Conservative Budget 2008

Federal Budget Analysis

The Conservative government’s Minister of Finance, James M. Flaherty, has come out with a detailed budget proposal for the year of 2008. It is a plan that has taken into account all aspects of the the Canadian Economy, and the needs of its citizens. Like any political proposal of this magnitude, it has been followed by both praise and critisism. With an issue as important as the federal budget, there are also intriguing differences in opinion. While some may suggest it meets Canadian Economic goals, others may say that the budget is far from doing so. This difference in opinion is much due to the diversity in Canadian society. While the budget may meet the needs of some, it may at the same time, ignore the needs of others. This is one of the most difficult aspects of creating a federal budget. The government must relatively balance the distribution of funds among all parts of society to best meet the needs of all people. The Conservative government’s budget plan for 2008 encompasses all areas of the Canadian economy and takes into generous consideration the needs of individuals and business. The proposed budget would surely meet Canada’s economic goals through helping business and industry, individuals, and insuring political and financial stability for long term success.

People opposing the 2008 budget proposal suggest that it is merely a “shell game”, and is “much more notable for what it does not contain than for what it does contain” (An Insignificant Shell Game). They would also suggest that it sets aside the needs of public service. This years Budget proposal lays out many plans to lower taxes, help corporate sectors, and lower federal debt. However, some suggest that through doing so, the plan does not give nearly enough support to environmental and manufacturing areas, “The amounts being spent on the environment and the manufacturing sector are peanuts, compared to the huge corporate tax breaks…and the large sum going to debt repayment” (An Insignificant Shell Game). This article’s criticism supports the opposing view by also suggesting that the budget is not in the best interest of Canadian citizens. It would also suggest that it does not take into account the need to focus on the environment or on Canada’s future involvement in manufacturing. These suggestions could not be further from the truth. First off, the budget is meant to be in the best interest of economic growth and stability. The opposition criticizes the Conservative’s efforts to reduce Canadian debt, and invest in long term stability. Focusing on corporations and providing further tax incentives will only ensure that investors will see the growing possibilities in Canada. Furthermore, the claim that the budget ignores public and social needs, as well as the environment is completely unfounded. The budget would clearly set aside hundreds of millions of dollars in public transit programs, education funds, job programs, unemployment insurance, retirement bonuses and much more. Not only do the plans meet the needs of Canadian citizens, but they are also working in unison with positive manufacturing and environmental plans.

The overall purpose of the budget would obviously be to meet all of Canada’s economic goals. Many of these goals tie in with the government’s responsibility to ensure the equitable distribution of wealth. This can be one of the hardest aspects of creating a budget, but the Conservative government has laid out its plans in a way that meets the needs of all societal sectors. Their government has been running on a surplus profit that is being used to pay down large amounts of debt, a total of 10.2 billion this year. Due to this reduction, the amount of interest also drops, and the federal government is left with more money to invest in the economy. When the government pays less on debt and interest, the taxation policies on citizens can also be reduced, “We are reducing the tax burden to the lowest level since the government of John George Diefenbaker” (Budget 2008). The reduction of public debt has opened up new opportunities for supporting Canadian society, and this is quite evident in the 2008 budget. The fair division of wealth is a guiding factor that can make or break economic growth. In preparation for an economic slow-down, the budget will invest billions of dollars in helping business and industry, a driving factor of the economy. While doing so however, it must also try to make communities more efficient, improve infrastructure, and deal with social needs. There are many core responsibilities that need to be addressed in order to ensure increased productivity and a promising future for Canada.

Some of the main economic goals lie within the realms of business and industry. The current budget proposal institutes plans to support economic growth, increase productivity and efficiency, and reach higher employment rates. It plans to do this by making Canada a fantastic place to own and invest in business. The budget proposes to lower the federal corporate income tax rates so that it reaches 15% by 2012. Not only will this help corporations but it would also give Canada a notable achievement, “This bold initiative will give Canada the lowest overall tax rate on new business investment in the G7 by 2010, and the lowest statutory tax rate in the G7 by 2012” (Budget 2008). Tax breaks like these are surely incentives, and the Conservatives are merely continuing what has worked well in the past, “The 2008 budget includes $12 billion in incremental tax relief, bringing total tax relief since the Conservatives took office [in] 2006 to $21 billion” (Global Economic). The federal budget is also trying to push provincial governments to reduce their corporate income tax rates so that federal and provincial rates combined would be 25% by 2012. This goal would not only assist Canada’s current industries, but also make Canada’s business tax rate competitive on a global scale. If Canada wins this competition, it will be able to advance economic growth, and offer more employment and productivity, in turn raising GDP. By bringing in new business and promoting growth, we would also be raising Canada’s output of consumer and capital goods. The budget would also bring in benefits specific to manufacturing businesses and the automotive sector. Due to the tough times these industries have faced in recent years, and continue to face today, the government brought in a temporary allowance for capital costs in 2007. The plan for 2009-10 is to extend this capital cost allowance for three years. What this allows businesses to do is write off their investments in equipment and machinery so that they can invest in advancing their facilities. This is all part of the budget’s plan to turn Canada into a world competitor for manufacturing. One major sector in particular, the auto industry, has had a lot of influence on the strength of the Canadian economy. For the years of 2009-10, the government plans on opening an Automotive Innovation Fund. Not only will this help the industry, but it will also help the environment, “This money will fuel the development of greener and more fuel-efficient vehicles. This will help preserve the environment” (budget 2008).

