The Flaherty Budget Giveway - Everything Must Go!

Friday, May 5, 2006

This past Tuesday, the Harper government tabled it's first budget. During the election campaign and the recent speech from the throne, the government highlighted tax cuts and increased spending on policing and national defense as priorities. The budget, as outlined by Finance Minister Jim Flaherty, held little surprises for observers, but criticism has steadily been growing louder in the past few days.

Amongst the tax cuts introduced was the promised reduction in the GST from seven per cent to six per cent, a drop in the small business tax rate drops by one per cent, the corporate tax rate falls from 21 per cent to 19 per cent, the corporate surtax and capital tax will be eliminated entirely and tax credits will be handed out for transit passes, tools and youth sports.

But taxes weren't the only thing that was cut, the axe also fell on environment spending. Federal spending on combating climate change will be cut to $2 billion as the government develops its "Made In Canada" program to replace the Kyoto Protocols.

But after being all fiscally conservative, Flaherty went on a spending spree. $500 million went to aid farmers, $1 billion was allocated to ready the country for a pandemic, there was $1.1 billion in extra spending for the military, $1.4 billion for policing and public safety, $3.3 billion for provinces to meet short term needs, and $5.5 billion for highways and infrastructure.

Despite a jump of $10 billion in spending since the last federal budget, the Conservatives are still predicting a surplus for the next fiscal year, while looking for an additional $2 billion dollars in cuts to be allocated later. In should be noted also that the Conservatives did raise the taxes for one group, lowest income earners will see their taxes jump have a percentage point to 15.5 per cent.

For students and administrators of post-secondary institutions, there wasn't much to recommend this new budget. There's a new tax credit on text books, and scholarships and bursaries will now be income tax exempt. There will be increased access to Canadian Student Loans, and $1 billion for the provinces and territories to make "urgent investments in post-secondary infrastructure."

There are a few on campus who were less than impressed by what the government had to offer.

“The textbook tax credit is only a maximum of $65 a month and will only benefit students who earn enough to pay tax, and not the students who really need the financial assistance," says John Coombs, CSA External Commissioner. "In addition to this, the only other effort to aid our under funded post secondary education system is $1 billion towards infrastructure renewal. This is not even a drop in the bucket for our universities and colleges. Guelph alone has a deferred maintenance bill of over $200 million.”

Finance and HR Commissioner Chris Killer agrees. "The budget neglected the necessity of funding more heavily in post-secondary education that will ensure a sustainable economy in the future. The lack of funding in post-secondary education imposes a barrier and a deterrent for students wishing to pursue post-secondary education. The Tories had a very narrow perspective
when creating this budget and in my opinion did not consider the future of Canada. With the tuition hikes and now a lack of government funding, you really have to question who’s looking out for students and affordable post-secondary students."

The disappointment in the Federal budget extended to the upper floors of the University Centre as well. University President Alastair Summerlee expressed his disappointment to TheCannon.ca. "Of course I would have liked to have seen a great deal in the budget for postsecondary education but I am actually cautiously optimistic about the announcements."

Summerlee cited a list of seven things that he sees as positives in the budget."Various tax credits that will alleviate some of the costs for students; increase in the number of students who will receive bursaries from the Canada Student Loan program and an increased amount of money available for those receiving loans; a line-item which is referred to as "infrastructure" in the budget - it is not clear exactly how much this will be, over what time period or what it can be used for - but any additional funding without it being allocated to specific items i.e., can support the operating budget is good news.

"There is money to support the indirect costs of research which will help the institution with utility and other service bills (again the amount or the timing of allocations is not clear); major additional funding for the Canada Foundation for Innovation (we will be able to apply for more research money and equipment); tax relief on scholarships and bursaries which will be particularly beneficial to graduate students, and there is a major capital gain tax relief program which will help support philanthropic giving."

Summerlee went on to say that, "In addition, there were significant investments and incentives to support apprenticeship and training programs that will help colleges. This is very important for the postsecondary system as as whole."

Among the items on Summerlee's wish list were: a reintroduction of the federal grant system for students, money for deferred maintenance, incentives for energy reduction and efficiency, and an increase in base funding per capita for higher education, specifically in the form of operating funds.

"I was very disappointed to see the continued reductions in support of environmental issues," Summerlee added.

"The Conservative minority government released a budget that is more a divisive attempt with tax cuts to win votes for a majority government than it is an attempt to ensure Canada remains a competitive nation in the world," Killer says in summation of Tuesday's budget.

It is expected that the budget will be passed by the House of Commons, despite rumblings from both the Liberals and the NDP that they will be voting against the budget. The government should stand thanks to support from the Bloc Quebecois.

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