OTTAWA - The RCMP and Finance Department have dropped their probes into a leak of information from 2013 federal budget — a leak critics say was likely orchestrated by the government itself.
Two news outlets, the National Post and the Globe and Mail, reported the evening before the March 21 budget that tariffs were being cut on imported sports equipment, likely leading to retail price reductions for consumers.
The RCMP's investigation, launched at the behest of the New Democratic Party, drew on financial market experts as well as its own officers, but could neither identify the leaker nor demonstrate that anyone might have benefited financially.
The Finance Department conducted a parallel probe on the orders of the deputy minister, but also determined it was unlikely anyone could have used the leaked information to make money on the stock markets.
The Finance Department made its market experts available to the RCMP as well.
NDP deputy finance critic Guy Caron wrote to RCMP Commissioner Robert Paulson four days after the budget, requesting the investigation.
"The leak and availability of this information, prior to it being made public in the budget, gave those with this information an opportunity for personal financial gain," Caron said in his letter.
Assistant Commissioner Gilles Michaud responded Aug. 13, explaining the decision to close the file. Michaud said the Mounties also considered breaches of the Security of Information Act, but noted that some sections have been declared unconstitutional and so did not pursue charges.
Caron said the Harper government itself may have been behind the leak, in an effort to highlight positive elements of the budget and distract from any bad news.
"We suspect it's from the government," he said in an interview from his riding office in Rimouski, Que.
"These leaks might be used as a communication tool by the government. ... as a way to distract and disorient the media towards preferred messages."
Stories drawing on the leak highlighted the potential cost savings for hockey parents, who pay much more than their American counterparts to equip kids for the game. Media coverage of the budget itself also focused in part on the sports-equipment tariff cuts.
Only days later did it become clear the Harper government had also raised tariffs on imports from 72 countries — a move with the potential for hiking retail prices on a broader range of other consumer goods.
The government estimated the higher tariffs would eventually generate $333 million per year in new revenues for the treasury.
"The fact that the tariff initiative on consumer goods is scheduled to take effect on April 1, 2013, narrows the possible scenarios under which an importer could have changed its behaviour to benefit from the information," says a March 27 Finance report for Michael Horgan, deputy minister.
"Given the limited information published ahead of the budget, notably the fact that the measure is only effective on April 1, on what is a relatively narrow initiative, it's difficult to see how one could have benefited from advance information on the stock market."
The Finance Department officials also checked the March 21 trading in shares of Canadian Tire Corp. (TSX:CTC.A) and Bauer Performance Sports Ltd. (TSX:BAU). Volumes were low and stock prices barely moved.
Documents related to the twin probes were obtained by The Canadian Press, some through the Access to Information Act.
Caron says he remains concerned.
"We've seen an increasing number of instances prior to budgets where information is actually leaked," he said. "The process itself should be reviewed."
He added that because such leaks also impair the privileges and work of members of Parliament, the NDP is now considering whether to raise the matter with the Speaker.
One of Canada's most infamous budget leaks occurred in 1989 when Doug Small of Global News was given a copy of the "Budget in Brief" pamphlet, and reported on it the day before the budget was to be tabled.
Then-finance minister Michael Wilson was forced to hastily release the budget that evening. Charges against Small were later dropped.
2013 BUDGET HIGHLIGHTS
Revenues for 2013-14 forecast at $263.9 billion, spending at $282.6 billion, deficit at $18.7 billion. Deficit projected to drop to $6.6 billion in 2014-15 and become an $800-million surplus in 2015-16. With files from Althia Raj and The Canadian Press.
Tackling The Skills Gap
The Tories plan to create a Canada Job Grant that will provide $15,000 or more per person -- up to $5,000 provided by the federal government, the rest matched by the province/territory and the employer. Nearly 130,000 Canadians are expected to benefit when the new grant is fully implemented in 2017-2018. Essentially, this is the government saying it is taking training out of the hands of provincial governments because it hasn’t worked and placing it in the hands of individuals. The Canada Job Grant will replace the Labour Market Agreements the feds signed with the provinces, which expire in 2014.
Manufacturing and small business get tax-credits introduced in past budgets extended to help spur investment and growth. There will be $1.4 billion in tax relief for manufacturers by extending the temporary accelerated capital cost allowance for new investment in machinery and equipment. And hundreds of millions for small business owners.
The government has pledged more than $53 billion in infrastructure spending, including $47 billion in new funding over 10 years. This includes $32.2 billion over 10 years for a “Community Improvement Fund” to build roads and public transit as well as recreational facilities and other community infrastructure projects. The Fund will consist of an index Gas Tax Fund and the incremental GST Rebate for Municipalities.
Military spending will be re-jigged that it is modeled on the ship building strategy and aimed at creating more jobs in Canada and key domestic capabilities with an eye towards exports.
Foreign Affairs - Aid Agency Cancelled
The budget has cancelled the Canadian International Development Agency, the primary agency responsible for foreign aid. Its duties will be merged into the Department of Foreign Affairs.
Tax Evasion Snitch Line
The government says it is aggressively going after tax avoiders/and closing tax loopholes. They are launching a “Stop International Tax Evasion Program” where the Canada Revenue Agency will pay individuals with knowledge of “major international tax non-compliance” a percentage of the tax collected as a result of information provided. The CRA will only pay a reward if the information results in total additional assessments exceeding $100,000 in federal tax.
Public Service Cuts
Two departments -- Canada Revenue Agency and the Department of Fisheries and Oceans -- will see big cuts. Departments will see a 5 per cent cut in their travel budgets. The government also says in the budget it intends to work with the public sector unions to “further align overall compensation with other public and private sector employers.”
The federal budget says new projects related to Canada's perimeter security deal with the United States will go ahead as planned, despite budget woes south of the border. The federal budget has given the green light to almost a dozen information-sharing and infrastructure projects related to the Beyond the Border initiative between the two countries. The vaunted deal was announced with fanfare by Prime Minister Stephen Harper and U.S. President Barack Obama in December 2011 at the White House. The plan aims to speed the flow of goods and people across the 49th parallel while protecting the continent from a terrorist attack.
Tobacco Prices Going Up
The government wants to reduce import tariffs on a number of goods including baby clothing, skis, snowboards and gold clubs. But it plans to offset the $76-million revenue loss from that by hiking excise taxes on chewing tobacco and other manufactured tobaccos, to bring them in line with cigarette taxes.
Finance Minister Jim Flaherty's spring budget commits Ottawa to five more years of funding through the Investment in Affordable Housing program. The level of commitment is the same as in the past: $253 million a year over five years, which needs to be matched by the provinces and territories and can be spent on new construction, renovation, home ownership assistance, rent supplements, shelters and homes for battered spouses. But there's a new twist to the funding. Home construction in the program will support the use of apprentices so that newcomers to the construction trades can build up crucial experience. The budget also commits $100 million over two years to build 250 more units of affordable housing in Nunavut, where homes are so crowded that illness spreads easily and poverty abounds.