10 things to watch for in the budget

Families, seniors and manufacturers expected to get a hand up from Joe Oliver in his 2015 budget.

Thestar.com
April 20, 2015
By Les Whittington and Bruce Campion-Smith

Here are 10 things to watch for in the budget.

Help for Seniors

Oliver is expected to address a longstanding complaint from seniors that their ability to manage their retirement nest eggs is compromised by rules that force them to withdraw cash from their registered retirement funds. Partly because people are living longer, advocates say it’s wrong to make seniors as of age 71 take out set amounts of money every year from their registered retirement income funds, or RRIFs, and pay income tax on the withdrawals. Oliver is expected to ease or scrap the requirement.

Doubling Tax-Free Savings Accounts

The contribution limit for TFSAs is expected to be doubled to $11,000 annually. Doing so is in keeping with a promise by Prime Minister Stephen Harper in the 2011 election campaign.

Political Posturing

With an election looming in October, Oliver will use the budget to repeat his political attacks on the opposition parties. The Conservatives are trying to depict themselves as better stewards of the economy than the NDP and the Liberals. Expect spirited arguments in the aftermath of the budget about which parties have a better record at running budget surpluses and which parties have more to offer the middle-class, with the opposition accusing the government of favouring the rich.

Income-splitting

Implementation of this budget measure was announced last fall in an unusual pre-budget move by Harper. Known as the Family Tax Cut, the plan allows families with minor children to split their income for tax purposes, with a maximum savings of $2,000 a year. It was widely criticized because only 15 per cent of families benefit will significantly.

Family Goodies

Partly because of the uproar over income-splitting, the government is greatly expanding spending on families, including an increase in the family allowance called the Universal Child Care Benefit. In all, these pro-family measures will increase Ottawa’s spending by $5 billion a year.

Deficit

The government has long promised in 2015 to put an end to seven years of consecutive federal budget deficits. The spending and tax cuts announced by Harper in the fall, coupled with the negative hit on federal revenues from the oil price slide, put that goal in doubt. As of November, the predicted budget surplus for 2015 had been reduced to a slim $1.6 billion. But the Conservatives’ cuts to government spending appear to have put Oliver in a position to a record budget surplus this year and, unexpectedly, for 2014 as well.

Manufacturing

With the economy growing at a meager 2 per cent this year, the government is expected to try to shore up business conditions by extending a much-valued and soon-to-expire tax break for companies buying machinery and equipment. Another possibility is more federal support for development of innovative technologies. Both would benefit southern Ontario, considered the decisive battleground in the upcoming election.

Job Creation

At a time when the so-so economy is unlikely to result any time soon in a reduced jobless rate, Oliver will stress the need to put more Canadians to work. More funds for training and apprenticeships are likely. And the government has already announced a $225-a-year Small Business Job Credit. It was announced six months after a decision in the 2014 budget to scrap a similar, $200-million a year job-creation plan for small business.

Defense and Security

Soldiers and spies are also expected to get more funding. The Conservative government has brought in new anti-terror legislation and Tuesday’s budget is likely to boost the bottom line of Canada’s intelligence agencies and the RCMP. And additional dollars are on the way for the military, Defence Minister Jason Kenney hinted on CTV’s Question Period on Sunday.

Public Transit

Oliver is expected to earmark billions of extra dollars over several years to help build public transit in Toronto and other large cities. This should help pay for Mayor John Tory’s SmartTrack rail project. Tory has asked Ottawa for $2.7 billion over eight years to pay a third of the cost of the Toronto transit plan.