Vancouver Board of Trade grades 'stable' federal budget B+
March 22, 2011
The Vancouver Board of Trade, representing 5,500 members, awarded the federal budget an overall Report Card grade of B+ today, saying the budget was conducive to a "stable Canadian economy."
The Board's Government Budget and Finance Committee commended the federal government's spending control and deficit reduction, but felt the deficit could be eliminated at least a year earlier than promised.
"This is a budget that will please an awful lot of people; there were a lot of small measures. In some areas, it has exceeded our expectations, but had insufficient long-term economic measures." said the chief economist, The Vancouver Board of Trade.
"However overall, it is a budget that will preserve the stability of today's Canadian economy," he said.
The Board graded the 2011/12 federal budget in the following four categories to reach its overall grade of B+:
Spending Control (A):
As The Board recommended spending increases on non-stimulus items to be less than the combined rate of population growth and inflation (3.5 per cent annually), it commends the government for keeping increases at 3.1 per cent over the previous year's budgeted expenditures for the next year ̶ below The Board's recommendation.
Tax Competitiveness (B+):
The Board specifically recommended the government continue its announced program of business tax reductions. "We commend the government for continuing its announced reduction of business taxes to 15 per cent by January 2012, combined with a variety of small tax credits for both individuals and business," said the chief economist. "However, when looking carefully, this budget has closed some perceived loopholes, such as corporate partnership tax deferrals and a tightening of the definition of charitable donations, so there are some negatives in there, leading to our B+ grading of this category."
Debt Management (B-):
The Board recommended a target debt-to-GDP ratio of less than 35 per cent by 2012 and 30 per cent by/or before 2015 with an allowance of $3 billion for debt reduction per year once the deficit has been eliminated. "The government has succeeded in keeping the debt-to-GDP ratio below 35 per cent (just over 34 per cent in the coming year). However, it has promised a balanced budget by 2015/16, and we believe this could be achieved at least one year earlier ̶ by 2014/15 ̶ which brought this category down to a B- grade," explained the chief economist.
Long-term Vision (B):
The Board commends the measures announced in the budget which give better access to capital, enabling business to invest in the economy, much-needed infrastructure and capital goods. The Board also saw this budget as one that enhances innovation and productivity which is good. "However, the government is maybe not going as fast in some of these areas as it could," said the chief economist.
In 2009, The Board suspended its letter grading criteria in recognition of government having to invest in economic stimulus spending when dealing with the challenge of tough economic times. The Board has reinstated its federal budget Report Card following the economic turnaround experienced in the last year and the projected end of stimulus spending.
The Board of Trade awarded the federal government an overall 'B' rating in its 2008 Report Card, up from C+ the previous year, before it was suspended in 2009.
For more informationvcontact Terry Hadley, communications director, at 604-640-5471 (direct) or 604-644-4793 (cell). Report Card visual available on request.
See Board of Trade recommendations slide presentation (PDF)
See The Board of Trade's budget recommendations made to Finance Minister Jim Flaherty
See Board of Trade grading criteria: Federal Budget Grading Criteria (PDF)
See Budget 2011: Budget Plan; Budget in Brief; Budget Speech
Budget and Finance