Jim Flaherty came through with an interesting and, I would say, very optimistic Economic Update (mini-budget, whatever) yesterday that aimed for something that all voters love to see under financial siege, Government Agencies and MP’s.
No Debt Financing?
With some very creative and optimistic accounting, the Finance Minister is promising to try to have either balanced budgets or very small surpluses up to 2013, which is very contrary to what most economists are saying is possible in the current economic instability (i.e. Financial Apocalypse).
Flaherty did couch his optimism with the following cold statement:
“Any additional actions to support the economy will have an impact on the bottom-line numbers in our next budget. These actions, or a further deterioration in global economic conditions, could result in a deficit.”
So he isn’t saying there will be deficits, just that there will be measures taken to avoid debt if possible.
Take that Ottawa Fat Cats
No, that is not a real Ottawa fat cat, it’s my cat from when I lived in Kitchener, but he is a good metaphor for the “Fat Cats” in Ottawa.
Some of the measures against the “Ottawa Fat Cats” taken will be:
- Elimination of the $1.75 per vote allowance to support political parties that receive more than 2 per cent of the vote, staring April 2009. I really like this one, because all of the politicians are howling about it, so it must be a good thing.
- Wage controls holding increases to public servants, including MPs and senators, to 2.3 per cent for last year and 1.5 per cent for each of the next three years. I really like this one, because the MP’s are mad about this as well, and the public service doesn’t like it either.
- Slash cost overruns on government travel, hospitality, conferences, exchanges and political services, this sounds like something they should have been doing already? What exactly were they doing before this, wait, I don’t want to know the answer to that one, so please don’t answer.
- Provincial equalization payments are gauged to the average GDP growth over a three-year period. Can’t wait to hear Dalton McGuinty tirade about this one.
- No mention of any extra taxes, but since this is not a budget, then I guess nothing has to be mentioned about that (yet).
Some pro-active steps being taken are:
- Giving $350 million in equity into the Export Development Canada and another $350 million in equity into the Business Development Bank of Canada. Interesting, guess I should send my resume in there since they might be hiring soon.
- A scary one for soon to be pensioners is allowing federally regulated pension plans to spend 10 years instead of five to make solvency payments if necessary. This is a slippery slope I think and it could end up like some of the private pensions that are woefully underfunded these days.
- Only allowing seniors to withdraw $7,500 instead of $10,000 from their Registered Retirement Income Funds (RRIFs), which is supposed to slow the cashing in of stocks and mutual funds I guess.