Understanding the Canadian Federal Budget

[ 0 ] May 14, 2014 |

Budget 2014

After lengthy service to the Harper government over several terms, former-Federal Finance Minister, Jim Flaherty, stepped down in the spring of 2014.  He was financially ‘prudent’ in the way he managed our finances. One of the more spectacular miracles he pulled off, in conjunction with former Bank of Canada Governor Mark Carney, and others, was to ensure Canada was one of (if not the) least affected countries in the world in the mortgage recession fall-out of a few years ago. We may not always like “prudent”, and certainly most of us are crying for relief from an onerous HST, but we have retained excellent financial health as a first world country for many years.

Every February or March, prior to the beginning of the Federal Government’s fiscal year, a new budget is presented by the Government of Canada. Financial priorities—how the government will spend and make money, and an economic forecast—are presented in the budget. (Of interest is that provincial budgets are released shortly after federal budgets, as the provinces depend on money from the ‘feds’.)

We all go through this annual unveiling with the Federal Finance Minister (new shoes and all, a tradition on Budget day), but many of us may not understand the process.

In days of yore, the Budget process was so secretive that the Finance Minister would create and type it her/himself, not even allowing a secretary to read it! The process always gave the government of the day the upper hand over the Official Opposition (current to 2014, this is the New Democratic Party). This practice was changed under then Prime Minister Jean Chrétien and his Federal Finance Minister, Paul Martin. The changes that took place then (1993) are very much still in effect today. For example, highlights of the Budget are usually released—or to use a negatively charged term, “leaked”—in advance of the actual Budget. Where the Official Opposition party used to create and present a completely alternate Budget, today, as before, they simply vote against it.

The creation of a federal budget is complex, time-consuming, and begins at more of a government grass-roots level. Various federal departments, like the Department of Defence or Foreign Affairs, submit estimates (these are formally called “The Main Estimates”) to the Treasury Board Secretariat. The estimates consist of planned expenditures, and they must be linked to ongoing or new programs which themselves are ultimately connected to the objectives of the ruling Government. Following the collection of the Estimates, the Secretariat is tasked with the extremely detailed job of collating and compiling a proposed budget. Of course, that’s not the end of the trail. Cabinet, along with key people in the Prime Minister’s (PMs) Office, make adjustments. Perhaps political realities of the day would make it very rough going if, for example, the Government allowed undue increases in Defence spending. Speaking of reality, the Budget is often adjusted with the next federal election in mind, or at the very least, with key constituents in mind (the provinces, most often, along with other groups who have let the Government know how important an item is).

What kind of goodies or bad news pills do Budgets hold for us? In 2014, when then Federal Finance Minister Jim Flaherty tabled what was to be his final Budget, there were 18 main points, of which CBC, when discussing Budget 2014, picked up on “6 promises Canadians could see.” The main talking points of those 6 were:

Closing the Canada-U.S. price gap. This has been a bone of contention for many Canadians, for many years. Why, when the dollar reaches parity or close to it, should we pay more for the same book title here than in the United States?

Help for youth employment. Unemployment figures for our new, younger workers have always been too high, making it very difficult for them to find work.

More rules for charities. An unfortunate fact of our world today is that terrorist groups have been using charities to ‘launder’ their funding. The Budget moved to shore up loose ends that have allowed this.

Broadband internet for rural and remote Canadians. While I sit in my Toronto home office, enjoying lightening fast and reliable Internet connectivity—and have done so for over 15 years—many people in rural or remote areas are still waiting for even the most rudimentary broadband connection.

Infrastructure funding. Most major centres, but smaller ones too, are in desperate need of infrastructure funding. Cities and towns simply cannot afford to go it alone, and depend on support from both provincial and federal money. For example, Ottawa needed help in upgrading its sewer system, while Toronto needed additional funding for an upgraded and expanded subway system.

Support for the auto sector. In an ongoing effort to keep car plants open in various Canadian centres, and of course auto workers gainfully employed, the government has renewed its support for major auto makers.

On Budget day—in 2014, this was on February 11th, after (as always), the financial markets were closed—the Federal Finance Minister ‘tables’ the Budget in the House of Commons. Of interest here, besides the meat and potatoes (or lack of the same) of the Budget is how the voting goes. There are two factors or factions one must consider. There is the Government of the day, and in that camp, all Members of Parliament are expected to vote in favour of the Budget. The other major factor, beside the Opposition Party (and sometimes others) voting against it, is that the Budget is always a ‘confidence’ measure/vote. If a minority government, for example, can’t get enough votes from its party and/or smaller parties to vote in favour of the Budget, an election may be called. This happened to former Prime Minister Joe Clarke. When it happens, the government can fold, Parliament can be dissolved, and an election is called.

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Category: Canadian Culture

About the Author ()

Rob writes for CyberCletch LLC and provides Windows technical support to their clients. He hails from Toronto, Canada where he also teaches computer courses at a local college.

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