Uh, thanks Steve but you shouldn't have

EDITORIAL: We can't spend our way out of a recession...


If the Harper budget feels an awful lot like that rather expensive, but rather hideous, gift you got for Christmas – the one that made you force a smile and a thank you even as you thought about whether to bury it in your closet, re-gift it or Goodwill it – there’s good reason.
It’s expensive all right. This budget will plunge Canada into the red for the first time in 11 years. To the tune of $64 billion. Our long-silent debt clock is ticking again. Prime Minister Stephen Harper and Finance Minister Jim Flaherty have gone on a real bender with this one, throwing cash at our economic funk like a drunken sailor buying rounds he can’t afford.
The old Harper ideals – conservative budgets, no debt, no deficit, cut some taxes – have given way to a spend, spend, spend mentality. Temporary insanity maybe?
And, like with that gift sitting at the bottom of your closet, a lot of the spending is well meaning. The Prime Minister and his chief cheque writer are breaking their spendthrift ways in hopes of stimulating the economy by borrowing billions for everything from roads to sewers to bridges (and maybe even a Charlotte County Civic Centre?).
The gobs of cash being talked about should provide plenty of grunt work around the country but it offers little in terms of retraining for the unemployed (or as we’re so often reminded, the soon-to-be jobless). It offers only the Scroogeliest of tax cuts to the average worker.
And what the heck is with this renovation tax credit? Want to add on a deck, redo the kitchen, maybe put in some new cabinets? Or maybe the old tub isn’t doing it for you and you need something with a little more leg room and some massage jets?
For the next year – the offer is on the table until Jan. 31, 2010 - homeowners can claim a tax credit for 15 per cent of renovation expenses between $1,000 and $10,000. That means a $9,000 renovation project will yield a $1,350 tax credit. The government is estimating about 4.6 million families will benefit to the tune of $3 billion. Who are these beneficiaries? Well, it isn’t going to be the unemployed or anyone working in an industry in which the axe could fall any old time now. And it isn’t seniors or single parents or students.
Nope. This benefit is going to help that sector that always gets the most help when governments start throwing out tax benefits or tax cuts – people who don’t really need it.
Flaherty says the benefit will help industries that traditionally hurt during recessions – home builders, contractors, wood product manufacturers.
We doubt it’s going to have much of an impact on the Kent’s and Keith’s of Southern New Brunswick. Times are tight. If a homeowner can’t afford to do $5,000 in renovations now, they won’t be able to afford it because they’re getting a little tax break.
If you’ve already planned some renovations, additions, finishing a basement, perhaps, then the tax break might spur you to get cracking (the work has to be finished by Feb. 1, 2010).
On the other hand, the credit could end up hurting a segment of our economy – the one that involves cash-only transactions, no receipts, tax free. Now homeowners will want to get their tax break and that under-the-table work will dry up.
Harper’s attempt to spend his way out of our financial hole is interesting and out of character, to say the least. With his minority government in the balance, he obviously had to take a gamble and throw away some of his principles at the same time. If his roll of the dice comes up snake eyes, we’ll all be paying for it for a long, long time.