Jim Flaherty plans on promoting Canada’s fiscal record in Asia, but the Finance Minister says he’s not sure whether he’ll get a rough reception in Bangkok next week over a 2013 budget that makes imported Thai goods more expensive.
Mr. Flaherty is scheduled to visit Hong Kong and Thailand, leaving Prime Minister Stephen Harper and other cabinet ministers with the job of defending the government’s budget in Parliament.
China and Thailand top the list of countries that use Canada’s General Preferential Tariff to import goods. They are also among the 72 nations that are being removed from the program meant to help developing countries.
Thursday’s budget said the change will raise $1.1-billion in new revenue over five years and will take effect in 2015. The budget also announced a $76-million measure that will waive tariffs on baby clothing and various sporting goods, such as hockey skates.
While the tariff break got the most attention, Canadian retailers say the higher tariffs on goods from China and other nations will raise the cost of a wide range of products in Canada.
In an interview with The Globe and Mail, Mr. Flaherty was asked whether he expects resistance from China and Thailand to the higher tariffs.
“I’m not sure about Thailand. China ought not to have any concern because their economy has grown so much,” he said. “It’s actually a foreign-aid program, in fact. And there’s no reason to have foreign-aid programs for countries that have developing, strong economies.”
Karen Proud, vice-president of the Retail Council of Canada, said her members want more time to prepare for the higher tariffs.
“There will be an impact,” she said, estimating a 3-per-cent increase in cost for some goods. “We’ll likely feel that in the final price of those products in Canada.”
On other budget issues, Mr. Flaherty said Canadians shouldn’t expect more spending cuts, even though his budget speaks of eliminating “redundant organizations.”
Mr. Flaherty insists all the cuts – such as reduced travel for public servants – have been announced.
“Basically what we’ve done is flatlined the government’s own spending,” he said, in a phone interview from Vancouver, where he was addressing a business audience.
In speaking with reporters separately in Vancouver, Mr. Flaherty responded to criticism from Quebec, British Columbia and Ontario over his budget plans to turn transfers for skills training into more direct support to individuals through a “Canada Jobs Grant.”
Mr. Flaherty noted that the transfers are federal money, but that there is “an opportunity to negotiate and work it out.”
The House of Commons sits until March 28, before taking a two-week break until April 15.
The minister’s travel plans don’t sit well with the opposition.
“It’s troubling when we have a budget that’s introduced and the Minister isn’t even around to answer questions in the House,” said NDP finance critic Peggy Nash.
Last year Mr. Flaherty delivered a speech in Toronto on the day after the budget, followed by speeches in Vancouver, New York and Edmonton.
In 2011, Mr. Flaherty held an event at a music store in Ottawa on the day after the budget. He then travelled to Calgary for a meeting of the Finance Ministers of the Americas and the Caribbean.
Perrin Beatty, the president of the Canadian Chamber of Commerce, said it is always a good thing when Canadian ministers travel to Asia.
“We need to be much more aggressive in terms of putting out the Canadian brand,” he said.
Some lines in the 2013 budget have the opposition bracing for another round of controversy over budget-implementation bills. Many were surprised last year by the content of budget bills, including extensive changes to environmental laws, even though Mr. Flaherty insisted the content of the bills were reflected in the budget.
The budget numbers show the government’s operating expenses will fall from $80.5-billion this year to $74-billion in 2014-15 – a $6.5-billion drop – with no explanation. They are likely related to cuts announced in the 2012 budget. Operating expenses are described as “the cost of doing business” for more than 100 government departments, including National Defence. It includes salaries and benefits for public servants and the cost of supplies and leases. As a share of GDP, the budget said operating expenses will decline from 4.4 per cent in 2012-13 to 3.5 per cent in 2017-18.
With a report from Brent Jang in Vancouver