Finance Minister Jim Flaherty delivered what he called a “boring” federal budget on Tuesday, which didn’t provide tax cuts or large amounts of additional spending.
Ian Edelist, a principal at Eckler in Toronto, came to a similar conclusion. “There really wasn’t much,” he says.
Contained in the budget were a plan to reduce the costs of public sector retiree healthcare benefits, a modernization of the government’s disability and sick leave management system, a reiteration of reforming public sector pension plans, measures to improve skills training and a renewed commitment to infrastructure spending.
Public sector changes
The government will take steps to ensure that the costs of the Public Service Health Care Plan (PSHCP) for retirees are shared equally. It currently pays 75% of benefits costs.
It will also increase the number of years of service required to be eligible to participate in the PSHCP during retirement to six years from two, except for current pensioners.
The government estimates that phasing in equal cost sharing for retired employees and increasing the minimum years of service required to be eligible for the PSHCP to six years would result in “savings of roughly $7.4 billion over six years under accrual accounting.”
“For a government employee opting for individual coverage in his/her retirement, a move to equal cost sharing would increase his/her annual payments to the plan from $261 to roughly $550,” the budget states. “This increase, when fully implemented, would represent less than 1% of a gross federal public service pension of $30,000.”
The budget also mentions this year is the beginning of a new round of collective bargaining between the government and its public sector unions.
The government’s specific policy priority in this round of negotiations is to implement a modern disability and sick leave management system.
“A modernized disability and sick leave management system, including the introduction of a formal short-term disability plan, will lead to a healthier and more productive federal workforce serving Canadians,” states the budget. “The government looks forward to working with bargaining agents to make it happen.”
Paul Forestell, senior partner and the market retirement leader for Mercer Canada, noted that the budget also reiterated that the government plans to work with Crown corporations to implement fifty-fifty employer-employee pension plan cost sharing and increase the retirement age for new hires to 65.
“That trend is already in place in the provinces, so it’s not shocking if they did it,” he says.
The reforms are expected to be implemented by all Crown corporations subject to the Pension Benefits Standards Act, 1985 by 2017.
Employment measures
The budget also provides measures to help strengthen the labour market, including the launch of the Canada Job Grant with or without support from the provinces.
Some other measures the government plans to implement this year are as follows:
- $15 million annually toward supporting up to 1,000 internships in small- and medium-size enterprises;
- $40 million toward supporting up to 3,000 internships in high-demand fields;
- $40 million over four years to the Canada Accelerator and Incubator Program; and
- $75 million over three years to renew the Targeted Initiative for Older Workers program.
Infrastructure spending
The budget also includes more than $1 billion in infrastructure spending, mainly on bridges. They include the following:
- $165 million over two years to advance the construction of a new bridge for the St. Lawrence River;
- $378 million over two years to advance the repair and maintenance of federal bridges in the Greater Montreal Area; and
- $470 million over two years for a new Windsor-Detroit International Crossing.
The government will also commit $1.25 billion over five years for a renewed P3 Canada Fund to build infrastructure projects through public-private partnerships (P3s).
“We are very pleased to see the government’s renewed commitment to taking a leadership role in promoting and encouraging P3s,” says Frank Swedlove, president of the Canadian Life and Health Insurance Association.
While there weren’t any big announcements in the budget, Edelist expects the government will announce some in the near future. “I’m guessing next year they’re going to release all their goodies,” he says.