Ok, it’s that time of year again when snow is on the ground, children’s laughter is in the air and everyone is expecting presents. Yes, it’s the Canadian federal budget day!
I wasn’t sure if it was even worth checking out this year’s edition since it appears that all the details were “leaked” out in advance but curiosity got the best of me and as I suspected – “stimulus” was the word of the day. Not that it means all that much – like a company announcing a stock buyback, the government doesn’t necessarily have to do everything (or anything) they announce – especially if a certain coalition of provincial NDPers (Group of 8 ) succeed with their plans to eventually take over the federal government once they destroy York U.
I personally don’t think the country is heading into a deep, dark depression which is a different opinion than most of the people who write for a major newspaper in this country. A bit of stimulus wouldn’t hurt but too much of a good thing can backfire.
Here are some of the highlights:
- Total value of extra spending – $40 billion.
- Half of this will go to construction projects.
- Some tax brackets increased very, very slightly.
- First time home buyers amount increased to $25k. Long overdue – I’ve always thought this should be based on your region – $25k pays the real estate fees in Vancouver and Toronto.
- Home renovation tax credit – not really sure why they think this is necessary but if you’re doing any renos then save your receipts (if you have any).
- 5 extra weeks of EI benefits for the next two years. I really hope that I can continue not to care about this change.
I like the idea of a lot of the extra money going into fairly concrete (no pun intended) construction projects – yes, there might be a bridge or two build to nowhere but even the most useless construction projects can usually serve as skateboard parks or something like that. Another benefit of construction is that it takes quite a while to plan out projects so if the economy ends up not being as bad as it appears, then you don’t have to carry through with all the planned projects (see the stock buyback analogy above).
I’m not at all concerned about the new deficit – when times are tough then you have to do some spending. Unlike our neighbours to the south who like to run a large deficit in the best of times – our government has seemingly learned its lessons from past spending mistakes and has worked on paying down debt when the economy was going strong.
Conclusion
I don’t really see anything wrong with this type of budget but the reality is that our economy is very heavily dependent on the US economy. It really doesn’t matter what the budget contains – we need the US economy to get better in order for our economy to stay strong.
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I haven’t seen any coverage, being back home and on my parents’ ancient PC, I guess they think the reno rebate will help residential contractors out? I can tell you from the professional side, residential construction (and commercial construction generally) is completely and entirely dead and there is little overlap in the trades between the residential guys and those who do institutional (many of whom are still busy). Would have been great for me in 08, but we’re doing more work this yr.
The wheels have entirely fallen off the economy in Ireland. Suicides, bank scandals, zero liquidity and my sister just got her redundancy offer. I was doing some interviewing and was practically given the red carpet. Talk about gloomy …
Thanks for the overseas update Guinness!
I’ve always told friends that if they want to do major renos to wait for a recession – renovation is feast or famine. The industry has had a great run for a long time but once it dries up – if you need work done, they will be lined up out the door to give you a quote.
This budget would put me (barely) back into the bottom tax bracket… and I’d save $50 a year or something. wheeee.
I’d rather it be a balanced budget.
Elaine – the tax bracket changes are so minor they are almost meaningless. I think that was done just for show ie “we cut your taxes” rather than for stimulus.
That’s exactly why I’m not a fan of tax cuts. I never notice really notice the difference, but it costs millions (or billions) to the government. I’d rather have a better healthcare system than a few bucks more per paycheck.
Melanie – I agree – why bother with a few pennies/dollars.