Finance Minister Bill Morneau defended the government's budget Wednesday as a way to promote economic growth over the long term with a focus on benefits for the country's middle class.
“At the core is the notion when you have an economy that works for the middle class you have a country that works for everyone,'' Mr. Morneau told a business crowd gathered at the Chateau Laurier for the Post-budget Breakfast, presented by the Ottawa Business Journal and Ottawa Chamber of Commerce.
Mr. Morneau highlighted a boost to childcare benefits and increases to post-secondary education grants as a means to that end. He also reinforced the government's pledge to end boil-water advisories that plague aboriginal communities throughout the country as part of the budget's plan to give $8.4 billion to indigenous peoples over the next five years.
Don Carson, a Toronto-based partner with MNP LLP was less optimistic about the budget.
In an interview immediately following the breakfast, he told OBJ publisher Michael Curran that Tuesday was “a little bit of an expensive day” for small business.
Mr. Carson pointed to the small business rate that was supposed to drop, but didn’t.
“It was supposed to got to nine per cent under the legislated rates that both the Conservatives and the NDP had supported and also the Liberals in their election platform had supported that, but they changed their mind,” he said. “That unfortunately is going to be a tax increase for some small business owners.”
Mr. Carson also said business owners in Ontario were also hoping for some EI relief to offset the cost of implementing the upcoming Ontario Retirement Pension Plan.
But that didn’t happen.
Looking at the bigger picture, Mr. Carson said he is also concerned about the $29.4 billion deficit.
“Today’s deficits are tomorrow’s taxes. How are we going to pay for that debt and debt servicing?”
The answer, he said, is higher taxes and service cuts down the road.
It is not all bad news from Mr. Carson’s perspective, as the decision to back away from taxing stock options was a relief.
“They need to be able to provide some sort of incentive for the early start employees. The stock options is a nice way of doing that. Fortunately Minister. Morneau actually listened to alot of affected businesses.”
Ottawa Mayor Jim Watson sees the budget in a different way, calling it “very good news” for Ottawa residents.
The budget is packed with nuggets for the nation’s capital – $156.4 million to expand the Canada Science and Technology Museum, $114.9 million to revamp the National Arts Centre, and $62 million for a sewage tunnel to clean up the Ottawa River, among others.
A $11.9-billion fund over five years for transit will help with “large-scale” projects, including Ottawa’s light rail transit line. But the city still has to apply for and negotiate an exact dollar figure for phase two of the LRT.As expected, the federal Liberals will fund up to 50 per cent of city infrastructure projects.
“It’s a very positive signal on the part of the federal government that they understand that there are a number of municipalities that don’t have the full financial capacity to pay for all these projects,” Mr. Watson said. “If we want to see light rail travel farther east and west and south, this gives us that opportunity to free up about $500 million.”
Mr. Morneau was one of several cabinet ministers deployed Wednesday to tout the budget across the country.
Treasury Board president Scott Brison, Economic Development Minister Navdeep Bains, Immigration Minister John McCallum and Transport Minister Marc Garneau were at various speaking events from coast to coast.
On Thursday, Small Business Minister Bardish Chagger, Natural Resources Minister Jim Carr and Infrastructure Minister Amarjeet Sohi will do the same.
But if initial reaction is any gauge, the budget may not need a hard sell. With billions in spending splashed around, the budget appeared to satisfy many constituencies.
Dozens of stakeholder groups gathered on Parliament Hill to provide budget reaction Tuesday offered an unusual consensus in lauding the Liberal efforts.
And the sharpest critics left the big-spending budget comfortably parked in the "Goldilocks" zone between too hot and too cold.
The Canadian Taxpayers Federation offered a withering review of Mr. Morneau's string of deficits and the absence of any timetable for a return to balance.
“If this government held a contest to pick a title for this budget, the winner would probably be 'Spendy McDebtface,'” said the tax lobby group's director, Aaron Wudrick.
But the left-leaning Canadian Centre for Policy Alternatives took Mr. Morneau to task for spending too little, noting next year's deficit amounts to just 1.5 per cent of GDP, smaller than any federal deficit run between 1974 and 1996.
“The Liberals are spending in the right places, but the amounts aren't up to the task,” said the think-tank's senior economist, David Macdonald. “The deficit is too small to really tackle Canada's biggest economic challenges: unemployment and slow growth.”
with files from OBJ Staff and Lucy Scholey