2012 Federal budget –- Penny Wise, Dollar foolish?

Canada (Photo credit: palindrome6996)

Ottawa gets rids of pennies, increases pension age from 65 to 67 and returns skilled workers applications filed before 2008

The 2012 Canadian federal budget announced by Finance Minister Jim Flaherty will get rid of the penny coin for starters and is aimed to control government spending and create better economic times for Canada. Well that is the plan anyway. In detail the budget is targeting the civil service, future retirement benefits, will stabilize immigration quotas to skills shortages and expand Canada’s free-trade agreements.

“Our government is looking ahead not only over the next few years but also over the next generation,” Finance Minister Jim Flaherty told the Commons.

Amongst the reforms $11 million a year is expected to be saved by phasing out the one cent coin that actually costs 16 cents to produce. Canadians can continue to use pennies as long as they have them. When they don’t, cash purchases will be rounded up or down to the nearest five-cent increment.

Around 19,200 federal government jobs, with most of the cuts being felt around Ottawa and civil servants will also have to contribute more to their pensions and there will be a $115 million decrease in budget. There is also a $319 million cut to the Canadian International Development Agency; and $165 million to aboriginal affairs.

Ottawa will also spend $387 million to change how Employment Insurance benefits are calculated with a view to eliminating “disincentives to accepting all available work prior to applying to the EI program.” The impact will vary from region to region but some workers may find their benefits reduced or harder to obtain, officials said.

Younger Canadians will be forced to wait longer to collect Old Age Security payments, to 67 from 65. The change will be phased in and those aged 54 and older won’t be affected.

The defence department is being asked to find savings of $1.1 billion a year – However, the Canadian Forces’ strength of regular troops will be maintained at 68,000 and its reserve force at 27,000.

The government also provided $205 million to extend a tax break for small businesses who expand their workforce and $5 billion to renew the Canadian Coast Guard fleet.

There were no across-the-board changes in individual taxation.

Overseas Canadian diplomats will be moving into smaller premises, some properties will be sold. Even the Governors General will have to pay tax for the first time on their $130,000-plus salaries.

Regular Canadian shoppers in the U.S will be happy as the government wills as of this summer increase duty-free cross-border shopping limits to $200 for 24-hour trips and $800 for trips of 48 hours or more.

The government is hoping to cut back spending by $5.2 billion over the next three years.

Ottawa will run a $21 billion budget deficit in the 2012-13 fiscal years, with overall spending set at $276 billion. The Tories aim to balance Ottawa’s books by 2015.

Opposition NDP Leader Thomas Mulcair said the deep cuts will hurt job creation.

“Instead they are slashing health care, they are slashing pensions. It’s a betrayal,” Mulcair told reporters. “In the long term, the continuation of these Conservative policies will leave the greatest economic, ecological and social debt in our history in the backpacks of future generations. That’s a result of the choices the Conservatives are making,” Mulcair said.

Liberal leader Bob Rae said the budget is “ignores environmental and economic problems and does not favour economic development in central Canada and they will suffer.”

Flaherty defended his budget saying, “We have no need to resort to the drastic cuts being forced upon some other developed countries today.”

Official Opposition Critic on Finance, Peter Julian, MP (Burnaby-New Westminster) said, “Instead of choosing flawed F-35s, costly mega-prisons while the crime rate is going down, and breaking their electoral promise with reckless and unnecessary cuts to OAS, the Harper government should focus instead on the real priorities of Canadian families and work to improve public services, develop a jobs plan, strengthen pensions, and make life a little more affordable.” Julian added, “The budget outlines the Conservative plan to raise the OAS eligibility age from 65 to 67, forcing seniors to work two years longer to make ends meet. It also unilaterally changes the funding formula for federal health transfers, short-changing provinces by a whopping $31 billion, opening the door to privatization and two-tier health care.”

People who travel outside of Canada for 24 to 48 hours will be able to return with $200 of tax-exempt goods. The previous limit was $50. Those who stay in the States longer than 48 hours can bring back $800, up from $400. The rules for same-day trips of less than 24 hours have not changed; travellers cannot bring back anything duty-free.

The same rules apply for Canadians who travel abroad.

