Finance Minister Jim Flaherty said Tuesday his new budget is aimed at middle-class Canadian families, who can look forward to more tax cuts in the future as Ottawa uses continuing surpluses to pay down Canada's national debt.
Opposition leaders and several provincial premiers say it's a missed opportunity to address pressing issues and boost the fortunes of ordinary Canadians.
Jim Flaherty, in Whitby, Ont., Tuesday, said the government has dealt with the fiscal imbalance now.
(CBC)
Debate has begun in Parliament on Flaherty's budget, which is a mix of new spending and adjustments to taxes. It needs the support of at least one opposition party to pass and for the government to stay in power. The first of several votes leading to parliamentary approval is expected Wednesday.
The Bloc Québécois has indicated it will back Flaherty's fiscal plan, which means the budget probably won't trigger an election. Bloc Leader Gilles Duceppe said Tuesday that his party wanted more action on the fiscal imbalance than Ottawa was offering, but there was enough for him to support the budget.
"Having said that, there's money on the table [for Quebec]," he said, "so we'll take that money."
Provinces raise objections
Duceppe is referring to one of Flaherty's chief proposals — an extra $1.5 billion for the upcoming fiscal year aimed at correcting the so-called "fiscal imbalance," the claim that the provinces are not getting their fair share of the money Ottawa collects.
Quebec, which goes to the polls in a provincial election on March 26, would get the bulk of the new money, roughly $698 million. Saskatchewan would follow with an extra $226 million, meaning that it would get the most per provincial resident, at $230.
Saskatchewan Premier Lorne Calvert said that's not enough and called the budget "a betrayal" of his province. Newfoundland's Danny Williams and the premiers of Nova Scotia and New Brunswick have also raised objections.
Speaking to CBC News Tuesday from his constituency in Whitby, Ont., Flaherty said it was regrettable that not all provinces could agree on the best way to address spending imbalances but Canadians wanted the issue settled once and for all.
"This is about post secondary education, it's about infrastructure and health care — issues that the provincial governments have to deal with. They've had this bickering with the government of Canada over a long period of time. We've dealt with it now," Flaherty said.
Liberals, NDP reject budget
The opposition Liberals and NDP say they will not support the budget.
"He [Flaherty] should have had a strategy," Liberal Leader Stéphane Dion told CBC News Tuesday. "He should have explained how his budget would make us more competitive, how it would be fairer for those in need, how it would enhance the environment." Instead, Dion said, the budget was a "patchwork" that represented a "missed opportunity."
NDP Leader Jack Layton criticized the budget for being too generous to big corporations and not doing enough to help working families.
"For every step forward, there seems to be two steps back," Layton told CBC News. "We could have supported child care or environment and given less to the big board rooms of Bay Street."
But Canadian oil companies and the financial sector are also critical of some of the budget's measures. A plan to phase out tax breaks for energy firms working in Alberta's oilsands and the budget's omission of capital gains tax cuts are their main complaints.
"If the goal of this government is to move towards being an energy superpower, we have the resources to do this, this is definitely a step backwards," said Sue Riddel-Rose of the Canadian Coalition of Energy Trusts in Calgary.
The Canadian Federation of Independent Business says some tax changes are welcome but overall the budget has too much new government spending.
CBC's Keith Boag in Ottawa says Flaherty's budget is not what might be expected from a Conservative government and poses real political risks to Stephen Harper.
"If there's a criticism to be launched in a broad sense against the government," Boag says, "it's that it may lose its identity in the view of its own base.… It's such a big spending budget in so many ways that you have people describing it as a budget that Paul Martin's Liberals could have delivered."
With Bloc support, the Conservative government will get enough votes to pass the budget, which is considered a confidence motion. Failure to win passage of the plan would mean the end of the 14-month-old minority government and probably another election.
Even if the budget passes, the government is still free to ask the Governor General to dissolve Parliament and call an election.
'Tax-back' pledge offered
Flaherty said his budget also included a "tax-back guarantee" — a plan to legislate the return of money the government saves in interest payments on the federal debt to individual Canadians, in the form of personal income-tax reductions.
The government said it will return $1.1 billion this way in 2007-08 and another $1.3 billion the following fiscal year.
Flaherty's latest projections estimate that Ottawa will pay down $9.2 billion of the federal debt in 2006-07.
The government surplus is expected to shrink over the next two years, falling to about $300 million for 2007-08, and to zero the following year. That's after putting aside $3 billion each year to reduce the accumulated debt.
The Bloc Québécois backed Finance Minister Jim Flaherty's second budget yesterday, which means that there will be no federal election yet.

"Having said that, there's money on the table for Quebec," bloc leader Gilles Duceppe said, "so we'll take that money."

However, the opposition Liberals and NDP did not back the budget. NDP Leader Jack Layton said the budget is giving more money to companies and less to Canadian citizens. The budget also has been criticized by some finance critics.

"He should have had a strategy," Liberal Leader and former Environment Minister under Jean Chrétien, Stéphane Dion, said today. "He should have explained how his budget would make us more competitive, how it would be fairer for those in need, how it would enhance the environment."

"For every step forward, there seems to be two steps back," said Layton. "We could have supported child care or environment and given less to the big board rooms of Bay Street."

Elections have to happen five years or less after a government is elected. The federal election of 2005 was held during winter.