Tight budget should keep Tories in power

With apologizes to that 1960s rock band Steppenwolf, Jim Flaherty's federal budget Tuesday was more born to be mild, rather than wild.

Faced with an uncertain economic forecast for the coming year and with concerns about the health of our largest trading partner, the United States, Mr. Flaherty presented a very straightforward, tight and, dare we say, conservative budget.

With few bells and whistles and little new spending planned, it's hard to see how the opposition parties can love this budget. But it's also hard to envision them choosing to fight an election over it either.

Mr. Flaherty ballyhooed many of the measures he's introduced over the last two rosy years as taxes were cut -- including two cents off the GST -- and the debt was paid down. The Whitby-Oshawa MP admitted his government is "taking the path that requires focus, prudence and discipline."

As part of that plan, the Conservatives have introduced a tax-free savings account (similar in format to a registered retirement savings plan) that would allow Canadians to contribute up to $5,000 every year. All contributions would be tax-free even when withdrawn. The measure is meant to encourage debt-ridden citizens to save a little every year. Seniors will have their Guaranteed Income Supplement exemption jumped from $500 to $3,500 per year.

For the auto industry, which has taken some body blows as manufacturing jobs have been draining away, Mr. Flaherty is investing $250 million for an Auto Innovation fund over the next five years. The money is meant to be used to develop greener, more fuel-efficient vehicles and the finance minister believes it will help preserve jobs. The feds will also provide another $1 billion in tax relief to help in capital cost allowances.

Students also got some good news: as the Canadian Millennium Scholarship Foundation winds down, the feds will establish $350 million for a Canada Student Grant Program in 2009-10 growing to $430 million by 2012-13. Mr. Flaherty estimates as many as 245,000 students across Canada will receive aid in the plan.

Other highlights include making the transfer of gas tax revenues to municipalities permanent, the investment of $400 million to hire 2,500 front-line police officers across Canada over the next five years and using the lion's share of the surplus -- $10.2 billion -- for debt reduction.

It's not flashy but it will probably do the job of keeping the Conservatives in power for the time being and forestalling an election.

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-- Metroland Durham Region Media Group