The 10 key priorities of Flaherty's federal budget

Smoking is getting more expensive. The tobacco tax, unchanged since 2002, will be increased to account for inflation – amounting to a tax hike of roughly two cents per cigarette, or $4 per carton. The lower price paid for tobacco at duty-free stores is also being cancelled.

“We were pleased. … We believe we’ll get an impact from that. It’ll decrease the number of young people, in particular, who start smoking,” said Pamela Fralick, president of the Canadian Cancer Society.

The tobacco changes will bring the government more than $685-million next year, and slightly less each year after, for a total of $3-billion in new tax revenue over five years. The RCMP will get $91.7-million over the same period to fight contraband tobacco.

Prime Minister Jean Chrétien lowered tobacco taxes 20 years ago, in February, 1994, to fight the flow of contraband cigarettes, largely at the urging of Quebec. Other provinces were forced to follow suit.

If a beer contains nutmeg, is it still beer?

The budget pledges a reduction in “red tape” that breweries face with new lines of craft beer, which contain an ever-widening host of ingredients. Under food and drug regulations, some of those new ingredients mean the suds can’t actually be labelled as beer. Examples cited by the budget include Pump House Brewery’s Blueberry Ale and Rickard’s Cardigan Autumn Spiced Lager; in the latter case, the Molson Coors Canada subsidiary’s addition of nutmeg “meant that there was a question as to whether the product could still be considered beer.”

Brewers had complained this created a barrier for innovation in a sector the government says provides one out of every 100 Canadian jobs. According to the budget, the new changes will “take full advantage of innovation and market developments.” The budget doesn’t say when those changes will be made.

The budget wades into the messy Senate scandal: Patrick Brazeau, Mike Duffy and Pamela Wallin were all suspended from the Senate last fall but continue to accrue pensionable years of service while suspended. The budget announced that the government will soon introduce a bill to change that if a member of Parliament or senator has been suspended by their peers.

“The actions of parliamentarians should be based on integrity, trust and respect for taxpayers’ dollars,” the budget said in announcing a provision for “integrity of parliamentary operations.”

The provision doesn’t mention any senators by name. All three are eligible to return to the Senate after the next election and resume collecting a paycheque unless suspended again.

At more than $1.6-billion in funding over the next five years, research and innovation is among the heftiest new spending items in this year’s budget.

The plan proposes to create a Canada First Research Excellence Fund for postsecondary institutions, though only $50-million of the $1.5-billion over 10 years will be dispersed starting in 2015-2016.Some $46-million annually will also go to four granting councils, including the Canadian Institutes of Health Research and the Natural Sciences and Engineering Research Council. And with renewed commitments to a major research facility and a cutting-edge quantum institute, the Conservative government made a strong show of support for the physical sciences.

Among the high-profile winners was the TRIUMF accelerator and particle physics laboratory, located near Vancouver, which will receive $222-million. Another nod to the subatomic was the budget’s allocation of $15-million over three years to the University of Waterloo’s Institute for Quantum Computing – a vote of confidence in the Waterloo region as a standard-bearer for high-end innovation.

Days after the Conservative government announced $1.9-billion for First Nations education reform, Ottawa delivered modest plans to help students prepare to land jobs.

In its ongoing effort to remedy a perceived skills gap, the government is extending student aid to apprentices in their first Red Seal training program, a certification that provides Canada-wide mobility for skilled workers. It is offering $100-million in loans to 26,000 apprentices during technical training.

A further $40-million over two years will fund 3,000 internships in so-called “high-demand fields,” though student advocates and career educators derided the initiative as a drop in the bucket that will help fewer than 1 per cent of postsecondary graduates.

Canada is wading into the world of bitcoin with a pledge to bring in “legislative amendments” to regulate the emerging online currency in a bid to fight terrorist financing and money laundering.

“It is important to continually improve Canada’s regime to address emerging risks, including virtual currencies, such as Bitcoin, that threaten Canada’s international leadership in the fight against money laundering and terrorist financing,” the budget document states.

Just how Canada will do that is unclear – the legislative amendments haven’t been tabled.

Ottawa says it plans to create a new DNA index to help identify human remains and bring closure to the families of people who have disappeared.

The idea is among several justice-related initiatives, including new money to deal with the growing problem of provincial court delays in Quebec and Alberta and a renewal of funding meant to address ongoing concerns about violence against aboriginal women.

In an effort to make it easier for victims to navigate the justice process, the government says it plans to create an online portal that would allow people to access information about a particular offender, including a photograph, before the offender is released from custody. The portal would be part of a long-promised bill of rights for victims of crime.

The budget also proposes more than $91-million to help police monitor contraband tobacco trafficking using new radar, sonar and ground-sensor devices and long-range video cameras.

Ottawa’s return to a balanced budget will be thanks, in part, to public servants.

The government plans to make current and future employees pay half – instead of a quarter – of the Public Service Health Plan cost.

The change means Ottawa will glean an additional $150-million on a cash basis from retirees, but because public-sector accounting standards require that liabilities for future health-care expenses are reflected in the year civil servants earn them, the move actually ushers in $7.4-billion in on-book savings over six years.

That massive savings number has prompted union heads to accuse the Conservatives of playing politics with the lives of public servants and the elderly.

“We feel, basically, that this budget demonstrates the government is putting its election victory ahead of the well-being of Canadians – saving all their money for sweetening the pot in next year’s budget in advance of next year’s election,” said Debi Daviau, head of the Professional Institute of the Public Service of Canada, a union representing 60,000 federal and provincial government employees.

The budget promises a total of $390-million over five years to improve the food-safety system, including new cash for inspections and the creation of a new Food Safety Information Network. The database will allow for real-time sharing and analysis of food safety data. More than $200-million will go toward a program aimed at dealing with the risk of bovine spongiform encephalopathy, or mad cow disease.

The changes follow an Auditor-General’s report that identified “significant gaps” in the federal system for handling food recalls.

NDP Leader Thomas Mulcair noted the funding comes after recent cuts to the Canadian Food Inspection Agency. “It’s never too late to do the right thing, but it actually is too late for some of the people who have gotten sick and, in the case of the listeriosis crisis, lost their lives,” he said.

With calls for Veterans Affairs Minister Julian Fantino’s resignation still fresh, the budget touts spending to honour veterans – and get them jobs.

Veterans medically released from the Canadian Forces will get preferential hiring in the public service, the budget said.

It also offered cash to improve online access to Veterans Affairs services – but gave no signal Ottawa will reverse its decision to close what it says are underutilized Veterans Affairs offices.

The proposal to spend $108.2-million over three years to ensure veterans of modest means get a proper funeral and burial, meanwhile, was met with praise. The Last Post Fund, a non-profit organization that administers the Veterans Affairs burial program, applauded the initiative as a “very welcome” one.

“Our money was just about gone. Two, three more veterans, and that’d be it,” national president Lieutenant-Colonel Daniel F. O’Connor said. “We’ve been pounding on this for 15 years, and more than once we were that close. But did we expect it? No.”

With reports from Kim Mackrael, James Bradshaw and Ivan Semeniuk

Source: Canadian Press, Department of Finance