Say goodbye to the penny, hello to more cross border shopping and anyone over 54 should get ready to wait longer for their old age security benefit.
The Federal Government has delivered a budget that can be described as slow and steady, with some unique changes weaved in. Finance Minister Jim Flaherty is cutting $5.2 billion in spending over the next 3 years in hopes that Canada can dig itself out of deficit by 2015.
It is not as austere of a budget as many economists and opposition party officials were expecting, but it does confirm the Federal government will continue to operate in the red for years to come. Here’s how the 2012 Federal Budget will affect Canadians going forward.
Where the Government will Implement Cost Saving Measures
The government will cut 19,200 federal pubic sector jobs over the next three years. Those cuts represent more than 4 per cent of the total public sector work force. Also, public servants will pay more into pensions and get fewer benefits at the end.
The CBC is losing 10 per cent of annual funding over the next three years, which could result in loss of programming and jobs at the country’s public broadcaster.
At an annual saving of $11 million dollars, the beloved penny will be phased out starting this fall. But it will still hold value for spending.
Age of eligibility for Old Age Security will gradually rise to 67 from 65 starting in 2023. Good news for anyone 54 or older as of March 31, 2012 as they will not be affected by this change. For the rest of us we will have to wait two years longer to get the government benefit. As well, the retirement age for federal public servants will rise to 65 from 60 for people hired in 2013.
Also, Canada will review participation in some international organizations. The Katimavik program for youth will be eliminated. Government will sell some official residences abroad and downsize others and the Atlantic Investment Tax credit will be phased out.
Where the Government will Spend Money
The government is focusing on job creation by putting $50 million into job skills training for young people. The budget wants to clear the backlog in federal skilled worker program by removing some applicants and refunding their fees, which will total $130 million. They can reapply under new criteria. Also the temporary hiring credit for small business is extended one more year. All good for Canadians looking for work right now.
For those still out of work, $482 million will be spent over two years to improve the effectiveness of the employment insurance system, including incentives for accepting work and ensuring benefit levels align with local labour market conditions and a cap on annual increases to employment insurance premiums until the operating budget is balanced.
There is good news for young First Nations, $275 million will be spent to build and renovate schools on reserve, and renewal of the Urban Aboriginal Strategy. Also, $330 million will be spent over two years to improve water systems and water quality in First Nations communities.
Where the Government will Keep the Status Quo
Canada will continue with the International Space Station mission until 2020. Here on earth, the Canadian Forces regular force strength will remain at 68,000 and reserves to stay at 27,000.
There is also no significant tax changes for individuals.
If you like to shop you are in luck. The government has raised crossed border shopping limits. Starting this summer you can bring back up to $200 for 24-hour trips and $800 for trips of 48 hours or more.
Eligible Canadians will be allowed to defer old age security for a maximum of five years, beginning in 2013, in exchange for higher benefits.
Changes may be coming to the Canada Mortgage and Housing Corporation. The budget proposes amendments to strengthen the oversight of CMHC and to ensure its commercial activities are managed in a way that helps the stability of the financial system.
Not Far Enough
Overall this budget does not go as far as some were first predicting, especially when it comes to federal job cuts. I remain skeptical that these slow changes can really bring the country into the black by 2015. The Federal government played it very safe, despite having a majority government for the first time this decade.