Could this be the end?
That's the question pundits are wondering after Finance Minister Jim Flaherty, whose health issues have already spurred questions about his political future, appeared to break with his party on the issue of expanding income-splitting for Canadian families.
The concept, promised by Prime Minister Stephen Harper in 2011 en route to his majority mandate, would allow couples with children under the age of 18 to pool their income together in order to qualify for a lower tax bracket.
Harper vowed to only bring in the measure once the books are balanced, which is expected to be next year. Though Flaherty's latest budget shows Canada is essentially there already.
But the finance minister expressed doubts about the idea on Wednesday, telling the Ottawa Chamber of Commerce it would really only benefit some Canadians.
That's largely the same conclusion reached by the left-leaning think tank, the Canadian Centre for Policy Alternatives, which found 86 per cent of Canadian families would not benefit from the plan.
"It's an interesting idea. I'm just one voice. It benefits some parts of the Canadian population a lot. And other parts of the Canadian population virtually not at all," Flaherty said.
"I would pay down public debt and reduce taxes more, myself, but I am only one person."
Other Tory cabinet ministers — including, notably, Jason Kenney — publicly disagreed with Flaherty.
"All I know is we keep our platform commitments," Kenney said. "We made a platform commitment to introduce income-splitting when we get to a balanced budget. We'll get to a balanced budget next year, that's very clear."
And the finance minister was largely silent in question period Wednesday, leading many to wonder if he had been "benched" by his boss.
Now, the idea that the second-most powerful person in the Harper government would publicly question a key campaign pledge has many wondering if Flaherty can possibly stay on in the job.
Lawrence Martin, columnist for iPolitics, believes Flaherty is as good as done. Not only for demeaning a key Tory promise but for calling into doubt the Harper government's reputation as sound fiscal managers by opining about Canada’s "large public debt."
The Tories' success in slaying the deficit without hiking taxes is a big part of what makes the party appealing to some voters, but Martin now thinks they have "lost control of the narrative."
Now it's not about the erasure of the deficit. Where before there was little controversy over the government’s economic policy there is now controversy aplenty — over the future of income splitting, the future of Jim Flaherty and the national debt.
Here's betting that it's Flaherty who goes and the income-splitting promise which stays. There is no stellar heir-apparent on the Conservative front benches to step into finance — which makes the situation all the more difficult.
Postmedia's Andrew Coyne wrote that the entire affair shows Flaherty, who has showed signs of fatigue and erratic behaviour of late, is in need of a break.
But, much like Martin, Coyne suggests Flaherty has now backed himself in such a corner that he may not stay be able to keep his position.
It is difficult to see how Flaherty can carry on in the job. As a matter of tax policy, income-splitting is squarely within the finance minister’s purview. It is inconceivable that the minister, having attacked the policy in public, should then be charged with putting it into effect — and defending it from opposition attack. Or would someone else have to answer for this part of the minister’s portfolio? No. If it is a choice between the policy and the minister, the minister will have to go.
Coyne concludes that if Flaherty is now unwilling to carry out Harper's agenda, it may be time for someone new in time for the 2015 push.
Flaherty may have decided that he is done with budgets and, as a result, he may feel freer to speak his mind — regardless of where the chips may fall.
Worse — from Harper's perspective — he may have decided that he would rather be done as finance minister than have to deliver on the prime minister’s income-splitting promise next year.
What is certain is that in a week when Flaherty could be celebrating his imminent triumph over the deficit he is not coming across as that happy a camper.
Flaherty has had a number of unusual moments in the last year.
In November, after Kenney publicly called on Rob Ford to resign in the wake of his crack cocaine admission, Flaherty angrily confronted him in the House of Commons. According to CBC News, Flaherty told Kenney to "shut the f--k up" about the Toronto mayor and the two ministers reportedly had to be separated.
Flaherty is a long-time friend of the Ford family.
In December, Flaherty's behaviour at a meeting with provincial finance ministers renewed speculation about whether treatments for his rare skin condition, bullous pemphigoid, were wearing him out.
Sources told Postmedia's Stephen Maher that Flaherty sat in silence for most of the meeting, occasionally with his eyes closed, and allowed minister of state Kevin Sorenson to quarterback things.
"He did not seem like a well man," someone who was in the room told Maher. "He kind of closed his eyes a number of times, but whether that was just him sitting there listening or not, I don't know."
