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Ignatieff had no choice
Jan 29, 2009

The federal budget, in which one newspaper said “Harper shovels out the money,” will pass a confidence vote in the House of Commons. Liberal Party Leader Michael Ignatieff has assured its passage by only calling for a minor amendment in order for the budget to be acceptable to his party.

It’s no real surprise as the coalition entered into by former Liberal Leader Stéphane Dion with the NDP, with support from the Bloc Québécois, was never a factor in Ignatieff’s decision. 

The only thing Ignatieff wanted from the Conservatives was three economic status reports on the budget’s implementation and its costs, beginning in March. It’s a small price for the minority Harper government to pay in order to have the budget passed. For Finance Minister Jim Flaherty, the Liberal proposal is all the more palatable because it does not in any way change the fundamentals of the budget. As a result, he quickly announced the Conservatives will accept Ignatieff’s minor amendment, which includes a confidence vote after each update. 

The recent political uncertainty has taught the  Harper-led Conservatives  a valuable lesson —  engaging in petty partisan politics can be costly and a minority government has to occasionally listen to the opposition in order to get things done.

“We are putting this government on probation,” Ignatieff told reporters. “This budget does not include one word on accountability.

“We will be watching like hawks to make sure the investments Canadians need actually reach them.”

Ignatieff’s comments were not overly critical of the budget which contains billions of dollars in economic stimulus and throws the country into a massive deficit for the first time in years. But he did warn the government that if his party dislikes any of the economic reports, the Liberals will withdraw their support. As expected, the NDP and BQ do not support the Flaherty budget, and are quite peeved at Ignatieff for abandoning the agreement to defeat the Harper government and form a new government. NDP Leader Jack Layton expressed his displeasure by saying Ignatieff and the Liberals are forming a new coalition with the Conservatives.

While the NDP and BQ are miffed, Ignatieff’s decision ensures Canadians will not be going to the polls any time soon. Most Canadian are breathing a sigh  of relief they have been spared the misery of another election . 

Ignatieff also recognized the widespread support for the budget when making his decision.  Organizations such as the Canadian Real Estate Association applauded the Flaherty budget, especially the economic stimulus it provided for the housing market.

“The change announced to the popular Home Buyers’ Plan will help Canadians who want to own their home, and do it in a responsible way that is not a major drain on taxpayers,” said CREA president Calvin Lindberg.

The HBP was introduced in 1992 by the Mulroney Conservative government and made permanent by the Chrétien Liberal government in 1994.

CREA lobbied the federal government prior to the recent budget to change the HBP RRSP withdrawal limit to keep up with inflation. For 16 years, the limit had been $20,000, which represented 13.3 per cent of the average house price in 1992 as opposed to about 6.5 per cent today, according to CREA.

Flaherty announced in his budget that the withdrawal limit will increase to $25,000.

When approaching the federal government, CREA convincingly used research conducted by the Altus Group to show how greatly housing impacts the Canadian economy. The research showed that each real estate transaction generates $32,000 in ancillary spending, and 94,700 full-time jobs are generated annually by the spending and spin-offs.

It should be noted that the whole idea of stimulating the economy involves creating jobs and ensuring Canadians start to spend, since increased consumer confidence and spending is the only way to bring any nation out of a recession.

The only aspect of the plan not accepted by Flaherty was increasing its scope to include all Canadian home buyers — it remains limited to first-time buyers.

CREA also praised the home renovation tax credit contained in the budget. “The use of tax credits will make the program of interest to many Canadians who own their own home,” said Lindberg. “But the success (of the program) will be tied in part to the availability of savings or credit, since the expense has to be paid before the tax credit is issued.”

The $3-billion tax credit provides for  a recovery of 15 per cent of the cost of any eligible home repairs over $1,000. For a repair bill of $10,000, the maximum under the program, a homeowner will receive  $1,350 back from the federal government.

The program is limited to one year, which means any homeowner wanting to take advantage of the tax credit must act quickly. Unfortunately many Canadians seem to be unwilling to take advantage of the myriad of government programs — municipal, provincial and federal — that bring down the cost of a home renovation, which can be quite significant. 

A survey conducted by Ipsos-Reid for CREA in October 2008 found that only 12 per cent of Canadian homeowners had ever applied for some type of government renovation or energy-efficiency program. In the same survey, 36 per cent said they would consider replacing windows as a priority to improving home energy efficiency, while another 27 per cent said they would be adding insulation. These are all renovations eligible under  the new federal tax credit. 

“The announced measures for aboriginal and social housing are welcomed by REALTORS® as steps to help house those who may be in need, and to modernize existing housing resources,” said Lindberg. “The budget spending initiatives help address the issue of the quality of native housing and quality of life on Canadian reserves,” he added. “Equally as important is the transition to market-based housing on reserves, and the government in the budget has committed to the transition toward that as well.”

With many Canadians and such national organizations as CREA praising the budget, Ignatieff undoubtedly felt the wiser course was to bide his time and support the Conservatives.