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.