Flaherty talks training and tariffs post-budget

On Friday, a day after the federal budget was unveiled, the National Post’s John Ivison talked to Jim Flaherty, who was making a speech in Vancouver on his way to Hong Kong. The Finance Minister spoke about his future; about the prospect of forcing workfare on First Nations reserves; and about the new Canada Job Grant, which will see Ottawa grab money for skills training back from the provinces.

Q Minister, you said on TV that “so far, I’m sticking around,” which did not sound unequivocal.

A I intend to stay until the budget is balanced in 2015.

Q On to the jobs grant – you said in your speech [in Vancouver Friday] that the jobs grant comes from consultations, but clearly not with the provinces. The Quebec finance minister has called it “economic sabotage,” and I gather they want to opt out. Would you cut off training funds for provinces that don’t sign up for this?

A We’re going to have negotiations with the provinces. Quite frankly, I think the provinces need time to listen to organizations like the Canadian Chamber of Commerce, who view this issue as the number one issue challenging economic growth in Canada. [The provinces] need to see what the views are of employers in all the provinces across Canada. We listened intently and broadly during the prebudget consultations and this was the number one issue —that is matching the available people to the skills that they need to obtain the jobs that are vacant.

Q You clearly don’t think the status quo is working and you made clear in your speech that these are federal funds. Again, do the provinces need to fall into line here?

A I think we need to negotiate and come to an agreement. I think we have common goals — it’s very important to the provinces that we have significant economic growth, as it is to us. It affects all of our revenues and we have a need here that is obvious and certainly obvious to employers. I think we’ll have constructive discussions with the provinces and hopefully have new agreements. The new agreements don’t need to be in place until 2014.

Q There is also going to be opposition to – I know you don’t call it workfare, but it is essentially workfare on reserves. Is it fair to cut benefits for people who don’t sign up [for training] on reserves?

A You’re going to have to ask the minister responsible about how that is going to work. The concept that runs throughout the budget with respect to jobs is to try to match people to the jobs available and provide people with the necessary skills through whatever resources are available.

Q The broader picture – it looked like quite a political budget. Last year it was more about responsible resource development, with a western focus. This year it’s more about manufacturing, particularly in Ontario, which is where the votes are. Does that reflect some concern that the NDP was getting some traction with some of the comments that Mr. Mulcair was making on Dutch disease?

A No. It reflects the fact that southern Ontario, particularly southwestern Ontario,

is the manufacturing hub in Canada. There is significant manufacturing elsewhere, particularly in Quebec. But Ontario has suffered the effects of the recession grievously and there’s some comeback now in the manufacturing sector and we want to enhance that comeback.

Q On tariffs – you’re cutting tariffs worth $75-million a year on sporting equipment and babywear but you’re adding tariffs worth three times that amount. Is that misleading Canadians? You sold the idea of cheaper hockey gear but just about everything else looks like it’s about to get more expensive.

A That’s the general preferential tariff ? That’s really a foreign aid scheme in place to help evolving economies that are poor. No one had looked at the list since 1974. We looked at the list in preparation for the budget and saw all the BRIC countries [Brazil, Russia, India and China] are still on the list. They certainly don’t need subsidies or protection by tariffs. We still have over 100 countries on the list. The other tariff on baby clothing, skates, hockey equipment and some other sports equipment: That is really a test case — we’re looking to see whether the Senate report is correct and whether the Retail Council of Canada is correct when they tell us that if you eliminate these tariffs, retail prices in Canada will go down and be closer to prices in the United States. We’ll see. The baby clothing tariff is 18%, so it will not difficult to track that over the next year.

Q But if they are correct, prices are going to go up for other imported goods that will now be subject to higher tariffs.

A Well, as I say, the purpose of a general preferential tariff is a foreign aid purpose.

Q Talking of aid, it seems the Canadian International Development Agency is now going to be driven by foreign policy concerns rather than poverty alleviation. Has it been at odds with foreign policy? Why merge it with the Department of Foreign Affairs?

A That’s an administrative change that brings CIDA into the fold in a department that already has two aspects to it – that is, international trade and foreign affairs, diplomacy. It brings all three into the same realm. One can differ over whether that’s efficient but I think it’s more efficient than the way it’s structured now.

Q Final question – your plans for the public service. There’s a mention of [public servants’] sick leave but there’s no detail. Can you elaborate?

A The sick leave is part of the collective bargaining process with the public service, so that’s where it will be discussed. The overall goal, as it has been with pension contributions and other items, is to bring the public sector more in line with the private sector, and the public sector includes parliamentarians.