What we know about Tuesday’s federal budget: it’s going to crack down on charities, tackle price gaps between Canada and the U.S. and help fund internet access in remote areas. Aside from those undramatic public leaks, there might not be much else to keep us from turning our attention back to Sochi.
Canadians have been warned not to expect too much from Tuesday's “stay the course” budget — what BMO Economics called “among the least eventful in recent memory” — as the Conservatives head into the last leg of their race to balance the budget by the next election.
Finance Minister Jim Flaherty said Friday he will outline the government's plans to curb the link between terrorists, organized crime and charities, as part of stricter rules for charities in the budget. He also hinted that a reduction in tariffs on certain consumer goods could be on the agenda, as it was last year, with a cross-border price gap near the top of consumers’ minds as the value of the Canadian dollar continues weaken against the U.S. greenback.
Aside from those issues, Flaherty has maintained the budget will be “risk-free” with a focus on “jobs and the economy” amid tepid economic growth, an unemployment rate that continues to hover at at seven per cent and a youth rate about double that figure.
Spending money is expected to be allocated for job creation — especially for young people, aboriginals and those with disabilities — and large-scale infrastructure improvements.
“We’ve looked at hundreds of issues and some of the most important ones are relating to jobs, relating to young people, relating to apprenticeships, relating to internships, relating to getting people that first job even though they’re well educated and so-on,” Flaherty told CTV’s Question Period.
One area of focus for infrastructure improvements will be funding to bring better internet access to rural and remote communities, with an injection of cash that is expected to be “equivalent” to the previous $225 million Broadband Canada program, the Globe and Mail reported.
All the same, the budget is widely expected to contain little in the way of goodies for most Canadians.
“Normally the time spent going into a Federal budget is marked by advance notice or trial balloons of significant initiatives,” Scotiabank Economics said in a note Monday morning.
“This year is different, as indicated by little in the way of such stories.”
The budget is widely expected to be overwhelmingly concerned modest cuts aimed at pushing the government toward surplus in 2015 so that the Tories can dole out some of their long-awaited election promises, including income splitting for tax purposes. Spending cuts are predicted to take aim at the public service, including a potential crackdown on sick days.
The expected 2015 surplus was last estimated in November at $3.7 billion, and Flaherty has said a balanced budget is unlikely to come any sooner.
In the absence of any more concrete information, here’s what economists and other budget-watchers have been predicting:
BMO Economics:
“Ottawa will unveil its FY2014/15 budget on Tuesday, in what will likely be among the least eventful in recent memory. The decision to unveil the budget during the Olympics tells you all you need to know.
Finance Minister Flaherty has made it clear that no significant spending initiatives or tax cuts are in store, but some small goodies for voters might be included.”
RBC Economics:
“With fiscal performance year-to-date showing a modest deterioration from the same period in fiscal year 2012/13, expenditure restraint is likely to supersede the introduction of new initiatives, with the latter expected to instead be a prominent feature in future budgets, likely in 2015/16 when the budget balance will return to surplus.
"As a result, Budget 2014 is expected to broadly maintain the deficit profile presented in the November 2013 update with new spending announcements remaining limited and a continued focus on reining in expenditure growth.”
Capital Economics:
“We don't expect this year's federal budget to contain significant new spending measures or tax breaks that would alter our macroeconomic growth view. (The government will save those for next year ahead of the scheduled election.)
“We still think that nominal GDP growth will turn out below the government's consensus-based planning assumptions, ultimately delaying the return to a balanced budget.”
KPMG Accounting:
“With the Conservative government planning to balance its books in 2015, KPMG expects the Harper government will continue to tighten the tax system by closing 'tax loopholes' and introduce a range of tax measures to achieve tax fairness.”
Scotiabank:
“...The Budget is not expected to be a path-breaking one for two reasons. First, even at the best of times, most of the contents are typically floated in advance which limits the surprise factor on budgets these days. Budgets just are not the events they used to be before the age of instant scrutiny via newswires and the Internet, as the focus shifted toward risk management of the major initiatives.
“Second, the ruling federal Conservative Party is likely to prefer waiting until the next annual budget before perhaps rolling out more significant initiatives in advance of the October 2015 Federal election.”
And here’s a “sneak peak” video the Conservative Party released on the budget on Friday:
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