Federal job bank would fast-track immigrants with right skills: Kenney

BY PETER O'NEIL, POSTMEDIA NEWS MARCH 30, 2012 4:02 PM

The federal government plans to create a global job bank to bring in more skilled foreign workers, while using a new technique to end the "bizarre" situation where low-skilled temporary foreign workers are hired in Canadian communities with double-digit unemployment, Immigration Minister Jason Kenney said Friday.

Photograph by: Chris Wattie, Reuters

OTTAWA — The federal government plans to create a global job bank to bring in more skilled foreign workers, while using a new technique to end the "bizarre" situation where low-skilled temporary foreign workers are hired in Canadian communities with double-digit unemployment, Immigration Minister Jason Kenney said Friday.

The job bank idea, modelled after New Zealand's immigration system, is a major departure that will take legislation and at least two years to implement, according to Kenney.

Every application from a prospective skilled foreign worker will go into an online pool, and provincial governments and employers will have the ability to cherry-pick potential employees who will have their applications fast-tracked.

"We'd essentially operate that as a huge, overseas federal job bank if you will," Kenney said of the proposal, which was mentioned in a single sentence in Thursday's budget and got little attention.

"If they get that job offer and if they're already among our qualified pool of candidates we'd bring them in at light speed, because we know they're set for success."

The proposal is part of a broader budget plan to meet the growing demand, especially in Western Canada's booming resource sector, for skilled workers.

While the federal government is anxious to bring in skilled foreign workers to boost the economy, Kenney said measures are also needed to deal with an anomaly in the huge temporary foreign worker program.

"We're bringing in, for example, Russians to work in a fish processing plant in Summerside, P.E.I., where there's double-digit unemployment. We're bringing in Romanians to work at the Ganong chocolate factory in St. Stephen, New Brunswick.

"We're bringing temporary foreign workers into Labrador, into the Saguenay, to work in the service industry in areas where there is double-digit unemployment."

Thursday's budget includes the promise of stricter provisions requiring employers to show they've made clear to local people making Employment Insurance benefit claims that there are jobs available.

"And then we're going to go to the local work population and say, 'look, the fish processing plant is hiring. Have you applied for that job?' And if they say no, we're going to say, 'well, look, you're not actually trying to get other employment'," Kenney said.

"We're basically going to try to put pressure on the folks who are collecting Employment Insurance in those areas to at least take the work that's available, so we don't have this bizarre situation where we're bringing in foreigners to do work in areas with double-digit unemployment."

If workers refuse those jobs their claims will be denied, he said.

Canada typically brings in roughly 250,000 immigrants and refugees each year, but the number of temporary foreign workers has risen due to labour shortage issues.

There were 190,769 in 2011, according to Citizenship and Immigration Canada, compared to 179,192 the previous year.

Poneil@postmedia.com

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2012 BUDGET: Deficit to be eliminated by 2015

The federal government will run a higher-than-expected deficit in 2011-12, but says it will balance its books a year ahead of schedule, in 2015-16.

HIGHLIGHTS: Expenses to keep growing; "test bed" procurement program expanded; OAS age pushed back; purging the penny.

Costs associated with laying off thousands of public servants and other measures introduced in Thursday's budget will increase the deficit by $500 million to $24.9 billion. That's down from $33.4 billion in 2010-11.

But the measures will create long-term savings, shaving more than $1 billion off the deficit in 2012-13 and climbing to $5 billion in 2014-15.

The Tories are forecasting a $3.4-billion surplus in 2015-16, but that's largely based on the expectation of higher revenues.

Despite talk of austerity and spending cuts, government expenses are projected to keep rising over the next five fiscal years.

Over the next fiscal year, expenditures will rise by $3.2 billion, or 1.17 per cent, while revenues climb $7 billion, or 2.82 per cent.

Over the next five years, total expenses are expected to grow $31.8 billion between 2011-12 and 2016-17, a rise of 11.65 per cent. Revenues are expected to go up 26 per cent, by $64.5 billion, over that same time period.

"We have no need to resort to the drastic cuts being forced upon some other developed countries today. We have no need to undertake the radical austerity measures imposed by the federal government in the 1990s," Finance Minister Jim Flaherty said in a speech in the House of Commons Thursday, according to a prepared copy of his remarks.

