Budget Scorecard

CGA-Canada's 2005 Federal Budget Response

CGA-Canada made a number of recommendations to the federal government on priorities going forward in the areas of program spending and competitive tax policy. We have updated the information to reflect Budget 2005 and the Liberal-NDP agreement. Here is how they measures up from CGA-Canada’s point of view.

GOVERNMENT SPENDING

COMPETITIVE TAX POLICY

EMPLOYMENT INSURANCE

CORPORATE GOVERNANCE

AGING

GOVERNMENT SPENDING

CGA-Canada Proposals
	Maintain program spending growth at three per cent per annum.
	Reform management culture of the federal civil service to better direct resources to program priorities and to ensure current and future federal spending generate highest program value.
	Enhance departmental, policy and functional reviews. Create methods to challenge the transparency and accountability of existing programs and new program proposals.
	Develop and implement private-public partnerships to better allocate resources, risks and rewards and to deliver public projects sooner and at lower cost.

2005 Budget
	Program expenses are expected to increase by 11.9 per cent in 2004 — 05. Average annual growth in program expenses over the 2005 — 06 to 2009 — 10 periods is projected to be around four per cent.
	Cumulative savings of $11 billion over the next five years have been identified. Over 89 per cent of the savings come from improved efficiencies.
	The government is committed to ensuring that review of federal spending will continue.
	No action taken.

Liberal – NDP Budget
	Program expenses will increase by an additional $4.5 billion over the next two years. The measures outlined in the Budget agreement will be funded from any budgetary surplus that exceeds $2 billion in this fiscal year and the next.

Comment

Efficiencies contributed to 89 per cent of the $11 billion savings. There needs to be firmer commitment to challenge existing programs to ensure long term value and sustainability.

Although the increased program spending is a concern for CGA-Canada, we are pleased in that such fiscal dividends from this Liberal – NDP Budget agreement will only be authorized to the extent that there is a $2 billion surplus in those two years as well as the hard cap of $4.5 billion on the spending proposals over the same two year period.

Grade:

Needs improvement.

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COMPETITIVE TAX POLICY

CGA-Canada Proposals
	Expand personal income tax brackets and decrease rates to increase competitiveness of Canadian taxpayers.
	Introduce tax prepaid savings to promote long-run economic growth and efficiency, simplify tax record-keeping and reporting, compete more vigorously with the U.S., and raise real standards of living.
	Accelerate eliminating capital taxes to quicken the day Canadian effective rates on capital mirror U.S. rates and to pressure provinces to eliminate all remaining provincial capital taxes.
	Engage a wholesale assessment of Capital Cost Allowance rates and classes. Enhance rates on new capital equipment to stimulate short-term business investment.
	Do not enact proposed section 3.1 of the Income Tax Act, which will generate spurious economic effects and increase the cost of producing workable innovations.
	Simplify the SR&ED program and make it more widely available, especially to businesses lacking other means of venture capital support.
	Provide Canadian municipalities a portion of a federally or provincially collected consumption-based tax. Tie funding to demographic trends impacting infrastructure need.
	Reduce corporate tax rates to become a preferred gateway for business and international expansion in the North American market.
	Extend the dividend tax credit system to all domestic taxpayers receiving dividends from any Canadian company, and enact legislation to address cross-border corporate tax concerns.
	Strike a royal commission on taxation.

2005 Budget
	The basic personal amount will be increased over a five-year period from $8,012 in 2004 to $10,000 in 2009. RRSP contribution limits are increased. A number of improvements are made to the disability tax credit to extend eligibility.
	No action taken.
	No action taken.
	A few modifications to CCA rates were introduced. New accelerated CCA will be considered for investments in green technology.
	The federal finance department will undertake further consultations on the issue.
	Minor change to offshore range of qualifying activities.
	The federal government will share a portion of the revenues from the federal gas excise tax with cities in the amount of $5 billion over the next five years. Funding is allocated on a per capita basis with a minimum amount assured for the smallest jurisdictions.
	The corporate surtax will be eliminated in 2008 and a cumulative two per cent reduction in the general corporate tax rate between 2008 and 2010. These provisions from the 2005 Budget have been eliminated.
	No action taken.
	No action taken.

Liberal – NDP Budget






	Subject to fiscal room, the federal government may provide an extra $900 million for the environment. Over the next two years, the Government may direct funds to infrastructure projects in areas such as public transit and energy retrofit for low income housing.
	The federal government has reiterated its commitment to reintroduce legislation to eliminate the corporate surtax by 2008 as well as reduce the general corporate tax rate to 19 per cent by 2010.

Comment

The federal government is to be commended on its tax initiatives for people with disabilities and low income seniors. However, individuals and businesses will have to wait a few years if at all before the minor effects of Budget 2005 are felt. Indeed, the Liberal – NDP Budget agreement was fulfilled at the expense of corporate tax cuts.

The federal government had an opportunity to take action towards making Canada’s tax system more competitive and fairer for the average Canadian and small business. Tax relief does not come into effect for two more years if at all.

Grade:

Fail

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EMPLOYMENT INSURANCE

CGA-Canada Proposals
	Experience-rate the employment insurance system to improve system efficiency, stabilize labour demand and eliminate growth-retardingcross-industry subsidies.

2005 Budget
	No action taken.

Liberal – NDP Budget

Comment

The government recognizes that there are inconsistencies in the rate-setting mechanism and undertakes to resolve the issue.

Grade:

Needs improvement.

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CORPORATE GOVERNANCE

CGA-Canada Proposals
	Amend the Canada Business Corporations Act to require CEOs and CFOs to certify that a company’s financial statements fairly present operational results and financial condition.
	Enact legislation to establish the Canadian Public Accountability Board to ensure government oversight, enhance transparency and broaden public participation.
	Adopt international financial reporting standards.

2005 Budget
	Legislation is expected to be introduced in Parliament in the spring.
	No action taken.
	No action taken.

Liberal – NDP Budget

Comment

The federal government should play a leadership role in strengthening investor confidence in Canada’s capital markets by ensuring regulatory and standard setting processes are conducted by a broader stakeholder group.

Grade:

Fail

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AGING

CGA-Canada Proposals
	Work with Canadian stakeholders to assess the status and sustainability of defined benefit pension plans, and develop reform options for consideration.
	Analyze effects of public policy to understand implications on an aging population. Strategically promote health and social policies that are sustainable.

2005 Budget
	No action taken.
	Budget 2005 introduces a number of measures that recognize an aging population. A National Seniors’ Secretariat, to be established, will serve as a focal point for efforts to address the new challenges facing seniors.

Liberal – NDP Budget

Comment

The mandate of the new Secretariat could extend to include issues relating to an aging population.

Grade:

Needs improvement.

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Budget Scorecard

CGA-Canada's 2005 Federal Budget Response