Finance Minister Joe Oliver talking about money. Screenshot via PMO.
The budget is balanced!
Thanks to $1.8 billion grabbed from the Employment Insurance fund, $2 billion from the contingency fund, and roughly $3 billion raised from selling shares in General Motors (below value), the federal government finally gets to brag that it balanced the budget.
The document, unveiled Tuesday by Finance Minister Joe Oliver, is an austere and no-frills spending campaign that keeps spending roughly frozen—while still hiking budgets for law enforcement, intelligence, and defence—and highlights the most important part of the budget: the budget is balanced!
"Now, this did not just happen. It took hard work, unwavering focus, and firm resolve," Oliver promised the House of Commons in tabling the budget.
That hard work involved plucking money from the contingency fund—a $3-billion pot set aside in order to cushion any unexpected fluctuations at the end of the year, not the beginning. By removing two thirds of that fund in order to cover what would have otherwise been a deficit, Oliver is basically dipping into savings in order to turn a budget shortfall into a razor-thin surplus.
That's great news for Harper's re-election campaign, less-than-good-news if anything at all bad happens to Canada's economy.
Taking the $2 billion from the contingency fund would not actually cover the deficit by itself, however. Even with the amount raised by selling-off the GM shares, as they announced earlier in the month.
To get themselves over the line, the Conservatives had to dip into the Employment Insurance (EI) fund.
The accounting trick, a favourite of former Liberal governments, involves grabbing surpluses created by EI premiums and using them to cover costs. Generally, in times of high unemployment, the EI account goes into deficit and rates, which are taken off workers' paychecks, may go up. Then, when times are good, the higher premiums mean huge surpluses for the program. The Conservatives had long been critical of governments using that money for anything other than paying down the premiums. They even introduced changes that required the government to run the EI system on a break-even basis.
Except, those changes haven't taken effect yet. So, in the meantime, Ottawa can break open the EI piggy bank to get to the politically-opportune promised land of a balanced budget.
When VICE asked Oliver how he could justify raiding the EI fund, he said that Ottawa didn't need it to balance the budget. And, besides, Oliver said, their decision to pluck cash from the EI fund was nothing "compared to the Liberals."
Angella MacEwen, economist at the Canadian Labour Congress, says that pulling money from the fund means that you can't then use the money to reduce premiums or expand EI coverage to more out-of-work Canadians.
"Workers are paying into the EI fund and the budget is being balanced on their backs," says MacEwen. "And only 40 percent of workers are getting access to EI now."
The document will be the Conservatives' banner as they head into a fall election in September, but the opposition parties say it's irresponsible.
Both the NDP and Liberals chastised Oliver for dipping into the contingency fund. NDP Leader Thomas Mulcair called it "economic sleight of hand."
Mulcair and Liberal Leader Justin Trudeau both went after the government's decision to expand income splitting and to raise the limit on how much Canadians could contribute to tax-free bank accounts.
"This budget helps those who need it the least," Trudeau told reporters after the announcement.
Thanks to the razor-thin surplus, many of those agencies begging for money from Ottawa won't be getting it.
The overseer of the Communications Security Establishment, which acts as Canada's NSA, and the Information Commissioner, which facilitates how journalists and Canadians can request government information, have both complained that they are severely under-funded. Neither office, nor the privacy commissioner, have received money from this budget.
"They're each got substantial budgets," Oliver said when asked. "If it turns out they need more, they will get more."
Virtually every watchdog and commissioner in Ottawa has repeatedly said they are unable to meet their mandate due to current budget constraints.
Mulcair isn't surprised. "Mr. Harper doesn't like being watched," he told VICE.
The budget does say that the government plans on expanding occupation health and safety standards to unpaid interns—good news for this entire generation of precariously-employed students—but doesn't actually do much in terms of preventing employers from using the unpaid interns.
The NDP have introduced legislation that would crack down on how employers use interns, specifically curtailing their ability to refuse pay.
Labour Minister Kellie Leitch, in an interview with VICE, wouldn't say whether that's the government's intention.
"I think that's something that's up for debate," she said, adding that the question as to whether or not withholding pay from young workers has come up in her consultations with her provincial counterparts. "It's about striking a balance."
Today's budget, though, doesn't appear to actually commit to ending non-education unpaid internships. The biggest impact, likely, would be to allow unpaid interns to sue their sort-of employers if they are hurt on their sort-of jobs.
The budget would, according to the government's announcement, "ensure that interns under federal jurisdiction, regardless of pay, receive occupational health and safety protections and are subject to basic safety standards, and to clarify the circumstances under which unpaid internships can be offered."
Those changes will be unveiled in coming weeks.
There's also no money for climate change—the phrase doesn't appear a single time in the budget document—and there are only small funding commitments for the environment, mostly to address industrial chemicals and contaminated sites.
For First Nations, there will be an additional $40 million a year for on-reserve education.
More money will be going into public transit, though not until 2017.
All-in-all, though, the budget lacks any big commitment to anything other than getting in the black.
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