Federal Budget 2007
Something borrowed, something blue, something for all
March 19, 2007
Tired of the barrage of political announcements fired your way from every conceivable scenic backdrop? Brace yourself, there's about to be a new onslaught.
Courtesy of Paul Martin's deficit-slaying legacy and a new Conservative government that wants to dole out this largesse, federal Finance Minister Jim Flaherty has produced a budget with almost literally something for everyone — seniors, stay-at-home spouses, suburban commuters looking for an excuse to buy that new ultra-green road machine.
Bing, bing, bing. This budget offers greater tax writeoffs for big oilsands development as well as for home office computers. Those looking for an iota of lean and mean Conservative ideology here might be disappointed: Government spending is up right across the board, and new measures are planned to look after everything from vaccinating women against cervical cancer to propping up local museums and so-called heritage sports like lacrosse and three-down football. There's even an improved deduction for meal expenses for long-haul truckers.
For the three federal opposition parties, this is not a budget that will be easy to vote against. Prime Minister Stephen Harper has borrowed heavily from previous Liberal administrations by upping the child tax credit for lower income families (a favoured Paul Martin vehicle) and boosting the pot for university scholarships and research.
The NDP can boast one of its more cherished policy options — the replacement of the existing oilsands tax writeoff with a much greener one, as well as a host of alternative energy incentives, the kind Jack Layton has been championing for years. And, of course, the Bloc Québécois gets to see a resolution (for the moment anyway) to the so-called fiscal imbalance: A whopping $39 billion more to the provinces over the next seven years.
The opposition dilemma
Given the nature of the largesse — vast and spread across a wide range of outreached hands — it's difficult to imagine any of the opposition parties wanting to be more than merely superficially against what's on offer here.
At the same time though, with election talk in Ottawa gaining steam, there may be a danger for them in letting it pass. One way or another, Harper and his key ministers will be crossing the country touting the many new initiatives on offer and dressing them up in their own particular way.
Just look at the last few weeks to see how the Conservatives have gone about just doing the striptease for all the eco- and province-friendly plans they were about to unfold.
The key question for the opposition parties at this juncture: Do they want to allow the Conservatives to continue with the barrage of good news, albeit in the politically charged atmosphere of an election campaign where everyone gets to weigh in almost equally in the most partisan way?
Or do they take a pass on bringing down the Harper minority at this juncture and risk having the Conservatives carry on with their announcements anyway, driving them home to the many groups the minority Conservatives are clearly targeting over the course of the summer barbeque season.
In most respects, the latter seems more likely. After all, with the way the numbers are in Parliament at the moment, Harper needs only the support of one of the opposition parties to have the budget passed. (If he wants to go to the polls, he may have to engineer a defeat on one of his other, more contentious bills, like the crime bills that have been languishing on the order paper.)
But Ottawa is currently in the grip of election fever and the issue to be decided is whose interest is best served by going now or keeping their powder dry for another day.
With tax revenue flowing in like spring rain — more than $7 billion in unanticipated surplus already this year and an equal amount projected for next year — Harper is clearly in a position to go either way.
Most of the polling over the past months has suggested the Conservatives have not moved beyond the 36 per cent they received in the last election just over a year ago. But with this budget, they may be in a better position to deal with a broader spectrum of electors.
Hostage to good fortune
The green initiatives, for example, are the among the most encompassing. Apart from the $1.5 billion ecoTrust with the provinces that Ottawa announced a few weeks ago, there is almost $3 billion in incentives and other rebates to encourage energy efficiencies, both among big business and ordinary commuters.
The Conservatives are offering up to $2,000 in rebates, for example, for those who buy the high-end fuel-efficient vehicles. They have also added tax incentives for a host of alternative energy initiatives — wind, solar, biofuel, tidal power — something the Liberals never quite got around to.
And the Tories have introduced a number of socially strategic tax advantages that should help them appeal to a broader base. There is to be a larger spousal deduction, for example, that should come close to ending the tax disadvantage for married couples. They are also changing the tax rules to allow for longer "phased retirement" and RRSP payouts for those who want to stay in the workforce longer.
But the biggest potential political advantage for the Conservatives may be the way this budget holds the provinces hostage to their own good fortune. For them, the taps have been well and truly opened.
Harper is no doubt hoping that this will help his new friend, Liberal Jean Charest, in Quebec when the votes there are counted on March 26. Though federally it is unclear who ultimately benefits if the federalist Liberals are returned to power in that province, Quebecers having an affinity for hedging their political options at the federal and provincial levels.
But keeping provincial premiers happy can probably only help an incumbent prime minister in the days or months before a federal election. Take away that grumbling and there is a lot less partisan noise on a campaign trail and, often, many fewer provincial operatives to jump into the fray.
In that situation, the campaign comes down to a contest between the guy who controls the purse strings and those who would like to have at them.
- Main page: Highlights
- Analysis: Election bound?
- Something borrowed, something blue, something for all
- Analysis: Harper's strategy
- It's all about the suburbs
- Fiscal Imbalance
- Personal Taxes
- Securities regulation
- Fiscal Outlook