And, in January, Flaherty was accused of stepping on the toes of the Bank of Canada Governor Stephen Poloz by predicting that Canada will be under international pressure to jack up interest rates this year.
Flaherty, who has been in the post since 2006, is the fourth longest-serving finance minister in Canadian history.
What do you think? Will Flaherty still be finance minister by the time the next election rolls around? Tell us in the comments.
With files from The Canadian Press
Also on HuffPost:
Finance Minister Jim Flaherty is obviously very happy with his spending plan but others aren't so sure. <em>With files from The Canadian Press, Althia Raj</em>
Finance Minister Jim Flaherty
"This prudent plan builds on our record of strong, sound and consistent fiscal management. It is a low-tax plan to promote jobs and economic growth and support Canadian families. And it is a common sense plan that will see Canada return to a balanced budget in 2015." <a href="http://www.huffingtonpost.ca/2014/02/11/canada-budget-2014-full-text-speech_n_4769576.html" target="_blank">Read Flaherty's full speech</a>
NDP Leader Tom Mulcair
"Budgets are about priorities and choices. It's very telling that the Conservatives would rather attack public servants, environmental groups, unions and anyone who dares criticize their short-sighted policies, than help Canadians." Mulcair said he gave the budget a D-. <a href="http://www.ndp.ca/news/conservative-do-nothing-budget-fails-to-meet-needs-canadian-families" target="_blank">Full NDP statement</a>
Liberal Leader Justin Trudeau
"Middle class Canadians need a plan for growth, and this budget has no plan for growth. The only way to achieve a sustainable surplus is with economic growth. What the Conservatives are doing, balancing the budget for political purposes – on the backs of Canadian workers, defence cuts, and asset sales – is just bad governance." <a href="http://www.liberal.ca/newsroom/news-release/conservative-budget-fails-middle-class-families/" target="_blank">Full Liberal statement</a>
NDP Finance Critic Peggy Nash
"Hundreds of thousands more Canadians are unemployed today than before the recession and are looking to their government for action. This budget is another Conservative disappointment."
Liberal Finance Critic Scott Brison
"This out of touch, no-growth Conservative budget does nothing for young Canadians, who cannot find good work, or for their parents, who are paying the bills by taking on more personal debt. Instead of this unimaginative, do-nothing budget, Canadian families are looking for investments that will produce growth, including in infrastructure and post-secondary education."
Green Party Leader Elizabeth May
"I don't think anybody is surprised that it's a budget that doesn't do anything inspiring. But it does continue down the road of increasing fossil fuels and green house gas emissions. "It never uses the words 'green house gases' or 'climate' but does actually have to spend money to deal with the damage caused by the climate crisis. In several different categories a total of about $300 million is spent to help deal with climate change, from extreme weather events, droughts, fires and floods and how they affect farmers, how they affect homeowners, how they affect first nations communities. "Mitigation against natural disasters is throughout the budget without mentioning why is this happening? Could we do something about the climate crisis?" <a href="http://www.greenparty.ca/media-release/2014-02-11/harper-s-olympic-budget-falls-well-short-podium" target="_blank">Full Green Party statement</a>
Gregory Thomas, Canadian Taxpayers Federation
"We're pleased and encouraged that Stephen Harper and Jim Flaherty are on track to keep their election promise and balance the budget in 2014-15. "The challenge facing all parties and leaders now is to return the projected $30 billion surplus to Canadian taxpayers over the next five years, by paying down debt and reversing EI payroll tax hikes." <a href="http://taxpayer.com/?section_id=5100§ion_copy_id=18201" target="_blank">Read his full statement</a>
Dan Kelly, Canadian Federation of Independent Business
"Small business owners know that today’s deficits are tomorrow’s taxes, so they are pleased the government’s commitment to a balanced budget in 2015 remains solid." Kelly said CFIB gave the Olympic-year budget a bronze. <a href="http://www.cfib-fcei.ca/english/article/5937-federal-budget-gets-a-bronze-from-small-business-cfib.html" target="_blank">Read CFIB's full statement</a>
Claude Dauphin, President of the Federation of Canadian Municipalities
"We're very happy to see that 280,000 will have access to broadband internet. Is it enough? Of course, if it was everybody, we would be even more happy but 280,000 people is better than nothing."
