Building on the March 3rd Speech from the Throne, Federal Finance Minister Jim Flaherty tabled the Conservative government’s fifth full budget on March 4, 2010. Entitled Leading the Way on Jobs and Growth, the budget outlined the government’s plan to solidify Canada’s economic recovery, return to fiscal balance and increase our competitiveness.

As expected, the government stuck to its commitments of no tax increases or cuts to government spending, as well as protecting pensions and transfers to the provinces. Rather, the government will rely on slowing the rate of government spending and growth to balance its books after 2015. Echoing its commitments from the Throne Speech, there were also significant announcements with respect to international competitiveness and research and innovation.

Budget by the Numbers

  • Total government spending will reach a record $280.5 billion, up $12.8 billion over last year;
  • The deficit for 2010-2011 will be $49.2 billion, and is projected to shrink to $1.8 billion in 2014-2015;
  • Total debt will increase to $566.7 billion;
  • Debt-to-GDP ratio will rise to 35.4 percent in 2010-2011, and fall to 31.9 percent by 2014-2015;
  • As a share of GDP, program spending will go from 15.6 percent in 2009-2010 to 13.2 percent in 2014-2015;
  • Basic personal income-tax exemption rises to $10,382;
  • $7.7 billion in stimulus money for infrastructure; and,
  • $4 billion for Employment Insurance.

Continued Stimulus Funding

As announced in last year’s Economic Action Plan, the government followed through with year two of stimulus funding ($19 billion), including:

  • $3.2 billion in personal income tax relief (as noted above);
  • $4 billion on job creation;
  • $1.9 billion in post-secondary education infrastructure research, technology innovation and environmental protection; and,
  • $7.7 billion in infrastructure.

Fiscal Austerity and Debt Reduction Measures

The government also proposes a five-year plan to reduce the deficit to $1.8 billion by 2014-2015. Having declared tax increases, pensions and transfers to the provinces off limits, the government will return to black ink by:

  • Winding down the temporary measures in the stimulus package;
  • Restraining spending; and,
  • Conducting a comprehensive review of government administrative functions and overhead costs.

Job Creation and Youth Employment

A key priority of the government, the budget included several measures aimed at job creation:

  • $100 million to extend work-sharing agreements;
  • $108 million for internships and skills development, and to support Aboriginal students;
  • $60 million to assist youth while the labour market recovers; and,
  • Freezing the Employment Insurance premium at $1.73 per $100 of insurable earnings to the end of 2010.

Research and Innovation

Building on the Speech from the Throne, the budget included a series of measures aimed at improving Canada’s productivity through innovation:

  • $45 million over five years for a post-doctoral program to attract leading researchers;
  • $222 million to support TRIUMF, Canada’s leading laboratory for nuclear and particle physics research;
  • $32 million per year for Canada’s research granting councils, and $8 million per year for indirect research costs;
  • $75 million to support Genome Canada’s research;
  • Doubling the budget of the College and Community Innovation Program to $30 million;
  • $135 million over two years to the National Research Council’s regional innovation clusters program;
  • $48 million for research, development and application of medical isotopes; and,
  • $497 million for RADARSAT Constellation Mission.

Green Jobs and Energy

With budget 2010, the government also aims to increase investments in, and deployment of, clean energy technology:

  • Establish the Next Generation Renewable Power Initiative, with $100 million over four years to develop, commercialize and implement clean energy technologies in the forestry sector;
  • Modernize the regulatory system for project reviews; and,
  • Expand the eligibility for accelerated capital cost allowance for in clean energy generation.


The government announced measures to make Canada more attractive for investors and increase its competitiveness:

  • Eliminate all remaining tariffs on productivity-improving machinery and equipment and goods imported for further manufacturing in Canada;
  • Establish a common securities regulator;
  • Establish a Red Tape Reduction Commission;
  • Ease foreign direct investment restrictions in the telecommunications sector;
  • Eliminate existing restrictions on foreign ownership of Canadian satellites; and,
  • Negotiate free trade agreements with Peru and the European Free Trade Association.

Supporting Families and Communities, Here and Abroad

In addition to the job creation measures, the government announced its intention to:

  • Increase child benefits;
  • Invest $62 million to support athletes and encourage amateur sport;
  • Add $199 million to the meet the funding needs of the agreement with former students of the Indian residential school system;
  • Provide $53 million to support child and family services to First Nations;
  • Increase funding for, and reform, the Food Mail program; and,
  • Fulfill its commitment to double international assistance.

Political Impact and Analysis

When compared to the first four Flaherty budgets, the 2010 vintage is more continuity than change. While the priority is clearly job creation, themes such as competitiveness and innovation that had first been highlighted in Advantage Canada (the government economic policy document of 2006) return after a year of dealing with the urgency of the global economic crisis.

In contrast to some budgets of years past, this document is more a policy budget than a political budget. The measures proposed neither aim to trigger an election nor avoid one. While the document contains no spectacular announcements, it also does not contain any poison pills. Moreover, in light of the current electoral dynamics which only give a slight lead to the Conservatives in public opinion polls, the steady approach to this budget will make it difficult to oppose. Shortly after the minister rose to deliver his speech, Michael Ignatieff signalled the Liberals’ intention of voting against the budget, but not in sufficient numbers to defeat the government. Despite the fact that Bloc québécois Leader Gilles Duceppe and NDP Leader Jack Layton have also announced their intention to oppose, the decision made by the Liberals will ensure the budget’s safe passage through Parliament.

As a result, perhaps the best news coming out of this budget for Canadians is: no spring election.