Everyone in Ottawa this week is talking about the budget.
This is typically the time where Government promotes what it believes are the benefits of said budget and opposition points out those items they view as missing or otherwise lacking.
will pass on some of my own observations and thoughts from my perspective of the official opposition deputy finance critic.
My first observation was how inaccurate many of the rumours about this budget turned out to be.
While many expected the Liberals to honour a promise to phase out taxation benefits with stock options and capital gains, none were targeted in this budget.
Likewise, another rumour that many airports located on federally owned lands would be sold is also off the table, at least for the moment.
The most frequently asked question on budget day is typically what taxes are being increased or decreased.
In this case, the changes in this budget are mostly tax increases in specific areas.
Some of those areas include a tax increase on:
- alcohol and tobacco products
- ride-sharing services such as Uber are now taxable
- and curiously the elimination of the transit tax credit for those who frequently use public transportation.
Income taxes remain unchanged after being altered in the 2016 budget.
Although the Liberals promised to balance the budget in 2019, the fiscal update contained in Budget 2017 reveals that the Liberals plan to run a deficit over $23 billion in 2019 with no plan to return to a balanced budget in the foreseeable future.
By the numbers, Budget 2017 proposes a total budget deficit of $28.5 billion with a $3 billion risk buffer.
If the risk buffer is removed the actual deficit would be around $25 billion. For added context, the 2016 budget deficit is estimated at $23 billion, so in that respect spending has increased by roughly $2 billion.
Where is the increased spending going?
The Liberals are using a different strategy in Budget 2017.
Rather than spend relatively large amounts of funds in specific areas, such as infrastructure, the Liberals are giving relatively small amounts of funding spread out over a much wider range of areas, far too many to include in this report.
Some critics have already suggested this will result in these funds having little impact because they are spread too thinly. From my standpoint while it would be easy to suggest this budget is trying to do too many things, I believe taking a wait and see approach is prudent.
Overall, my largest concern with this budget is the failure to indicate when the Liberals will return to a balanced budget. By the time the next election occurs the Liberals will have added over $100 billion in new debt with literally no end in sight.
While the Liberals argue this is investing in the middle class, in my view, it is mortgaging the middle class as future generations of Canadians will be left paying for what is basically a structural deficit.
As always, I welcome your questions and comments on Budget 2017 and any matter before the House of Commons.
I can be reached at [email protected] or toll free at 1-800-665-8711.
This week, the House of Commons is adjourned and will resume next week with the much anticipated budget to be delivered on March 22.
As is often the case, there are considerable rumors circulating about the content of the budget. At this point, the only details we know with certainty is the budget will again run a considerable deficit while the Liberal Government refuses to disclose when the budget will again return to balance, given that the promised date of 2019 will not be met.
The Liberals have created a very serious problem. Increases in program spending along with a cut to income taxes in particular for those in the $100,000 up to $199,000 threshold have essentially created a structural deficit where spending now exceeds revenue each year by a sizeable margin.
To further complicate this situation, as I mentioned last week, in 2019, Liberals will also significantly increase infrastructure spending according to their fiscal plan. In essence, the Government is now out of money and is borrowing, creating a situation where increasingly more money is spent paying interest on debt, leaving less money available for other programs.
In fact Canada now spend more on debt servicing each year than we do on national defence. As you may also be aware, Canada has recently been singled out for not fulfilling its NATO budgetary spending commitments.
For the Liberals, who inherited a balanced budget, the sudden change in Canada’s fiscal situation has created a serious problem. With spending only set to increase, the only alternative is to increase taxes.
This was recently contemplated with the idea to make employer provided health and dental plans to be considered as taxable benefits before the Government backed off on the idea. Currently, the Government is now exploring other options where taxes can be increased without causing harm to the Canadian economy.
I mention this fact as the new administration in the United States is lowering many taxes in particular for the corporate sector. Although the U.S. presidential twitter feed seems to attract most of the media attention these days lower U.S. corporate taxes are a real concern for Canadian competitiveness.
As one example, Canadian business investment declined over two per cent in the most recent fiscal quarter and has declined every fiscal quarter since the Liberal Government was elected.
The decline in investment is a particular concern as new investment typically leads to more jobs and by extension citizens who are employed and paying taxes instead of being unemployed and drawing benefits.
The solution? The Liberals have hinted they will undertake a taxation review that many have speculated will be an exercise to eliminate various tax credits in an effort to increase revenue.
It has also been suggested the Government may increase the capital gains tax. In theory, most support an increased capital gains tax, but the downside of such a move is a term called “asset lock” where assets are not sold in order to avoid paying taxes on the capital gains.
Having assets on hold does little to stimulate the economy and does not produce the revenue expectations of government thus creating a no win situation.
In my opinion, the Government will need to concede that it has developed a spending problem and we are leaving bills for our kids and our grandkids, a situation most I believe would agree is not responsible.
My question today relates to the budget. Do you believe the Government should place a greater priority on having a plan to return to balance?
I can be reached at [email protected] or you call toll free at 1-800-665-8711.
Canada is accelerating toward a trillion-dollar debt.
In late December, the Liberal government quietly released a rather ominous report from the Department of Finance that related to future debt projections based on the fiscal policy direction.
The report indicated that unless there is a change in course, Canada will continue to see annual deficit budgets until at least the year 2050.
By that time, Canada’s debt will have reached a rather staggering level of $1.55 trillion.
