Wednesday, February 27, 2008

Canadian Budget Winners, losers: Little cash for poor in budget

Winners, losers: Little cash for poor in budget

Updated Tue. Feb. 26 2008 5:27 PM ET

The Canadian Press

OTTAWA -- The Conservative government put its money where its votes are with a federal budget that does comparatively little for more than three million Canadians struggling on the social fringe.

Broad-based tax cuts already committed to drain $60 billion from once-bursting federal coffers over the next five years mean new cash for those most in need is modest.

Child care and affordable housing measures are conspicuously absent, despite long waiting lists in many parts of the country. Extra spending for First Nations, the poorest of the poor, amounts to $135 million this year and next, mostly to clean up dirty water and improve health and education services on reserves.

For the rest of Canada, social investments include:

  • $110 million for new mental-health projects.
  • $282 million over two years to support war veterans.
  • $90 million to extend a program that helps unemployed older workers find jobs in depressed regions.
  • $60 million to allow low-income seniors collecting the Guaranteed Income Supplement to earn $3,500 -- up from $500 -- before that benefit is clawed back.

Perhaps the biggest social-spending winners were students. Ottawa will invest $350 million for a new Canada Student Grant Program, but it doesn't kick in until the Millennium Scholarship Fund expires next year.

Suddenly tight fiscal room is coupled with economic uncertainty as Canada braces for possible fallout from U.S. troubles.

"We have come to a fork in the road," said Finance Minister Jim Flaherty. "Some would have us go down the path to higher spending, higher interest payments and higher taxes. That approach is misguided. Our government is taking the path that requires focus, prudence and discipline."

At the same time, the budget Tuesday also declares "Canadians have reason to be confident about the future. We have the strongest fiscal position of any Group of Seven country."

Budget 2008 aims to cut federal debt by about $10 billion this fiscal year while introducing a tax-free savings account and helping manufacturers and processors.

New program spending rises by 3.4 per cent -- way down from past budget hikes that saw increases at least double that amount.

Working poor feel forgotten

Cindy Buott, a single mother in Peterborough, Ont., says she feels all but forgotten by governments at all levels.

She and her 15-year-old daughter live on $1,300 a month, most of it social assistance. Buott worked for $10 an hour as a telemarketer until a debilitating case of Crohn's disease forced her to quit. There's little cash left once she pays rent, heating, hydro and telephone bills, she said in an interview.

"I eat very light and there are times when I just don't eat. Especially when it gets toward the end of the month."

Buott, 50, is far from alone.

The recent C.D. Howe Institute study "Reducing Poverty: What has Worked, and What Should Come Next" says about 11 per cent of Canadians - roughly 3.4 million people - fall below Statistics Canada's low-income cutoff. By that yardstick, a family of four in a small city earning less than $27,000 a year after taxes is considered relatively poor.

The anti-poverty group Campaign 2000 said in a report last September that 800,000 kids across Canada face the shame and exclusion that entails.

Buott's youngest daughter is among them.

"When she starts to look around and does the comparison, it's pretty tough. It's that social isolation. There's no friends. There's no money to participate in any kind of activities. Lots of times we're just in the house. That's it. There's nothing to look forward to."

Rob Rainer, executive director of the National Anti-Poverty Organization, says the Conservatives have taken a particularly ideological approach since taking power two years ago.

"Cutting taxes, encouraging people to take full responsibility for their lives and downplaying the importance of public investment in social infrastructure - that's been their approach. And there's very little evidence to show that ideology is successful."

Winners and losers in the federal budget:


  • Seniors: The budget allows seniors to shelter more of their Guaranteed Income Supplement from taxes, even if they earn extra income. There's also an extension of a program to help older workers stay in the workforce.
  • Savers: Introduction of flexible tax-free savings accounts that let the money grow tax-free. The money can also be withdrawn tax-free.
  • Manufacturers: One billion dollars in relief for three extra years of accelerated capital cost allowance for new machinery and equipment. Another $250 million over five years for an Automotive Innovation Fund.


  • Homeless: No new funding for affordable housing.
  • Child care: No measures to create new spaces or enhance tax benefits.
  • Working poor: No change in minimum wage in federal sector, which activists say needs to be at least $10 an hour.

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