Federal budget could lead Canada down road to ruin, critics say

Yorkregion.com
March 24, 2016
By Lisa Queen

While the federal Liberals are trumpeting their first budget as a transformative investment in Canadians’ futures, critics complain the financial document, at best, fails to deliver on key promises and, at worst, leads the country down the road to ruin.

In his budget, called Growing the Middle Class, Finance Minister Bill Morneau laid out a spending spree that he said will see the government spend $11.9 billion on infrastructure, bring in a child benefit that will lift thousands of children out of poverty and help middle-income families, and kick-start the economy.

But the budget also made a laughing stock of an election promise to keep the deficit at less than $10 billion, critics said.

This year’s deficit will hit almost three times that benchmark at $29.4 billion. And while Morneau hopes to balance the books in five years, he didn’t put that in writing.

The budget reflects the strong message Canadians have given the government to help families and make investments in the future, Morneau said.

“What we’re also going to do is be prudent along the way,” he said.

Investments in infrastructure include $3.2 billion for public transit, with $2.41 billion of that coming to Ontario and Quebec, $2 billion for clean water and wastewater and $3.4 billion for social infrastructure, such as housing, child care and recreation facilities.

But although $1.48 billion is earmarked for affordable housing, Richard Lyall, president of Vaughan-based Residential Construction Council of Ontario or RESCON, doesn’t think the funding will make much of a dent in the lack of affordable housing in York Region.

“This budget on housing is a real mess. I like the parts on seniors’ renos, homelessness and shelter. Other than that, it lays a massive bill in the hands of millennials without dealing with the real problems,” the Newmarket resident said.

“This will not put a dent in York Region’s shortage of rental or affordable housing. My eight-year-old could come up with a better budget.”

York Region’s serious lack of affordable housing is having a significant impact on economic development as young people struggle to afford places to live, Lyall said.

That dynamic is stopping businesses looking for a ready workforce from setting up in the region, he said.

Fewer than 50 rental units have been built in York Region in each of the last three years, he said.

The federal budget will merely put a Band-Aid of “drop in the bucket” limited funding on a housing market bogged down in systemic challenges, including new housing taking about 10 years to get through the development approvals process and construction.

York Region chair Wayne Emmerson congratulated the government on its budget, pointing out Ottawa has committed more than $120 billion over the next 10 years to improve and expand public transit, increase affordable housing, modernize water and wastewater infrastructure and enhance broadband service in rural and remote communities.

He called it an historic commitment to improve our communities.

Emmerson and several mayors and regional councillors met with Prime Minister Justin Trudeau and federal officials on a trip to Ottawa last month to lobby for a number of York priorities, including the extension of the Yonge subway to Richmond Hill, advancing all-day, two-way GO service serving Markham, Stouffville, Vaughan, King, Aurora and Newmarket, completing the final four Viva rapidway segments, addressing affordable housing needs and building the Upper York Sewage System.

“Clearly, our federal partners listened as our priorities align very closely with the priorities of the government of Canada,” Emmerson said.

But unlike Conservative infrastructure programs of the past, the Liberal budget doesn’t appear to invest in big ticket, job-creating initiatives such as subways, roads and bridges this time around, Thornhill MP Peter Kent said.

Instead, funding appears to be going toward supporting existing transit stock, he said.

The Liberals’ decision to break its promise to keep the deficit below $10 billion will kill jobs and plague future generations with massive debt, Kent said.

“We’re characterizing the budget as a nightmare budget. It has more than $100 billion in undisciplined spending projected and there’s no plan to balance the books,” he said.

While he praised the government for spending money on affordable housing and affordable rental housing, which will benefit York Region, he said it will take a long time to actually get the units built.

The Canadian Taxpayers’ Federation panned the budget as a reckless dive into unnecessary deficits and increased public debt.

“If this government held a contest to pick a title for this budget, the winner would probably be Spendy McDebtface,” director Aaron Wudrick said in a statement.

