2013 Budget expected to bring mix of stimulus, cutbacks

By Russell Piffer

The 2013 federal budget to be announced at 4 p.m. ET on Thursday is expected to attempt the difficult task of stimulating the economy while putting the government on track to eliminate a $26-billion deficit by 2015, experts say.

“I think we’re probably going to see an austerity budget continuing what we saw last year,” said Marc Lee, a senior economist with the Canadian Centre of Policy Alternatives, in Vancouver. “The government is overly obsessed with tabling a balanced budget before the next election and so this budget will be another step on this path.”

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Federal revenue was $256 billion in 2012 is expected to fall $6 billion this year because of sagging prices for commodities like oil, CBC reported.

Lee said cuts would probably come to areas of direct federal spending, not provincial transfer payments. The Toronto Star reported Wednesday that cuts would likely be in defense spending and federal public servants’ benefits.

The biggest new spending is expected to be a $4.5-billion infusion to infrastructure building in major cities, the Star reported.

Lee said this funding would likely be divvied out over three years at $1.5 billion per year.

“That’s something but Canada’s economy is but 1.7 trillion so that is less than 1/1000th of the Canadian economy so we’re not going to see a whole lot of action for that money,” Lee said. “Certainly, a whole lot more could be done.”

Lee said the Canadian economy, though not in horrible shape, is growing slowly and an austerity budget will “reinforce that weak economic condition.”

Plamen Petkov, Ontario director of provincial affairs for the Canadian Federation of Independent Businesses, said his organization would like to see the government foster investment and optimism in small and medium-sized business owners.

“There’s been some talks and discussion on increasing CPP premiums,” he said. “We don’t want to see any increases.”

The federation would also like to see the government extend the employment insurance credit for businesses and aim to eliminate the deficit by 2015.

“It will reduce the payroll tax burden on employers, meaning they can invest more in creating more jobs and paying their employees a higher wage,” he said. “Our members know that today’s deficit is tomorrow’s taxes.”

The Star reported that several hundred million dollars will likely be allocated to programs to expand job skills training.

It was widely reported Monday that Prime Minister Stephen Harper is frustrated with the widening gap between Canadians’ skills and the fields where workers are needed.

While unemployment is around seven per cent, Canada has about 260,000 job vacancies, CBC reported. Health care and construction trades have experienced some of the worst shortages and businesses have been forced businesses to turn to foreign workers.

According to CBC’s budget preview other major points in the budget will be an effort to close tax loopholes and increased funding for First Nations’ on-reserve education.