Budget 2012 Trims Rather Than Hacks Spending

March 29, 2012 Updated: October 1, 2015
Jim Flaherty
Finance Minister Jim Flaherty (R) and Industry Minister Christian Paradis laugh with reporters during the announcement for the 2012 budget at the government conference centre near Parliament Hill. (Matthew Little/The Epoch Times)

PARLIAMENT HILL, Ottawa—The Tories gave federal finances a haircut in Thursday’s budget, shaving just over half a percent off total program spending for the coming fiscal year.

While the specifics of those reductions won’t be known until departments release their budgets, the budget pledges that almost 70 percent of that $1.47 billion, or 0.6 percent reduction, will come from operating efficiencies in the back office, improving processes in human resources, accounting, and so on.

Travel expenses will also be reduced by making wider use of videoconferencing.

Some 19,200 jobs will be trimmed from the federal public service over three years.

Overall spending will be reduced by 1.9 percent by 2014-2015, trimming the federal budget by a bit over $5 billion annually from that point forward.

Two of the Conservatives’ priority portfolios, National Defence and Public Safety, will be hardest hit by the reductions, accounting for 35 percent of ongoing reductions by 2016-17, the final year projected in the budget.

Interim Liberal leader Bob Rae says any reductions to the Public Safety budget will come at the expense of the provinces, which will be forced to cover the costs of the Conservatives’ tough-on-crime legislation.

The budget also affirms the government’s intention to overhaul immigration, although it is light on details beyond those Immigration Minister Jason Kenney has already discussed, including making the system more responsive to labour market demands.

However, the budget does note plans to write off almost 300,000 pre-2008 applicants to the Federal Skilled Worker Program. The government says the requirements have changed since 2008 and around 284,000 people no longer qualify. Up to $130 million worth of application fees will be returned to those whose applications will be rejected.

Another major plank in the budget that is light on specifics are plans to revamp regulations for reviewing natural resources projects, including mining and oil and gas projects.

The current system is plagued by needless overlap, red tape, and uncertainty, says the government.

“In the federal government alone, accountability for assessments rests with dozens of departments and agencies, each with its own mandate, processes, information needs, and timelines. This leads to duplication, and a needless waste of time and resources,” reads the budget.

While the new system will depend on legislation yet to be introduced, the government says the plans were included in the budget because the overhaul is part of broader efforts to spur jobs and growth. The budget describes some 500 projects planned over the next 10 years worth around $500 billion.

Delays and uncertainty about projects keep investors jittery, especially if projects can’t be assessed and either approved or rejected quickly enough to respond to market demand. But efforts to streamline the approvals process have environmentalists fearful that protections will be reduced in favour of big business.

The review process will be skewed towards projects with substantial environmental impacts with less attention paid to “thousands of low-risk projects” that can clog up the system.

The new system will consolidate reviews from more than 40 departments and agencies to an unspecified but smaller number agencies.
And while reviews can take an unknown length of time, under the new process, each project would be directed to one of three possible review streams with the maximum time for a decision to be rendered ranging from one year to two.

The government will also kill the penny, which costs 1.6 cents to produce and has become a nuisance to retailers.

Those paying by credit card will be charged the exact amount, but consumers paying in cash will have their change rounded up to .05 cents if they are due three cents or more, and down to nothing if they were expecting two cents or less.

The budget also confirms early indications the government will raise the age to qualify for old age security benefits from 65 to 67.

A special pamphlet released with the budget details the rationale: “Canadians are living longer and healthier lives. In 1970 life expectancy was age 69 for men and 76 for women. Today it is 79 for men and 83 for women.”

The changes will not affect anyone currently over 54 years old.

The Tories have argued that the program has to be revised to be sustainable over the long term. The NDP has said the government is letting down vulnerable seniors.