Sharon Bollenbach, CEO Special Olympics Canada
"We will be receive an extra $10.8 million over four years which is significant to us and our organization and allows us to expand our reach of having athletes with an intellectual disability engaged in sport and reaching the benefits of sports that all of us are excited about, especially with the Olympics on now."
Jessica McCormick, Chair of the Canadian Federation of Students
"We're disappointed with the budget. We heard a lot about youth unemployment in the days leading up to budget so we were hopeful that there would be something substantial to address the issue. There are some paid internships, about 3,500, but there are almost 400,000 youth unemployed between the ages of 20 and 29 and so helping the 1 per cent doesn't really do something substantial to address the issue. "The other part of the budget that I have some concerns with is about expanding loans for apprentices. Downloading the cost of education and training on to the individual doesn't do much to breakdown any barriers for people accessing the training. Investments in non-repayable needs based grants which the Conservatives introduced in 2008 would have been a better way to reduce debt and eliminate some of those barriers to accessing training."
Pamela Fralick, President and CEO of the Canadian Cancer Society
Fralick told HuffPost she is pleased with the decision to <a href="http://www.huffingtonpost.ca/2014/02/11/tobacco-tax-2014-canada-budget_n_4769553.html" target="_blank">boost excise taxes on tobacco.</a> "We have been urging that an increase was appropriate at this point in time, the federal government hasn't increased tobacco taxes since 2002, the provinces have. At the same time, the tobacco industry has discounted their cigarette to a great extent...so we felt there was a great deal of room to move. "We had asked for approximately what they have put in place so we believe it will have an impact. It will decrease the number of young people in particular who start smoking and that's our goal. No new smokers." Fralick said there was evidence that when you raise the price of smokes, the utilization goes down.
David Wilkes, Senior Vice President at the Retail Council of Canada
Wilkes weighed in on Flaherty's <a href="http://www.huffingtonpost.ca/2014/02/11/us-retail-price-gap-canada-cheaper-books_n_4769964.html" target="_blank">remarks on the Canada-U.S. price gap.</a> "There are plenty of examples were prices are substantially higher in Canada than in the U.S. and the government signalled today that this is a something that it intends to approach. As a retail community, we do pay higher prices which are then passed along to consumers."
Dennis Howlett, Executive Director of Canadians for Tax Fairness
Howlett expressed disappointment the federal government failed to take decisive action on off-shore banking and tax avoidance. "My conclusion is that they are not very serious about tackling tax savings. They really lag behind other countries, the US, the UK, Australia, EU, they are alldoing much more than Canada on this regard. Canada is doing a few little things, but really it doesn't add up to much."
Jean-Francois Tremblay, University of Ottawa Economics Professor
"The government tabled an austerity budget that is essentially setting the stage for next year's budget when the federal government will enjoy a relatively large surplus and it is expected to introduce more costly tax cuts and possibly spending measures. "The government continues with a very tight control on spending. Total spending will actually decrease in nominal terms over the next year and that is largely do to the effort asked of federal departments and of its employees. "In terms of its relations with the provinces, the government doesn't do much to ease the tensions that were created last year with the creation of Canada Job Grant program. In fact, the government announces that it will go ahead with the program on April 1, with or without an agreement with the provinces. It is also announcing a new federal loan program for worker training so I think we can expect strong reactions from the provinces, especially Quebec."
Debi Daviau, President of The Professional Institute of The Public Service of Canada
Daviau told HuffPost she found it "truly offensive" that the government was balancing the books on the backs of federal public servants. Daviau said that the 19,200 jobs the Tories had cut from the federal public service were pretty much now all eliminated. She said the two year budget freeze would mean more federal public service job cuts. "I'm just wondering after all these years of cuts, where they are going to find these cuts that are not impacting on services to Canadians. When in fact, just the cuts over the last couple of years, we are already seeing the evidence and we are likely to be seeing the effects of these cuts for generations to come."
Gordon Moore, Dominion President of the Royal Canadian Legion
"I am very pleased that the issue of a dignified funeral for the most vulnerable, low income Veterans has finally been resolved. The Legion was singled out in the 2013 Budget in that the Government stated it would work with us and they lived up to their commitment in today’s budget." In a <a href="http://www.legion.ca/article/legion-disappointed-with-only-slight-consideration-for-its-budget-recommendations/" target="_blank">statement,</a> Moore also expressed disappointment that the budget did not address "the urgent financial shortcomings" of the New Veterans Charter.
