Budget Won't Include New Spending or Tax Measures

Home renovation

Fred Lum/The Globe and Mail

Focus for 2010 will be on long-term reduction of deficit, which means measures such as the popular home renovation tax credit will not be making a return, government official says


Bill Curry and Campbell Clark

Ottawa — From Tuesday's Globe and Mail Published on Monday, Feb. 22, 2010 4:23PM EST Last updated on Tuesday, Feb. 23, 2010 9:00AM EST

The Conservative government will unveil a budget without a single new tax or spending measure for 2010, and will instead shift the focus to the longer-term plan to cut the deficit starting next year.

The stand-pat budget means that the popular Home Renovation Tax Credit, which allowed homeowners to claim up to $1,000 on their income tax but expired Feb. 1, won't be extended. The fiscal plans for 2010 outlined in last year's recession budget, including $19-billion in stimulus spending, will go ahead.

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But when the year of spending is over, a long budget squeeze will start in 2011. And even the military, which has received rapid funding increases under the Conservatives, will face restraint, according to a senior official who briefed the media Monday.

The real story of the March 4 budget promises to be an outline of the multi-year plans starting in 2011 to reduce record deficits by curbing growth in every area of federal spending except health care, education and public pension plans such as the CPP.

With Parliament prorogued for weeks, Prime Minister Stephen Harper and Finance Minister Jim Flaherty met with community leaders for budget ideas. Some of that advice, supported by opposition MPs, included calls for new job-creation programs.

And while the government official said Mr. Harper and Mr. Flaherty have not completed all work on the budget, he signalled those calls for new spending in 2010 will be unheeded.

“I don't anticipate any new measures in this budget,” the official said in Ottawa.

The Tories will, in effect, present a turning-point budget.

They say that the economy and job-growth are still fragile, so Ottawa must continue with the promised second year of stimulus spending but show a plan for ensuring the deficit will be reined in later.

“Now is not the time to change that course. But it is time to begin looking down the road to major challenges,” the official said.

Members of Parliament begin a new session of Parliament next Wednesday with a Throne Speech and a federal budget the next day. The House of Commons was scheduled to return on Jan. 25, but the Prime Minister's Office prorogued Parliament on Dec. 29 to allow the government to “recalibrate” its agenda.

Members of the opposition say their skepticism of the government's reasons for proroguing Parliament will be justified if the budget contains no new measures.

“The central claim of the Prime Minister was that he needed all of this time to prepare for this historic budget and that's why he prorogued, and now we're told there'll be nothing in the budget,” said Liberal MP and finance critic John McCallum. “So I think that proves that this excuse for prorogation was not the reality.”

The new feature, however, will be the multi-year plan for reducing the deficit by restraining the rate of growth in government spending. Only health care, education and public pensions like the CPP – fast-growing areas of federal spending – will be allowed to grow at currently projected rates.

Those exemptions will put a particularly tight squeeze on what's left: a $100-billion annual program budget, of which the military makes up nearly one-fifth.

The government has already asked public-sector unions for suggestions on scaling back the $35-billion spent annually on federal salaries and pensions. But yesterday's briefing confirmed the defence budget – which has grown by 8 per cent a year since 2000 – is not on the exempt list.

When asked if defence spending will be restrained, the government official stressed that everything but health care, education and pensions will be curbed. But he did not specify whether the $1-billion in annual special funds for the Afghanistan mission, which ends in 2011, will be rolled back into the military or cut.

NDP finance critic Thomas Mulcair said the budget briefing makes a mockery of the traditional process in which the budget is kept secret and MPs and journalists see it under embargo the day it is read in the House of Commons.

“It shows the continuation of the lack of respect of our Parliamentary institutions,” he said.

Budget Won't Include New Spending or Tax Measures