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Cut and grow: Trimming jobs and cost while nurturing economy Flaherty's plan

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OTTAWA -- Penny-haters and cross-border shoppers are among the winners in an austerity budget that will axe more than 19,000 civil-service jobs and cut $5.2 billion in government program spending over three years.

On Thursday, Finance Minister Jim Flaherty looked as relaxed as he's ever been on a budget day as he introduced his first fiscal plan crafted with the knowledge it will sail through the Tory-dominated Parliament.

It's also his biggest budget ever -- at more than 500 pages -- and one Flaherty said ensures Canada keeps pace with emerging economies in Asia and South America.

 

Canada, said Flaherty, emerged from the recession strong but there is much more to do.

"We cannot afford to rest on this record of success," he said.

The budget had two major themes -- cutting spending with the goal of getting the budget back into the black, and growing the economy through business investments and developing resources.

Overall, 19,200 federal civil-service jobs will disappear, about five per cent of the federal workforce. The budget estimates about 5,000 of those jobs will be reduced by retirements and voluntary departures, leaving about 12,000 layoffs yet to come over three years.

Almost everyone in the federal government will be asked to do their part. And even the lowly penny will stop being minted next fall in order to save money.

The cuts will be phased in, with $900 million in 2011-12, $1.9 billion in 2012-13, $3.8 billion in 2013-14 and $5.7 billion in 2015-16.

Those cuts will affect federal government programming only, not transfers to the provinces for health, social programs and equalization.

More than one-fifth of the cuts will come from National Defence, which will be tasked with doing everything from improving its contracting processes, to centralizing its property management, to coming up with more than $1.1 billion in savings. Vic Toews's Public Safety Department will cut nearly $700 million, including almost $300 million from the Correctional Service of Canada. The budget makes clear despite new laws on the books expected to increase the number of people in prison, the correctional service must find a way to hold them in existing facilities.

"The government has not built a single new prison since 2006 and has no intention of building any new prisons," says Flaherty's budget papers.

The CBC will also take a big hit by way of a $115-million cut, about 10 per cent of its federal funding.

Improved economic forecasts and the planned cuts will allow Flaherty to balance the budget again by 2015-16, just in time for the next federal election scheduled for the fall of 2015.

Total spending this year will hit $276.1 billion, up 1.2 per cent over last year. It leaves the deficit at $21.1 billion, down from $24.9 billion last year. The deficit is forecast to fall to $10.2 billion in 2013-14 and $1.3 billion in 2014-15, before a surplus of $1.3 billion shows up in 2015-16.

The other half of the budget focuses on growth in the economy and puts a Conservative stamp on that goal with programs and spending targeted at getting the private sector to step up to the economic plate.

"Our focus in this budget is the long-term prosperity of our country," Flaherty said.

There is more than $300 million for various employment programs that work to match youth, older Canadians, aboriginals and unemployed workers with jobs that meet their skill sets. More than $1 billion will go to research grants but with a new focus on commercially viable projects. Another $500 million is set aside for venture capital.

The immigration system will also be reformed to process applications more quickly and focus on bringing in skilled newcomers, which Canada needs for its economic prosperity.

Canada will refund $130 million in fees to immigration applicants who applied before the rules were changed because, Flaherty said, it wouldn't be fair to keep their money if the country isn't going to approve their applications anymore.

The federal government is also moving to streamline environmental review processes on major oil, gas and mining projects, creating a one-project, one-review system that will not duplicate reviews at both the federal and provincial level.

Flaherty's eighth budget looks much further down the road than previous ones, including a plan to start increasing the eligibility age for old age security and the guaranteed income supplement beginning in 2023.

 

mia.rabson@freepress.mb.ca

Republished from the Winnipeg Free Press print edition March 30, 2012 A1

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