2009 Canadian federal budget

Last updated
2009 (2009) Budget of the Canadian Federal Government
PresentedJanuary 27, 2009
PassedFebruary 3, 2009
Parliament 40th
Party Conservative
Finance minister Jim Flaherty
Total revenue C$218.6 billion [1]
Total expendituresC$274.2 billion [1]
Debt paymentC$29.4 billion [1]
Deficit C$55.6 billion [1]
DebtC$519.1 billion [1]
Website http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf Canada's Economic Action Plan
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The Canadian federal budget for the 2009-2010 fiscal year was presented to the House of Commons of Canada by Finance Minister Jim Flaherty on January 27, 2009. The federal budget included $20 billion in personal income tax cuts as well as major investments in infrastructure.

Contents

The Budget Implementation Act, 2009 was introduced in the House of Commons on February 6, 2009, and it received royal assent on March 12, 2009, enacting the legislative changes necessary to implement the budget. It was announced as the "Budget 2009: Economic Action Plan", with accompanying publicity. [2]

The NDP and the Bloc announced shortly following the presentation of the budget that they would not support it in its initial form, [3] but the budget was passed on February 3, 2009, with the support of the Liberals. All MPs for the NDP and the Bloc and the six Liberal members from Newfoundland and Labrador voted against the budget. [4] [5]

Economic crisis and parliamentary dispute

Prior to the 2009 budget, on November 26, 2008, Jim Flaherty released an economic statement to which according to many experts would introduce measures to deal with a significant worldwide economic slowdown that started earlier during the year where millions of jobs were lost in several sectors across the world including thousands in Canada particularly in the auto sector in southern Ontario. While announcing that there will be no deficits in 2008–09 fiscal year, he added that any measures to deal with the economic slowdown would result in a deficit though the government that the situation in Canada compared to the other G7 countries is not as bad. He also added prior to the announcement that a "technical" recession was possible. [6] Many economists and groups predicted significant deficits after 2009 and for a couple of years and urged Parliament to quickly adopt a stimulus package to encourage spending. Parliamentary budget officer Kevin Page had forecast a deficit of between 4 and 14 billion dollars. [7]

Flaherty announced two controversial measures including the suspension of the right to strike among government workers which previously approved a 6.8% pay hike for the next 4 years (2.3% for the first year and 1.5% for the following three). [8] [9] The minister also announced a significant reduction of funding of political parties resulting in election results with a lower value per vote. It had also announced the possibility of cut spending by as much as $2 billion on various programs as well as the sale of various federal properties. It has also reduced the pay raises and bonuses of several bureaucrats and politicians including the cancellation of a three percent raise for MPs and cut unnecessary traveling. [10]

The opposition parties threaten to topple the government on a non-confidence motion in relation to the economic statement. The opposition criticized the lack of immediate economic stimulus packages to help cope with the struggling economy as well as the political party subsidies cuts which the latter was reversed by the government one day later and would not be included on a bill. [11] [12] This led a political crisis and the subsequent suspension of the Parliament on December 3, 2008, as the opposition threaten to defeat the government on a confidence motion that was set for December 1 and later one week later before the prorogation of the House. While the budget was scheduled for the early-spring, pressure due to the economic crisis and the opposition parties forced the government to move ahead the budget set for January 27, 2008, one day after Parliament resumes. [13] On December 20, 2008, the government announced it would spend approximately $30 billion in order to stimulate the economy while forecasting a deep deficit for a five-year period. [14]

Highlights

A $33.7 billion deficit for the 2009–10 fiscal was announced during the deposition of the budget on January 27, 2009, with a projected deficit of $29.7 billion for the following year as well as additional deficits until 2013 for a total of $85 billion over five years while Flaherty also announced a $1.1 billion deficit for the end of the 2008–09 financial year. It is the first deficit announced since the 1996–97 fiscal year. $12 billion was earmarked for various new infrastructure projects including roads, internet broadband access with additional funding for renovations on aging infrastructures as well as for green infrastructure projects. $8 billion was also announced for social housing renovation projects, $1.5 billion for job training, $2.7 billion for short-term loans for the auto industry as well as various income and corporate tax cuts and tax credits up to $20 billion for individuals and $2 billion for businesses. Among the tax measures included were a new home renovation tax credit of up to $1350, the extension of the EI benefits by five weeks for the next two years as well as the increase of the basic personal amount to $10,320 before any payment of federal income tax. [15] The government estimated that the $40 billion in economic stimulus and other measures would create close to 200 000 jobs while it forecast a one percent growth of the economy over the next two years. [16]