Kevin Page, Former Parliamentary Budget Officer
"Like other people have said, it's a setup budget. It's a budget with a lot of restraint," Page told CBC News. "It looks like we're headed for balance but it's an austerity budget."
Ontario Finance Minister Charles Sousa
<a href="http://www.thestar.com/news/queenspark/2014/02/11/charles_sousa_bemoans_federal_budget_that_ripped_off_ontario.html" target="_blank">An irate Sousa told the Toronto Star his province is being ripped off. </a> "They're pulling the rug right out from under us. What has happened here is not fair. All we're asking is for Ontarians to be allowed to keep a little bit more of their money. "Unilateral actions by the federal government have shortchanged and ripped off the people of Ontario." <a href="http://www.thestar.com/news/queenspark/2014/02/11/charles_sousa_bemoans_federal_budget_that_ripped_off_ontario.html" target="_blank">Read the full story</a>
UP NEXT: 2014 Budget Highlights
Finance Minister Jim Flaherty's budget predicts a deficit of $2.9 billion for the fiscal year. But Ottawa technically balanced the books when you take into account its $3 billion contingency fund. Flaherty said he didn’t want to push too aggressively, wanting a “nice clean surplus” next year.
Canada-U.S. Price Gap
The federal government says it will crack down on companies that charge consumers more for their products in Canada than in the U.S. Using a fictitious example, Flaherty said if Walmart charged Canadians more for Cheerios than it did Americans, and didn't have an explanation, like higher trucking costs, then they should be punished. (It's not clear how they are going to do this but they plan on giving the Competition Bureau more tools to do this and more details will be announced in the coming months).
'Made In Canada'
The federal government plans to develop a 'Made in Canada' branding program, work to establish more low-cost bank accounts and increase transparency on credit card merchant fees.
Public Service Cuts
The lion's share of spending cuts -- $1.5 billion -- will be targeted at the public service. The tories aim to cut $7.4 billion over the next six years from the public service compensation budget. Ottawa will drop its contributions to retired public servant health care plans from 75 per cent to 50 per cent.
Immigration Investor Program Scrapped
The federal government is scrapping the investor immigration program that allowed immigratns to "buy" their way into Canada with investment into the local economy. It was unclear initially whether the provincial investor programs will also be scrapped.
Credit Card Bills
The feds say they will ban banks from charging customers money to receive their credit card bills in the mail. Ottawa says it might do the same for wireless companies too.
Auto Industry Support
Ottawa said it will spend an additional $500 million for the Automotive Innovation Fund, essentially to bail out Chrysler, while announcing it is selling its stocks in GM, which it received when it bailed out the company in 2009.
Tobacco Prices Going Up
Ottawa plans to raise the cost of cigarettes by more than $4 on a carton of smokes. The cigarette tax would bring $685 million in new money next year.
The Conservatives are pressing ahead with the controversial Canada Job Grant program. The program covers up to $15,000 for training. When it was announced in Budget 2013, Ottawa said it would be funded in three ways split equally between the federal government, the province and the employer. But Ottawa hasn't been able to get an agreement with the provinces who are upset the federal government plans cut millions from their training budget and direct that cash towards this program.
Ottawa plans to create more than $100 million interest free loans through the Canada Apprentice Loan program, an expansion of the Canada Student Loans Program. It will also review the Youth Employment Strategy to provide real-life work experience in science, technology, engineering, mathematics and skills trade. The federal government says it will also dedicate more money towards internships. The budget includes a new Canada Apprentice Loan program, offering $4,000 interest free loans to students.
Ottawa will invest $305 million over five years to extend high-speed broadband to some 280,000 homes.
Tuesday's federal budget pushed $3.1 billion in planned capital spending off into the distant future, making badly needed new equipment on the Canadian military's shopping list little more than a wish list over the next three years. - CP
New Windsor-Detroit Bridge
Ottawa is giving a boost to southwestern Ontario's battered manufacturing sector with more than $1 billion in spending over the next two years to help the auto industry and build a new bridge to the U.S. at Windsor, Ont. The federal budget Tuesday called for spending $631 million over the next two years to help build a new Detroit-Windsor crossing. -CP