A less than incredible shrinking budget

Canadians concerned that the Harper government would bring in a trash-and-burn budget were apparently fretting needlessly. The budget reduces government spending by $5.2 billion a year by 2015, considerably less than the $8 billion many predicted.

Among all the political images Stephen Harper had hoped to evoke from his government’s promised "transformational" budget, it surely wasn’t the picture of self-serving MPs digging in to protect their so-called gold-plated pensions.   Parliamentarians sharing the pain of budget cuts was a key part of the government’s public relations strategy to sell Canadians on tight times ahead. Austerity begins at home and all that.  

Instead, there were the politicians of all party stripes, decorating the budget with a muddled undertaking to start paying more for their pensions in 2013, but otherwise postponing further changes until, say, sometime after the next election.  

The Prime Minister’s Office that never leaves anything to chance was quick to issue reassurances as the budget was being released Thursday.  

Harper was on top of the situation, we were told, and a new and more modest MPs' pension plan would be in place this fall.   "The conversation has been had," an official said in an email. "The rest of the basic pension reforms will happen, with details to be presented in the fall. Everyone is on the same page."

The bizarre scene of MPs being dragged kicking and screaming into the real world of ordinary Canadian retirement plans was just one of many surprises in Finance Minister Jim Flaherty’s fiscal blueprint — a budget that most ordinary folk will probably find underwhelming.  

Canadians concerned that a majority Harper government would bring in a trash-and-burn budget have apparently been fretting needlessly.

Minor shrinkage

The most controversial change affecting Canadians personally is the plan to raise the eligibility for Old Age Security from age 65 to 67, gradually phasing it in starting in 2023.

In other words, it won’t affect anyone older than 54 today, and most people younger than that aren’t going to lose a lot of sleep over it for another few elections at least.  

However prudent the move to change OAS may be as public policy, it is brilliant politics, confronting the fiscal elephant in the room in a way that most Canadians won’t care about for a long time to come.  

Small-c conservatives hoping the government would use the early days of its majority to vastly shrink the size of the federal bureaucracy will be particularly disappointed.  

The budget reduces the government's departmental spending on operations by $5.2 billion a year by 2015, considerably less than the $8 billion many insiders had been predicting.  

In perspective, the government is promising to reduce its basic bureaucratic operating costs by 6.9 per cent over three years, or less than two per cent of its total spending.  

Also consider this: Since the Conservatives came to power in 2006, the Harper government has increased operational spending by a whopping 54 per cent, or more than $25 billion.  

Now rolling it back $5.2 billion isn’t exactly the stuff of conservative euphoria.  

Oh, and did we mention that $5.2 billion is almost the same amount Canadian workers will have to pay in increased employment insurance premiums over the same time period?  

But there are no new taxes in the budget. Really.  

It’s the same story with the government’s promised cuts of 19,200 public service jobs over the next three years.  

That would still leave 30,000 more public servants on the federal payroll than when the Conservatives first went on a hiring binge six years ago.

Tough going? Go shopping

So what’s in the budget of interest to ordinary Canadians?  

Cross-border shopping — the budget increases the tax-free exemption to $800 for anyone out of the country more than 48 hours.  

How that got into a budget promoting Canadian jobs and prosperity hasn't been revealed, but pressure from the Americans during border security talks is a good guess.  

The government's promise to make the Governor General pay income tax — after he gets a pay hike big enough to cover the increase — is simply laughable.  

The budget's dooming of the Canadian penny is an interesting distraction, but not exactly going to transform government as we know it.  

Precisely what the cuts will achieve — and what services to Canadians they might affect — is impossible to determine from a budget that is long on platitudes and short on specifics.  

Foreign Affairs, for instance, is facing budget cuts totalling $170 million over three years.  

That will be achieved in large measure, we are told, by cutting the limo fleet, dumping some of the diplomatic mansions, axing expense accounts, and not shuffling staff from one country to another so often.  

But the department will also "restructure its Canadian offices, foreign properties and missions to provide better value for money and results for Canadians."

Translation: Canada is about to close some of its consulates in the U.S. and Europe, but details could be months coming.   Similarly, the budget announces sweeping changes to everything from immigration to environmental approvals for oil pipelines without providing enough details to judge their value.  

The good news is the government is getting rid of a few perfectly useless agencies exposed by CBC News in recent weeks.   More than $5 million too late, the government is finally shutting down the bureaucracy supporting the non-existent federal appointments commission which, needless to say, has never appointed anyone to anything.  

The budget says the government will also be reviewing the staffing requirements for the Employment Insurance Financing Board that is costing taxpayers about $2.5 million a year.  

The board was established in 2009 to set the annual EI rates which have instead been capped by government for the next seven years, leaving the agency with nothing to do.  

A senior government source says the agency’s staffing review will conclude its requirements are exactly zero.  

All of which may be enough for most ordinary Canadians to be content with a budget that holds the line on taxes, cuts some waste, and makes shopping cheaper in the States.