This, of course, stands in stark contrast to the return to a balanced budget in 2019 promise made by the Liberals prior to the last election. It is no wonder that the Liberals, it has since been reported, delayed releasing this report until Friday Dec. 23 instead of early October when it was first shown to the Finance Minister.
With so much newly created Liberal debt the question to be asked is where is this money all going? The Liberals will continually refer to one of the areas of increased spending is infrastructure. In the past, the former Conservative Government also significantly increased spending on infrastructure and in reality all levels of Government engage in infrastructure spending.
With that in mind for this week’s report I would like to share more information regarding the government infrastructure spending as it will be current and increasingly future generations of Canadians who will be paying for it.
Currently, the government has announced $186.7 Billion in planned infrastructure spending. However on closer inspection that $186.7 billion is being spent over the next 12 years.
Roughly $100 billion was already allocated for as regular infrastructure spending while the Liberals have called for a further $82 Billion increase of “new money” to raise that amount to reach the $186.7 billion figure.
What is more interesting is that only $13.6 billion of that $186.7 billion will be spent over the next two years Canada wide.
This is an important figure because for the first eight months of 2016 the Liberals ran a budget deficit of $12.7 billion and are estimated to hit a deficit over $25 billion this year alone. In other words infrastructure spending is in large part not to be blamed for the government massively increasing deficits and growing debt.
From another perspective, when looking at the $ 12.7 billion that is forecast to be spent on Infrastructure between 2016 and through to 2018 currently the Parliamentary Budget officer could only identify $4.6 billion in actual projects meaning that as much as debt continues to increase many of the announced infrastructure dollars have yet to make it out to communities where they can provide economic and societal benefit.
From a political perspective the timing is very interesting. While the Liberals have announced a significant $186.7 billion of spending on infrastructure and continue to cite increased infrastructure spending when queried on significantly increasing debt, in reality very little of the announced infrastructure spending will have occurred by 2018, in theory just $ 12.7 billion.
More troubling is that of that $ 12.7 billion, much of that has yet to be allocated. This means that by 2019, which just so happens to be an election year, The Liberals will need to significantly accelerate their infrastructure spending which has not, to date, kept pace with how fast the same Liberal Government has been accelerating deficit budgets and increased debt.
As the deputy finance critic, the fact that the current rise in debt and deficits is clearly un-related to increased spending on infrastructure is a serious concern. Basically this situation means that current program spending is unsustainable and is potentially creating a structural deficit that will present serious challenges for future generations of Canadians.
My question for this week is how concerned are you at the lack of progress on getting infrastructure projects going contrasted against the growth in deficit budgets and debt?
I can be reached at [email protected] or call toll free 1-800-665-8711.
One frustration I experienced in the last Parliament as a member of government was how certain bills and legislation were at times intentionally misrepresented by some groups solely to incite opposition.
As an example, it was often implied that Bill C-51 — The Anti-Terrorism Act, 2015 — would allow for peaceful, law-abiding protestors to be arrested without cause at a protest or demonstration.
These claims were erroneously made despite the fact the Bill contained language that clearly stated Bill C-51 specifically excluded “lawful advocacy or protest” from its application in defining legal and illegal protests with respect to “interference with critical infrastructure."
When I became a member of the Official Opposition, one of the commitments I made was to not use similar tactics that only serve to mislead Canadians.
I offer these comments as recently I have noted that a Bill introduced by the Liberal Government, specifically Bill C-23 — The Preclearance Act — is being targeted with many similar misleading and inaccurate claims much as was targeted at Bill C-51.
Bill C-23, in the words of the Liberal Government, will expand the limited number of U.S. Customs staffed pre-clearance locations in Canada (such as Vancouver and Calgary airports for U.S. bound passengers) to a greater number of locations in Canada (that because of Bill C-23) will expand to include passage by land, water and train.
Some are claiming that Bill C-23 allows U.S. customs agents to engage in activities that are against Canadian law while on Canadian soil.
While these allegations have are stirring up concern and opposition to the Preclearance Bill, the actual legislative summary is clear on this point and I quote accordingly:
“establishes that the exercise of any power and performance of any duty or function by a United States preclearance officer is subject to Canadian law, including the Canadian Charter of Rights and Freedoms, the Canadian Bill of Rights and the Canadian Human Rights Act."
From another perspective, it has been suggested that entering the United States may be more difficult for some Canadian citizens as a result of the new administration.
While I have not heard from any constituents to verify these claims, I will observe that if a Canadian citizen is going to be refused entry into the United States for whatever reason it is far more convenient for that refusal to occur in Canada at a pre-clearance location rather than in the United States where a deportation and related unplanned air travel costs can present a far more serious inconvenience.
For that reason alone, I believe the Liberal Government is taking a prudent course in expanding the pre-clearance program that by most accounts has proven to be a simpler, more accessible way to travel across the border.
I welcome your views on this subject:
- are you supportive of expanding U.S. pre-clearance as described above in Canada?
I can be reached at [email protected] or toll free 1-800-665-8711.
More Dan in Ottawa articles
- An immigration powderkeg Feb 23
- Housing first, not politics Feb 16
- PM breaks promise Feb 9
- Tragedy in Quebec Feb 2
- What's our Trump effect? Jan 26
- Where has the money gone? Jan 19
- PM's vacation still hot Jan 12
- Liberals' burning issue Jan 5
- Deju vu all over again Dec 22
- Another broken promise? Dec 15
- Pipeline good for all Dec 8
- Bank a bad investment Dec 1