Throne Speech and Federal Budget: it’s almost business as usual
CCA Bulletin 21/11
June 7, 2011
Just the Facts
On Friday, June 3, the Governor General gave a speech from the throne heralded by many as primarily ceremonial. The speech toed a safe line without introducing any new drastic policy measures, and we saw the same approach again in yesterday’s tabling of the federal budget by the Minister of Finance, the Hon. James Flaherty.
Minister Flaherty tabled his second 2011 federal budget, The Next Phase of Canada’s Economic Action Plan: A Low Tax Plan for Jobs and Growth. The government’s first budget was presented on March 22, but died on the order paper when the minority government fell, leading to an election.
As the CCA expected, there are no major program cuts to arts and culture in this budget. In fact, all measures mentioned by the CCA in its March 22nd analysis of the budget remain in this second version. They include:
- Introducing a new 15% Children’s Arts Tax Credit, provided on up to $500 of eligible expenses for programs associated with children’s artistic, cultural, recreational and developmental activities. This should translate into annual returns of $75 for parents;
- Providing $25 million over five years to renew funding for the Harbourfront Centre;
- On-going funding of $15 million per year to the Canada Periodical Fund to support a broad range of publications and ensure a diversity of Canadian content in 2011-12 and 2012–13;
- Renewal for 2011–2012 of the $60 million granted to CBC/Radio-Canada for the “production of high-quality Canadian programming”;
- Granting of a one-time investment of $7.5 million to the Royal Conservatory of Music to launch a national examination system in partnership with Carnegie Hall;
- Renewal on an on-going basis (as opposed to an annual renewal) of $100 million per year to the Canada Media Fund to invest “in the creation of convergent digital content across multiple platforms, including television and leading-edge applications for Internet, wireless and other emerging platforms”.
Now entering the 41st Parliament with a majority, there is no doubt that the government will pass its budget before the summer recess.
Tell me more: Speech from the Throne
The speech from the throne featured elements of the government’s upcoming policy and budget objectives. As the Governor General read the priorities of the 41st Parliament, he touched on the new children’s art tax credit, saying:
“Our Government will also support parents in providing their children with opportunities to grow personally and discover their creative passions by establishing a Children’s Arts Tax Credit.”
The government also stated its desire to quickly pass new copyright legislation:
“The success of Canada’s job-creating businesses demands both hard work and good ideas, and we must create the right conditions for both to be rewarded. Our Government will introduce and seek swift passage of copyright legislation that balances the needs of creators and users.”
On the introduction of a national digital strategy, the government commented that:
“It will also release and implement a Digital Economy Strategy that enhances digital infrastructure and encourages Canadian businesses to adopt digital technologies and provide digital-skills training for their employees and new hires.”
Finally, the speech addressed the issue of balancing the budget over the next three years by reducing spending at the government level. The government stated that:
“In order to accelerate the return to a balanced budget and to eliminate the deficit one year earlier, over the next year we will undertake a Strategic and Operating Review of government spending led by a new Cabinet subcommittee established for this purpose. This review will be focused on reducing the cost of government, while keeping taxes low and preserving transfers to individuals and provinces for essential things like pensions, health and education.”
The CCA will continue to monitor government review processes to the full extent possible, bearing in mind that the Strategic and Operating Review is covered by budget secrecy and that the rationale for any given cutbacks need not necessarily be made public.
Tell me more: 2011 federal budget
The 2011 budget, tabled yesterday, mirrored themes in the speech from the throne by laying out the fiscal approach to achieving the government’s policy objectives.
The only new components of this budget not featured in its March predecessor include:
- The elimination of the $2-per-vote subsidy for political parties over a four-year period;
- Setting aside $2.2-billion for Quebec in compensation for harmonizing its provincial sales tax with Ottawa;
- The promise to eliminate the federal deficit completely by 2015 (one year earlier than projected in the March budget).
The priority for this government is Canada’s economic stability and growth, which includes the elimination of the federal deficit. In order to balance the books, the government will undertake a massive one-year Strategic and Operating Review of all government bodies by reviewing $80 billion of direct program spending. The government will endeavour to make cuts that are expected to be worth $4 billion annually by 2014–15.
According to the budget document, “the review will place particular emphasis on generating savings from operating expenses and improving productivity, while also examining the relevance and effectiveness of programs.” Treasury Board President Tony Clement, along with a new cabinet committee will be charged with this task. The government believes that these measures will lead to a federal surplus by 2015–16.
The government reiterated its goal to present Canada’s Digital Economy Strategy, along with initiatives to foster the knowledge economy through accelerating adoption of information and communications technologies at small and medium-sized businesses, preparing students for careers in the digital economy, and building Canada’s digital content through the Canada Media Fund. This budget also establishes ten new Canada Excellence Research Chairs. Some of these new chairs will be active in fields relevant to Canada’s Digital Economic Strategy. These investments are meant to help develop and attract talented people, to strengthen Canada’s capacity for world-leading research and improve commercialization, to accelerate private sector investment to enhance the ability of Canadian firms to participate in global markets, and to create an advantage for Canadian business.