Reception

The Liberal Party, now headed by Michael Ignatieff who replaced Dion during the prorogation of the Parliament, supported the budget but also proposed in return an amendment, which passed 214–84, The amendment would force the government to present occasional reports on the progress and costs of the budget. [17] Both the NDP and the Bloc Québécois opposed the budget. The Bloc cited the loss of transfer payments for the province while the NDP cited a lack of funding for the vulnerable and also criticized the infrastructure funding as well as pay-equity reforms introduced in November. [18] Six Liberal MPs from Newfoundland and Labrador also expressed opposition to the budget citing that the province would lose up to $1.6 billion in transfer payments as it no longer collects equalization. Ignatieff permitted his members to vote against his party lines. The budget passed 211 to 91. [19] Among popular opinion, a Strategic Council poll indicated that 62% of Canadians were in favour of the budget against 38% who were not in favour while Canadians were split on whether the government failed the economy in Canada. [20]

Areas of direction

Some of the key items in the Economic Action Plan budget were: [21]

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References

  1. 1 2 3 4 5 Department of Finance Canada (January 27, 2009). "The budget plan". Department of Finance Canada. Archived (PDF) from the original on March 13, 2009. Retrieved 2009-05-08.
  2. ↑ "Feds pull Yahoo! ads after EAP banner shows up on The Pirate Bay". Ottawa Citizen. 26 September 2012. Archived from the original on 2012-10-18. Retrieved 2012-10-18.
  3. ↑ "Ignatieff puts Tories 'on probation' with budget demand" (Press release). CBC News. 2009-01-28. Archived from the original on 30 January 2009. Retrieved 2009-01-31.
  4. ↑ "MPs vote in favour of Liberal budget amendment". cbc.ca. 2009-02-02. Archived from the original on 27 February 2009. Retrieved 2009-02-18.
  5. ↑ "MPs approve federal budget". cbc.ca. 2009-02-03. Archived from the original on 7 February 2009. Retrieved 2009-02-18.
  6. ↑ CTV News. "'Technical' recession possible: Flaherty". CTV. Archived from the original on July 24, 2012.
  7. ↑ CTV News (November 24, 2008). "Budget advanced to deal with deteriorating economy". CTV. Archived from the original on July 29, 2012.
  8. ↑ CTV Ottawa (November 24, 2008). "PSAC reaches deal with federal government". CTV. Archived from the original on July 27, 2011.
  9. ↑ CTV Ottawa (November 28, 2008). "Public service unions lash out at government plans". CTV. Archived from the original on July 27, 2011.
  10. ↑ CTV News (November 25, 2008). "Government to curb Parliamentary perks". CTV. Archived from the original on December 5, 2008.
  11. ↑ CTV News (November 28, 2008). "Harper pushes political showdown back a week". CTV. Archived from the original on December 3, 2008.
  12. ↑ CTV News (November 26, 2008). "Tories slammed for lack of stimulus package". CTV. Archived from the original on December 6, 2008.
  13. ↑ CTV (November 30, 2008). "Flaherty to table budget on January 27". CTV. Archived from the original on December 4, 2008.
  14. ↑ Akin, David (December 20, 2008). "Feds to spend $30B on economy". The Ottawa Citizen. Archived from the original on December 23, 2008. Retrieved October 4, 2018.
  15. ↑ CBC News (January 27, 2009). "Bad-times budget delivers billions in tax cuts, spending". CBC.ca.
  16. ↑ CTV News (January 27, 2009). "Federal budget forecasts massive $85B deficit". CTV.ca. Archived from the original on March 2, 2009.
  17. ↑ CTV News (February 2, 2009). "Liberal amendment to federal budget passes". CTV.ca. Archived from the original on February 5, 2009.
  18. ↑ CBC News (January 27, 2008). "Early reviews mixed from Ignatieff; more expected Wednesday". CBC.ca.
  19. ↑ CBC News (February 3, 2009). "MPs approve federal budget". CBC.ca.
  20. ↑ CTV News (January 30, 2009). "Canadians support budget, but with reservations". CTV.ca. Archived from the original on February 5, 2009.
  21. ↑ "Budget 2009: Canada's Economic Action Plan" (Press release). Department of Finance. 2009-01-27. Archived from the original on 21 February 2009. Retrieved 2009-01-30.
  22. ↑ "Canada News Centre - Federal, provincial and territorial governments cooperate to improve foreign credential recognition for newcomers to Canada". Archived from the original on 2011-09-28. Retrieved 2010-01-28.
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