"The savings we have identified are moderate. They will amount to less than two per cent of federal program spending overall."

Some of 2012's budget highlights included eliminating the penny, making adjustments to Old Age Security eligibility and making changes to hiring credits, Employment Insurance and innovation and procurement.

Canadian Innovation Commercialization Program

The government proposes to make permanent the Canadian Innovation Commercialization Program, a 2010 initiative intended to help small- and medium-sized businesses sell unique or high-tech products and services to federal departments and agencies.

The objective is to give these businesses a reference account to scale up their businesses to other clients, particularly foreign governments.

The budget says $95 million will be allocated to the program annually for three years, starting in 2013-14, and $40 million each year after that.

Budget documents say the program will be expanded to include a military component, but did not provide further details.

Hiring credits

The government plans to extend its hiring credit for small businesses into the next fiscal year. This temporary credit provides up to $1,000 per employer as a credit against Employment Insurance premiums. Approximately 536,000 employers whose total premiums were less than $10,000 will be eligible.

The credit, first announced last year, is intended to help small businesses with the cost of hiring new workers.

Employment Insurance

The government proposes to continue holding the Employment Insurance premium rate to five cents every year until the operating account is balanced, following freezes in 2010 and 2011.

It will introduce legislation to limit the rate increases, which are currently set by the Canada Employment Insurance Financing Board.

When the account is balanced, the rate will then be set "to ensure that EI premiums are no higher than needed to pay for the EI program" during the next seven years, the budget stated. Once that rate is set, five cents will remain the upper limit for annual adjustments.

In addition, the government plans to introduce legislation to give notice of premium increases earlier in the fall, so that employers and workers have more notice.

"These improvements will ensure affordability for premium payers while offering ongoing predictability and stability," the budget stated.

Old Age Security

Workers who are 53 years old and younger will see their age of eligibility for Old Age Security and Guaranteed Income Supplements rise from 65 years old to 67 years old.

The ratio of active workers to retirees is expected to dip to to 2:1 in 2060, down from more than 4:1 in 2010.

The penny

The one-cent copper coin will soon be no more.

The Bank of Canada plans to cease production of the penny later this year in a move that will save the government $11 million annually.

The price of producing each copper coin is 1.6 cents, and the time it takes to count and collect the change is just not worth it any more, Mr. Flaherty said.

"Pennies take up too much space on our dressers at home. They take up far too much time for small businesses trying to grow and create jobs," Mr. Flaherty told the House of Commons.

For cash transactions, rounding will take place to the nearest five-cent increment before HST is applied if the consumer does not have exact change. Credit and debit payments will still be calculated to the nearest cent.

Although the penny will no longer be produced, pennies already in circulation can be used indefinitely.

The government says the move follows the lead of several other countries who have eliminated the one-cent coin, such as the United Kingdom, Australia, Norway and Switzerland.

Budget 2012: New immigration rules and $130M aimed at fixing skilled worker backlog

By Tobi Cohen

OTTAWA — The federal government will refund up to $130 million to federal skilled workers who applied to come to Canada before 2008 in a bid to get rid of a backlog of about 300,000 applications through legislation.

The plan, outlined in part in Thursday’s budget, will ultimately allow the government to ensure skilled newcomers actually meet current labour market needs.

The budget didn’t include plans to legislate away the entire backlog of nearly one million, which includes another 160,000 skilled workers who applied after 2008.

While all departments were asked to slash spending by five to 10 per cent, Citizenship and Immigration was spared some of the harshest cuts.

Read the full text of Jim Flaherty’s 2012 budget speech:

‘Our goal is to strengthen the financial security of Canadian workers and families, to help create good jobs and long-term prosperity in every region of the country’

The department will cut about $179 million over three years — nearly $23 million of which will come from the Immigration and Refugee Board.

Much of the savings will result from “reducing overhead costs and continuing to streamline operations and program delivery” at foreign visa offices.

In Hong Kong and Delhi, for example, a significant amount of office space is devoted to the pre-2008 backlog of federal skilled workers. With that eliminated through the refund program, officials suggest there will be reduced overhead.

By centralizing part of its visa processing, the department will also “reduce duplication and overlap” and ensure that those who are applying from within Canada are processed in Canada, according to the budget.