“The Liberals campaigned on real change but this plan bears a striking resemblance to the last government’s ill-advised choice to plunge the country into a long string of deficits. The biggest change on offer here is absolutely no plan to get back to a balanced budget.”

Bryon Wilfert, chair of the board of the Richmond Hill Chamber of Commerce and a former York Region Liberal MP who served as Parliamentary secretary to the minister of finance twice during his time in Ottawa, also expressed concerns with the deficit.

“The problem is it’s very easy to get into a deficit and very difficult to get out,” he said.

He also called the government’s broken promise of tax reduction for small business “disconcerting” and worried it could stifle job creation.

 However, he welcomed the significant investment in much-needed infrastructure and praised the government for boosting the economy.
“Investment in infrastructure is very important, although it’s obviously not to the scale some would like. But if I were cities today, I would be jumping up and down,” he said.
“Obviously, they are trying to stimulate the economy. But at the end of the day, it’s not government that creates jobs, it’s the business community. I like the fact they are going to eliminate some of those boutique tax (credit) things. We need a more streamlined tax approach ... where businesses are encouraged to re-invest.”

Meanwhile, the taxpayers’ federation did welcome some measures in the budget, including the shift to the means-tested child care benefit.

Families with incomes of $30,000 will receive a maximum of $6,400 for each child under the age of six and $5,400 for each child between the ages of six and 17.

With the phasing out and elimination of other tax credits, such as the fitness and arts credit to pay for the child benefit, that will work out to a gain of about $2,500 per child.

The tax-free child benefit, which begins in July, will be reduced as household incomes rise and will be eliminated for families with incomes more than $190,000.

A family with a household income of $50,000 with two children under six and two kids between the ages of six and 17 will get $1,200 a month or $14,000 a year under the new benefit before the loss of other tax credits are accounted for.

The same family with an income of $100,000 will get $729 a month or $8,750 a year.

A family earning $80,000 with one child under six and two aged six to 17 will get $779 a month or $9,350 a year.

A family with an income of $80,000 a year with three children under six will receive $945 a month or $11,350 a year.

And a family with a household income of $150,000 a year with two children under six and two kids between six and 17 will get $622 a month or $7,475 a year.

The benefits come on top of a tax cut introduced in December that lowered the middle-income tax rate by 1-1/2 points and brought in a new tax bracket for the rich.

York-Simcoe MP Peter Van Loan slammed the budget, echoing Kent’s concerns that Canadians will be paying higher taxes well into the future.

The Liberals have taken a $2-billion surplus left by the Conservatives and turned it into a massive $29.4-billion deficit, all the while breaking its election promise to keep the deficit to no more than $10 billion, he said.

At the same time, the elimination of the children’s sports and arts tax credits means almost every local family will pay more tax, Van Loan said.

The Liberals have also eliminated the education, textbook and job creation hiring tax credits, scrapped income splitting and will increase taxes that will hurt local entrepreneurs and kill jobs, particularly in York-Simcoe, which relies heavily on small businesses, Van Loan said.

“Despite those massive deficits and tax increases, there is very little in the budget to help York-Simcoe residents. Simply put, the Liberals are already spending out of control on very different things than what matters to our community,” he said in a statement.

But Newmarket-Aurora MP Kyle Peterson praised his government’s first budget.

“I am excited to see all the new investments that were announced in the 2016 budget. The budget clearly offers immediate help to those who need it most and lays the groundwork for sustained, inclusive economic growth that will benefit Canada’s middle class and those working hard to join it,” he said in an email.

“With this budget, the government seeks to help more Canadians and restore Canadians’ confidence in a brighter, more prosperous future.”

Rubbish, Markham-Unionville Conservative MP Saroya said.

The Liberals are borrowing and spending tens of billions of taxpayers’ dollars and raising taxes on families, workers and job-creating businesses, he said.

“When it comes to spending taxpayer money, the Liberals just can’t help themselves,” he said in a statement.

“Canadians should be concerned that the Liberals are failing to do what is necessary to encourage the private sector to invest in our economy and create well-paying, high quality jobs.”