Lamphier: More Alberta reaction.

‘Prudent’ Flaherty stays on track for well-timed surplus in 2015

Ontario’s auto industry, Canada’s scientific researchers and those in need of more trained workers are among the big winners in Jim Flaherty’s latest budget.

By committing $500 million over two years to the Automotive Innovation Fund and nearly $500 million toward a new Windsor-Detroit bridge, Flaherty has given the struggling auto industry a major boost.

The University of Alberta and other research-oriented institutions also got a shot in the arm, with Flaherty pledging $1.5 billion over the next 10 years to create the Canada First Research Excellence Fund.

On the flip side, the feds are again putting the squeeze on federal public servants — sure to be a popular move among the Conservative base — while whacking smokers with higher taxes and eliminating a hiring credit that benefited small business.

As widely telegraphed, Flaherty’s budget is modest in scope, and keeps the government firmly on track to deliver its first surplus budget since the recession, just in time for the next federal election in 2015.

“This prudent plan builds on our record of strong, sound and consistent fiscal management,” Flaherty told the House of Commons.

“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.”

By scaling back health benefits for retired federal bureaucrats and extending a spending freeze across all departments in Ottawa, the budget projects savings of $7.4 billion over the next six years.

That’s the single biggest belt-tightening initiative in the 2014 budget, which calls for a small deficit of just $2.9 billion this year, and a surplus of $6.4 billion in 2015.

Since this year’s budget includes a $3-billion “contingency” fund, however, the deficit is now little more than a convenient fiction, as Flaherty delays his victory dance until it is more politically timely next year.

So what are the reactions to Flaherty’s budget here in Alberta? Here’s a quick survey of opinion: “One thing I am pleased with is the attention given to training and skills development, given that we’re a labour-constrained economy,” says John Rose, the City of Edmonton’s chief economist.

On the other hand, Rose is disappointed that the budget didn’t call for more infrastructure spending.

“They had telegraphed fairly clearly that there was going to be some kind of significant commitment to infrastructure, but apart from reannouncing the Building Canada Plan and a nice big new bridge for Montreal, I didn’t see much there,” he says.

U of A president Indira Samarasekera lauds the government’s $1.5 billion in new research funding initiatives.

“This budget represents a visionary investment in research excellence and innovation that will ensure Canada remains competitive globally,” she says.

“This funding will allow the U of A and our peers to attract the best and brightest to advance the scientific discoveries, solutions and ideas that will benefit Canadians for generations.”

Joseph Doucet, dean of the U of A’s School of Business, says he’s particularly pleased with the budget’s focus on labour market training and skills development.

“Without doubt it’s particularly important in Alberta, given the nature of our economy, the cost pressures and the scope for growth in the energy sector,” he says.

“It’s really important that we be able to work collaboratively between the province and the federal government on anything we can do to improve the development of the labour market and improve access to training programs.”

W hile Doucet applauds the feds’ support for Ontario’s auto sector, he’d have liked to have seen more visible support for Alberta’s pipeline-constrained energy industry.

“Obviously I’m comparing apples and oranges but the fact remains that the (Windsor-Detroit) bridge required a lot of political cajoling and pushing, and I’d like to see the same level of commitment by the feds for energy infrastructure projects,” he says.

Amber Ruddy, senior policy analyst with the Canadian Federation of Independent Business in Alberta, says that the elimination of a hiring credit for small-business owners is particularly troubling.

“The EI hiring credit is something that was very well-received by small- business owners, and although employment insurance premiums and CPP are frozen for 2014, we’re really disappointed to see the elimination of the hiring credit,” she says.

“Any time a payroll tax goes up it can mean the difference between taking on a new employee or having to reduce the hours of others to help pay for those taxes.”

On the upside, Ruddy says the government’s pledge to tackle the rising credit card fees paid by merchants, which cost the CFIB’s members an estimated $5 billion to $7 billion annually, is a welcome move.

“That’s something small business owners are definitely looking forward to seeing more details on,” Ruddy said.