Tag Archives: Balanced Budget

No new mortgage rule changes: Flaherty

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There has already been “some softening” in the Canadian real estate market so there is no need for further tightening of mortgage rules, said Jim Flaherty, the finance minister.

Unlike the United States and Europe, the Canadian housing market has continued to rise after the financial crisis, leading some observers to caution we could be headed for a bubble.

Mr. Flaherty said he’s already intervened to toughen mortgage rules three times in the last few years and there’s no need for further action as conditions in the market are finally moving in the right direction.

In his first major public appearance since the election, at Bloomberg’s Canada Economic Summit in Toronto, Mr. Flaherty also said this country continues to weather the ongoing upheaval in the global economy. He said his number one priority is to deal with the budget — likely in June — in order to continue to implement his government’s economic action plan.

The past few months have seen the emergence of a string of new problems affecting the global economy, ranging from conflicts in the Middle East and North Africa and the rising issues around U.S. government debt.

Mr. Flaherty said the best way to protect Canada is for the government to move as quickly as possible to a balanced budget and to continue to take measures to strengthen the economy, such as maintaining low taxes for businesses and individuals.
Canada already has one of the lowest corporate tax rates of any major developed economy and the Conservatives have vowed to bring it lower still.

In the depths of the crisis Canada’s banks remained strong partly because of steps taken by the government aimed at boosting liquidity such as buying more than $70-billion of home loans from lenders. Ottawa also increased the limit on the volume of mortgages banks could sell into the Canada mortgage bond program.

Critics say that one unintended result was that banks were encouraged to make more home loans, which helped push up prices in the market.

But Mr. Flaherty said he does not believe there were unintended consequences from the government’s emergency support for the banks.

As a result of recent fluctuations in global currency markets the Canadian dollar is now trading at close to its highest level since 2008, creating challenges for many companies, especially manufacturers.

But Mr. Flaherty said the private sector is coping. One of the dangers of intervening, he suggested, is a fluctuating currency, which would be even more problematic.
“What we want to avoid is sudden, jerky movements in the Canadian dollar,” he said.
Mr. Flaherty said his government will present a slightly revamped budget in June. It will be changed to reflect an economic update and may include some items from the election platform, but will be largely the same budget he presented in March, Mr. Flaherty said.

http://business.financialpost.com/2011/05/10/no-new-mortgage-rule-changes-flaherty/

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Prepare to get hosed

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Education Minister Nancy Allan has signalled that property owners should prepare to be hosed by education tax increases this year.

Ms. Allan, of course, did not frame the signal in those words — she said this week that the government will not order school divisions to freeze tax rates — but it cynically amounts to the same thing.

Ms. Allan has not been long on the job. But she has been on the job long enough to know that a perfect storm is gathering around education property taxes, one from which she should be seeking to shield taxpayers. But instead, she declares it’s every school division for itself.

The perfect storm starts with the divisions, which have been agreeing to pay more teachers much more money to teach ever fewer children. Contract settlements have reached several times the rate of inflation, the most recent at 4.8 per cent, which will quickly become the norm for all. Why the settlements are so high is anybody’s guess in the current economic climate. But given the current economic climate — the government, which promised a balanced budget last spring, is already $600 million in deficit — the province is not going to be paying those wage increases, which leaves the hapless property owner, as Ms Allan must know.

To complicate — or is that implicate? — the situation, tax assessments this year have climbed on average 67 per cent under the recent reassessment. That dramatic rise, however, should not lead to a dramatic increase in property taxes. If everyone follows the City of Winnipeg’s policy of cutting mill rates by a 67 per cent equivalent to offset the expanded assessment base, a tax grab by stealth will not occur. That’s a policy, however, that the school divisions have ignored in the past, claiming to have frozen tax (mill) rates knowing that they would raise more lucre anyway. In 2002, for example, Winnipeg division raked in an extra $8 million under the scheme.

And what are taxpayers getting for this? The NDP government in its wisdom refuses to require standardized tests so there is no way of knowing. All we know is that in the absence of data, the province has reduced the school year from 200 days to as low as 193 to placate Labour Day vacationers, and it has guaranteed teachers that 10 of those days will be set aside for professional development.

At the same time, there are 136 more teachers on the job, in part because the government did not want to appear soft on obesity and declared that the reduced time in class should be further reduced by sending students to the gym.

So why is Ms. Allan ignoring all this and refusing to freeze education taxes? Because, while she’s a new minister, she is playing the same cynical game as the old ministers.

The government needs money, now more than ever, to cover the fact that its spending problems are bigger than its revenue problems in these tough times. Giving the green light to school divisions relieves the government of its responsibility to properly fund public education, as opposed to public education tax rebates.

But even more cynical is that, while the government refuses to accept responsibility, it hectors and lectures school trustees for raising property taxes in the absence of sufficient provincial funding.

Which is what Ms. Allan announced — she will not freeze taxes, she instead will pass judgement when taxes are raised.

So prepare to get hosed. But don’t blame the boards. This is the minister’s doing.

http://www.winnipegfreepress.com/opinion/editorials/prepare-to-get-hosed-81060087.html

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Manitoba government projected budget deficit for 09/10

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According to a Toronto economist, “A looming provincial budget deficit of about $600 million is more a symptom of a global recession than a government that can’t control its spending.”
Issued on their second quarter financial report Manitoba has projected a $592-million budget deficit for the year 2009/10. It’s a $640-million negative adjustment to the $48-million summary surplus the province projected in the March budget.
Warren Lovely, a CIBC senior economist said that the Manitoba’s shortfall is connected to the recession that occurred in United States. The weaker industrial demand for electricity from Manitoba Hydro was also pinpointed, as this year’s profit of $120 million is $145 million less than budgeted. Aside from this, Finance Minister Rosann Wowchuck has noted spring flooding and the campaign against the H1N1 flu as contributing factors for the economy’s condition.
However, the Manitoban government is still on track to an average pf $221-million surplus for the four year period ending 2009-10, sticking to its commitment of a Balanced Budget, Fiscal Management and Taxpayer Accountability Act. The act states that budgeting is done over a four-year period and allows deficit to be posted in one of those years.

According to a Toronto economist, “A looming provincial budget deficit of about $600 million is more a symptom of a global recession than a government that can’t control its spending.”

Issued on their second quarter financial report, Manitoba has projected a $592-million budget deficit for the year 2009/10. It’s a $640-million negative adjustment to the $48-million summary surplus the province projected in the March budget.

Warren Lovely, a CIBC senior economist said that the Manitoba’s shortfall is connected to the recession that occurred in United States. The weaker industrial demand for electricity from Manitoba Hydro was also pinpointed, as this year’s profit of $120 million is $145 million less than budgeted. Aside from this, Finance Minister Rosann Wowchuck has noted spring flooding and the pandemic H1N1 flu contributed to the economy’s condition.

However, the Manitoban government is still on track to an average pf $221-million surplus for the four year period ending 2009-10, sticking to its commitment of a Balanced Budget, Fiscal Management and Taxpayer Accountability Act. The act states that budgeting is done over a four-year period and allows deficit to be posted in one of those years.

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