Not only will the budget help business and industries, it also provides countless benefits to individuals and communities. One of the most popular examples of this would have to be the Tax-Free Savings Account. One of the main focuses of this year’s budget is long term stability. This means encouraging Canadians to invest in the future and be able to confidently save money, “Canadians will be allowed to save up to five thousand dollars a year ….The money can grow tax free, like an RRSP. Contributions won’t be tax deductible, but withdrawals won’t be taxed either” (Federal). This account can be used for anything, and there are no restrictions to when you can withdraw or recontribute. Full employment is also a major factor in long term stability, and this means bringing in incentives and aid to northern communities. The cost of living is on the rise, and many northern communities are struggling to keep up with inflation. Even though inflation is low and stable at the time, the help is long overdue and the issues must be addressed. It is up to Canada to institute the opportunity to bring more Aboriginal Canadians into the workforce. This is why the new budget plans on devoting 70 million dollars over a two year time span, “Chief Clarence Louie of the Osoyoos First Nation in B.C. pointed out that there are a large number of Aboriginal Canadians willing to work, they just need a chance” (Budget 2008). Part of helping Canadian communities also means helping the environment. Many of these issues are interconnected, and can be related to productivity and efficiency. Canada is not only trying to be effective, it is also trying to be efficient. Public transit is an efficient way to travel and it is a step in the right direction towards a cleaner environment. The budget puts $1.3 Billion in support of public transit, and also gives a tax credit for the people who use it. Not only is public transit an efficient way for people to travel, it is also a step in reducing traffic, in turn insuring that goods and services can be more easily and effectively delivered. Helping individuals and communities also means promoting education. This is one of the most basic yet vital elements used to insure a successful future. Compared to the current system, the budget’s proposal would allow 100,000 more students from low or middle income families to receive funding, “this funding will reach an estimated 245,000 students” (Budget 2008). More scholarships are also being opened up, with an emphasis on creating the next generation of world class researchers. Four of the priority areas will be the environment, natural resources and energy, health, and Information and communications technology. These areas of focus are meant to get Canada recognized on a global scale, open up new opportunities for employment, and become environmentally efficient.

The budget proposal for 2008 given by the Conservative’s Minister of Finance, James M. Flaherty, displays promising future potential. I believe that that it promotes Canadians to save, as well as to invest in Canada’s business potential. The corporate and industrial benefits will surely make Canadian businesses more profitable, all the while making Canada an enticing investment for foreign companies. The budget lowers taxes on corporations, which will surely assist productivity, and it offers much benefit to individuals as well. Productivity relies on having a stable work force, and part of that relies on job opportunity and the resources to get people involved. Aboriginal communities have long been neglected in this regard, that is why this current budget proposal goes out of its way to open up new opportunities to Aboriginal and northern communities. Another main aspect that I find particularly important for the individual would be the Tax Free savings fund. It would be the first of its kind, and encourage people to save their money. This is just one step towards insuring long term financial stability for Canadians. In today’s day and age, environmental issues have also taken center stage. The environmental implications of the budget, such as research and pollution control, will help to make Canada a world leader in environmental sustainability.

Points in the opposing article would suggest that the budget sets out to do all of the wrong things. The article “An Insignificant Shell Game”, even criticizes the Conservatives efforts to pay back debt, saying that they are focusing on it far too much. I feel that this is a ridiculous suggestion, since it is an obvious benefit to pay down debt and reduce government interest payments. In fact, it is because of the large debt reduction, that the excess money can be distributed to our economy. The opposing article is merely proposing procrastination, and that is never a good option when in debt. While many of the supporting articles rave the Conservatives efforts to improve business and industry, the opposing article complains that these actions are bringing a shortcoming to social needs. This complaint is unfounded in my opinion, since investing in business and industry ends up helping individuals in society, and allows for economic growth, which benefits everyone. One can not expect the same monetary value to go towards both causes equally; it is a matter of balance and relativity. If some of the main economic goals are to reduce public debt, ensure economic growth, and increase productivity, than it should be expected that large amounts of money go in that direction. This is not to suggest that social needs of specific areas in society are not important; the plan merely insures equitable distribution of income that will allow for the most overall progress. Creating something as influential as a federal budget is bound to attract a wide spectrum of views. Much of the controversy lies in the fact that most groups in society just want what is best for them. Putting together a federal budget means taking into consideration what would be best for everyone, and insure that Canada is able to meet all of its economic goals. The question that everyone now has is the general inquiry of what amendments will be made to the budget. As far as I can tell, these changes will not be anything too drastic, and I don’t see my opinion on this promising budget changing any time soon. I agree with what it has set out to accomplish, and I hope that Canada will begin seeing its positive effects in 2009, and many years to come.


Works Cited

“An Insignificant Shell Game!” PIPSC. Feb. 27, 2008. .

“Budget 2008.” Ministry of Finance. James M. Flaherty, P.C., M.P.. Feb. 26, 2008. Feb. 27, 2008. <>.
“Federal Budget 2008 Prepares Canada for Economic Slowdown.” By Ben McCulloch, Feb. 27, 2008. Feb. 27, 2008. .

“Federal Budget Prudent for Today’s Economic Conditions.” Canadian Bankers Association. < option="com_content&task=" id="76895&Itemid=">.

“Global Economic Uncertainty Helped Shape 2008 Canadian Budget.” By Stephen Huebl, Ed. Nancy Girgis, CEP News, Ottawa. Feb. 26, 2008. Feb. 27, 2008.
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