhort us to be more friendly to the environment. Maybe with this extra $5 billion we're going to hire someone whose actually famous like Bono to make a commercial about AIDS AND the Environment. Spend the money you've got sitting around before pilling more ontop of it in a politically correct and ill thought out gesture. Have a plan before you start throwing billions of dollars at a problem and in the meantime - take this $5 billion dollars and CUT TAXES.

$5 billion dollars for a "National Daycare Program" so far $700 million dollars is being rolled forth this year with no strings attached. Watch this money dissapear into the hunry maw of healthcare as fast as a cat can blink its eye. Now I tend to agree with the Klein plan for child care, give parents money for it and let them make their own decisions about how its spent. If a parent wishes to stay home and care for their child - good deal, or if they hire a grandparent, relative, neighbour or nanny this is all simmilairly acceptable. Furthermore, I couldn't care less if the kid is in a private or public daycare centre. Let the parents decide, they care more about their children than the government does when you come right down to it.

Furthermore, do I really need to point out the absurdity of committing five billion dollars to a program which doesn't exist yet? Do I also need to point out that the provinces, the vast majority of whom are currently in decificit positions, or whom are lingering near decifit positions will find 5 billion dollars split 10 ways, woefully inadequate to fund a whole new social program. Do I also need to mention that the federal government has absolutely no jurisdiction in early childhood education? Do I also need to mention that taking on an expensive new social program when your strapped for cash and the federal government isn't offering enough money would be something too stupid for even the provincial governments to do? We could avoid this entire problem by cutting people's taxes by another 5 billion dollars so they could afford to make their own provisions for childcare, heck, maybe so they could even afford to have and raise children.


At 8:06 a.m., Blogger John the Mad said...

"Furthermore, I tend to be suspect of promises made far into the future and over this five year term its debatable how seriously we can take this Liberal pledge as its quite plausible they'll declare something else such as health care an "emergency for a generation" and loot any other commitments."

As a public policy wonk by trade I know this "commitment" is just political spin. The Martin Liberals cannot bind a future government on spending through promises made in this manner. The public has been been duped and the rust out of the Forces continues.

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