It is going to be an interesting week – Di Matteo


THUNDER BAY – SPECIAL to NNL – The release of the Federal budget this afternoon represents a relatively cautious approach to dealing with the economy as well as the prospect of a federal election.

There are large numbers of credits and programs that will appeal to many people as well as those of us here in the Northwest. For example, there are incentives for rural doctors and nurses, a family caregiver tax credit (cleverly borrowed from the Liberals), an extension of the energy retrofit program, enhanced GIS payments for seniors and even an arts tax credit for children.

This provides a generous base of policy options on which to build an election campaign should an election campaign occur.

Specifically mentioned in the budget is the 4 million dollars for a cyclotron to produce medical isotopes at the Thunder Bay Regional Research Institute. This would certainly be a handsome addition to the knowledge economy infrastructure of Thunder Bay.

The budget is also planning some revenue enhancements including closing up a tax deferral loophole for corporations that will bring in about a billion dollars a year and increases in EI premiums of 5 cents per 100 dollars in 2011 and 10 cents in 2012.

The EI premium announcement is a tax increase and it will be interesting to see how the opposition reacts to it. The deficit is slated to come in at 40 billion dollars for 2010-11 but it may likely be even smaller once the full tally for the fiscal year is done.

One interesting item of interest to Northwesterners was the announcement of 150 million dollars to build an all-weather road in Nunavut. I suppose it would have been nice to have had a similar announcement on roads in Northwestern Ontario given the need for all-weather roads here as well as the fact that the Trans-Canada in this region is not up to par with the rest of the country.

Also missing from the budget was any serious in-depth discussion of how to deal with the long-term sustainability of federal finances given rising health care costs and an aging population. On the other hand, all the Federal parties are currently living for the moment and are not going to focus on the far future.

Will all this be enough to avoid an election?

Independently of the contempt of Parliament issue, it might of been but listening to Jack Layton this afternoon it appears that we may indeed be headed for an election unless there are some last minute amendments to the budget to satisfy the NDP.

Who wins from this budget?

If there is an election, the Conservatives have a pretty good platform from which to campaign. The NDP and the Liberals will have difficulty campaigning on the economy and the budget. If there is no election, the Conservatives hang on to power for a bit longer and the NDP demonstrate that they can bring some gains to Canadians via their brokering role.

The longer the minority government lasts, the weaker the Liberal hand gets given the difficulties Michael Ignatieff has been having in his leadership role.

It is going to be an interesting week.

Livio Di Matteo

Livio Di Matteo

Di MatteoLivio Di Matteo is an economist in Thunder Bay, Ontario specializing in public policy, health economics, public finance and economic history.  Livio Di Matteo is a graduate of the Fort William Collegiate Institute (1898-2005) whose school motto “Agimus Meliora” has served as a personal inspiration.  Livio Di Matteo holds a PhD from McMaster University, an MA from the University of Western Ontario and an Honours BA from Lakehead University.   He is Professor of Economics at Lakehead University where he has served since 1990.  His research has explored the sustainability of provincial government health spending, historical wealth and asset holding and economic performance and institutions in Northwestern Ontario and the central North American economic region.  His historical wealth research using census-linked probate records is funded by grants from the Social Sciences and Humanities Research Council of Canada.  He has constructed, assembled and analyzed nearly 12,000 estate files for Ontario over the period 1870 to 1930.  Livio Di Matteo writes and comments on public policy and his articles have appeared in the National Post, Toronto Star, the Winnipeg Free Press and Thunder Bay Chronicle-Journal and  Livio Di Matteo has had an entry in Canadian Who’s Who since 1995.

Livio Di Matteo

This article was originally posted on Livio Di Matteo’s NORTHERN ECONOMIST Blog at

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