CBC In Depth
A budget for all reasons
Keith Boag, Parliamentary Bureau Chief, CBC-TV | Feb. 23, 2005

While it's true that budget secrecy isn't anything like it used to be and most of what we're hearing from the finance minister today we'd already been primed to expect, there is, nevertheless, a surprise.

Tax cuts are promised in areas no one had predicted, and despite long and oft-repeated signals that tax cuts are not this government's thing.

There were hints that low- and middle-incomers were in for a break and they got it. But so did everyone else. The basic personal exemption will be going up so that by 2009 the first $10,000 you earn will be tax-free. No matter who you are or how much you make.

The stunner is on the corporate side. Almost a 10 per cent cut (from 21 per cent to 19 per cent) in corporate tax rates by the year 2010 and the elimination of the corporate surtax by 2008. This is the kind of thing that could win Liberals friends from what Conservatives think of as their base. And of course the Liberals know that.

Looking for a little extra retirement security? There's some of that too. Registered Retirement Savings Plan caps are rising a thousand dollars a year to $22,000 by 2009 and the 30 per cent foreign-content restriction disappears.

These tax measures reflect a change in government thinking that presumably has to do with the new uncertainties of its minority status in Parliament.

Still, the budget is most notable for the billions in spending plans. We already knew about the $41 billion for health care and the $33 billion added to equalization for poorer provinces over the next 10 years. But who knew about the $36?

Thirty-six bucks: Now there's a number we can all understand!

It's a little more than the average no-frills phone bill, a little less than the cost of a monthly bus pass and it easily covers a pair of movie tickets with a regular popcorn and a couple of soft drinks. And those are the kinds of things it might actually mean to the low-income seniors who, by 2007, will be getting another $36 every month through the Guaranteed Income Supplement.

That may not sound like so much until you start adding it up. $36 a month times more than a million and a half low-income seniors over the next five years equals $2.7 billion.

Unfortunately, that's about as simple as a $200 billion spending plan is ever likely to get.

Today's budget is an appeal to just about every broad political constituency in the country. It covers kids, their parents, the environment, the military, corporate and personal income taxes, native people, tsunami victims, artists, athletes and so on and so on. Here are some more broad strokes:

  • $5 billion over five years for the child-care initiative the Liberals first promised more than a decade ago.

  • $5 billion over five years to help fund a strategy to address climate change and begin to honour Canada's commitment to the Kyoto Protocol.

  • $12.8 billion over five years for the Canadian Forces. Much of this will be to make good on the Liberals' election promise to increase the military by 5,000 people and 3,000 reserves.

  • $735 million over five years "to address the urgent needs of First Nations communities."

  • $3.4 billion over five years to international assistance.

This is an election budget. It has to be. If somehow it failed to pass in Parliament next month, the Liberals might find themselves in an election. Even if it passes, the Liberals may find themselves running on it in an election later, perhaps next fall.

So the budget departs from a decades-long tradition of making spending commitments for only two years into the future and makes commitments for five years. That frees the finance minister to make more sweeping promises all over the map.

For example, he could never have promised his corporate tax cut or the $22,000 RRSP cap or the $10,000 basic personal exemption in 2010 if he'd stuck to the old tradition of not looking beyond two years into the future.

Is this a politically shrewd budget? Certainly the tax cuts and military spending are specific measures to blunt predictable attacks from the Conservatives.

The Conservatives will likely vote against the budget anyway (though probably not with sufficient strength to defeat the government), but it will be harder for them to mount a strong public case for that.

There is a distinct absence of detail on high-profile environment and social policy elements. For instance, there is money for a national child care plan but no plan.

The Bloc Québécois can scarcely complain about that, since there is no evidence of an imminent intrusion into their jurisdiction.

There is money for reducing greenhouse gas emissions, but only a vague outline of a Kyoto implementation plan. That's something all parties will complain about but for different reasons and so they'll have something to unite them in opposition.


ISSUES: Environment Health care Child Care Cities Business Personal finance Defence Sports Other

FINANCE DEPARTMENT DOCUMENTS: Budget in-brief [pdf] Budget speech [pdf] Budget plan [pdf] Full budget documents
REACTION: Quotes Letters
MEDIA: Audio/Video
COLUMNS: Keith Boag: A budget for all reasons Christopher Waddell: The budget's political traps
How would you spend the federal surplus? (Flash)

RELATED: Federal Budget 2004 Federal Budget 2003

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