FEDERAL BUDGET 2011

On March 22, Finance Minister James Flaherty tabled the 2011 Federal Budget. On March 25 the government was brought down as the result of a non-confidence motion. This action has resulted in the budget papers dying and will require the introduction of a new budget once the election is decided. Mr. Flaherty has stated that if the Conservatives win the election they will reintroduce the budget in the same basic form with the possibility of some minor adjustments. If the Conservatives are not re-elected then we will have no idea what will be in the resulting budget.

Therefore we have decided not to provide a commentary on the budget until a new one is introduced. One thing we can state is that this election will add $300 million to the deficit for 2011-12.

ONTARIO BUDGET 2011

On March 29 Ontario Finance Minister Dwight Duncan tabled the Ontario Budget for 2011-12.

Basically they are projecting additional spending measures and no new corporate or personal tax reductions. However, contrary to their Federal cousins, the Ontario government has stated that the previously announced corporate tax reductions will stand as they expect these reductions to help expand Ontario’s economy.

The budget also provides some worrisome facts including the following:

• Since 2003 when the Liberals took power, provincial spending has increased by nearly 70% and program spending has increased by more than 90%
• 10% of Ontario revenue pays the interest on our debt and each 1% increase in interest rates will result in an additional $500 million in interest costs.
• Ontario is currently in danger having its credit rating downgraded which will result in increased borrowing costs.
• The current year deficit is projected at $16.7 billion and is not expected to decrease materially over the next 4 years but will magically disappear in 2018.
• By 2013 health spending is expected to represent more than 43% of total revenues.