Mixed response to spending, tax cuts

The Conservative government added tax cuts to infrastructure spending in its economic stimulus federal budget Tuesday, while also extending unemployment benefits for laidoff workers.

While the package — a $34-billion deficit budget this year and projected at $85 billion over five years — was welcomed by some industry sectors, including forestry. The United Steelworkers, the largest forestry union in B.C., gave it thumbs down.

The budget included $12 billion for infrastructure spending — $7 billion of it new — for things like roads, sewers and universities, a particular interest of Prince George community and business leaders who met Finance Minister Jim Flaherty earlier this month to put a wish list in front of him.

The budget did not single out any spending specifically for Prince George or northern B.C., and there was no mention of continued pine beetle spending, an earlier $1-billion promise by the Conservatives.

One Prince George project was mentioned in the 343-page budget document, but it was used, like other projects in the country, as an example of the kind of project that was eligible for funding. In this case, the College of New Caledonia was mentioned as an example of one of six colleges that could be eligible for $2 billion to support deferred maintenance and repair projects at post-secondary institutions.

Cariboo-Prince George Conservative MP Dick Harris said he expected some people to be unhappy that there was no funding under the pine beetle program, which he said will be put on hold for the next two years, but stressed there will actually be more funding available to communities in northern B.C. than before.

He also pointed to the enhanced unemployment benefits — a five-week extension of Employment Insurance and a 14-week extension to a work-share program which tops up workers’ benefits at mills on reduced work weeks.

“Overall, I’m pretty happy with it,” said Harris. He said he will be alerting north-central B.C. mayors this morning to make them aware of the funding that is available. “I’m going to be putting together what you call a cheat sheet, that will help people get to the different programs faster,” said Harris.

The programs also include a two-year $1-billion fund to help communities adjust to economic hardship, as well as more than $1.4 billion for aboriginal schools, health, water and housing. Another $7.8 billion has been set aside for social housing and private home renovation, and $8.3 billion for skills training, including $1.5 billion to retrain workers.

Skeena-Bulkley Valley NDP MP Nathan Cullen called the budget a mess, saying it ignores the fact that communities do not have the money to come up with one-third of their share. The federal government has replicated its normal funding formula that requires contributions from the province and the municipal level. “The rich cities will get richer and the communities that are hurting will suffer more because they won’t access the funds,” said Cullen.

He said he also has little confidence the government will be able to get the funding to work on the ground quickly to create jobs. “People are looking for some hope, but with no specifics, no guarantees, folks are still going to go to bed tonight very, very worried about their families’ future,” said Cullen, whose riding extends from the northwest coast, east to Fort St. James.

The Forest Products Association of Canada lauded the budget, saying it was pleased with measures aimed at improving access to credit. “Overall we are encouraged by the direction the budget is taking – helping to alleviate Canada’s current economic woes while keeping an eye to future prosperity,” said president Avrim Lazar.

The United Steelworkers union, which represents 6,000 workers in northern B.C., said the budget was too small a step. “It provides insufficient economic stimulus, inadequate improvements to Employment Insurance, no meaningful safeguards for private pensions and no improvements to public pensions,” said union official Ken Neumann. The budget was delivered against a troubled economic backdrop in northern B.C.

A lengthy forestry downturn has put more than 3,000 mill and forestry workers off the job, and other sectors like mining and oil and gas have also started to slow. The forest sector has been hit hard by a collapse in U.S. housing, while other sectors are responding to a more general global economic slowdown.

College of New Caledonia economist Al Idiens said the infrastructure spending in particular could provide a stimulus for the economy, perhaps creating as many as 128,000 jobs across Canada. However, Idiens said it would depend on how quickly projects can start.

George Kennedy, another CNC economist, cited a similar concern on project timing, estimating it would take six to nine months to get projects off the ground.

“It’s one thing to announce something, it’s another thing to translate it into production. That’s the scary thing with regard to all governments when they make commitments — it’s quite difficult to carry them through,” said Kennedy.

Source: Prince George Citizen
Web Link: http://www.princegeorgecitizen.com/20090127172217/local/news/mixed-response-to-spending-tax-cuts.html