The budget also seeks to “better align the temporary foreign worker program with labour market demands.”

The plan, which will be unveiled in full in the coming months, seeks to encourage Canadian employers to consider the domestic labour market before hiring overseas workers to fill gaps, by giving them access to Canada’s pool of employment insurance recipients.

While many temporary foreign workers are employed seasonally in the agriculture sector, officials say there are also shortages of, for example, lawyers in Saskatchewan and that this is not about putting unemployed Canadians to work fruit picking.

The budget also calls for a new skilled tradespeople stream under the federal skilled worker program to attract more plumbers, electricians, crane operators and construction workers.

As a result, sources suggest that the current annual cap of 10,000 federal skilled worker applications is likely to increase.

“Our government will reform Canada’s immigration system to make it faster and more efficient,” Finance Minister Jim Flaherty said.

“We will ensure it is designed above all to strengthen Canada’s economy. As a result we will be better able to fill gaps in our labour force. We will attract more of the entrepreneurs we need to create good jobs and long-term economic growth.”

Postmedia News

Canada scraps some skilled immigrant applications

By Randall Palmer

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OTTAWA (Reuters) – The federal goverment plans to eliminate a backlog of stale immigration applications by skilled workers, in a potentially controversial move designed to enable immigrants whose skills are in greater current demand to enter the country faster.
Some employers have complained backlogs have hobbled the immigration system and made it unable to respond nimbly to demand for foreign workers in higher growth sectors such as video-gaming and the oil patch.
Finance Minister Jim Flaherty said on Thursday Canada now plans to return almost all of the 300,000 foreign skilled worker applications that were filed before Feb. 27, 2008, along with their $130 million in fees. Some have been waiting for one decade or more.
Flaherty made the announcement in his annual budget, saying the reforms would make the system faster and more efficient.
"We will ensure it is designed above all to strengthen Canada's economy. As a result, we will be better able to fill gaps in our labour force," Flaherty told the House of Commons in hisbudget speech.
It is an irony national unemployment is running at more than seven per cent while certain industries face labour shortages, but such employers may be looking for people with certain skills not found among most of the unemployed.
But someone who applied in 2001 may not have the skills needed in 2012, and if she was 42 when she applied would now be 53 and have fewer working years.
Canada has traditionally welcomed high numbers of immigrants. The country lets in 250,000 people per year and because of its below-replacement birth rate it will eventually rely on immigrants for any growth in its labour force.
It has a total backlog of one million would-be immigrants, about 460,000 of whom are skilled workers. Also in the backlog are applications by family members of recent immigrants, as well as investors and entrepreneurs.
The government allows 75,000 skilled workers to immigrate each year. In 2008, Ottawa started fast-tracking new applications by skilled workers but it quickly had to put a cap on those in order to be able to work through those still in the queue.
As a result of the measures announced on Thursday, it will be able to raise the number of applications it fast-tracks, with a planned eventual turnaround time of six months.
It had already told those in the backlog that they were welcome to withdraw their applications and reapply under the new rules. But if their skills are now in less demand, their chances of acceptance will also be lower.
The budget also announced somewhat less-developed plans to revamp the rules under which investors can immigrate. Previously, they were required to invest large sums of money with Canadian governments. But the intention now is to require them to invest directly in the economy.

Canadian Government Slashes Backlog

Canada (Photo credit: palindrome6996)

BREAKING NEWS

The Government of Canada announced on 29 March 2012 a plan to reduce the backlog of Federal Skilled Worker (FSW) applications by returning all applications and government fees submitted prior to 27 February 2008. This will amount to a total of almost 300,000 returned applications, as well as approximately $130 million in refunded government processing fees.

Approximately 160,000 FSW applications, submitted after 28 February 2008, will remain in queue for processing.

The Announcement

This statement has been issued as part of the larger Federal Budget for 2012, which was released on 29 March. The budget includes information for reducing national deficit and creating more fiscally efficient government infrastructure, an integral part of which is tied to immigration policy and processing times. As part of this plan, Citizenship and Immigration Canada (CIC), is expected to reduce its operating costs by $179 million over the next three years.

The budget mentions that “Canada risks losing the global talent competition for the world’s best and brightest as potential immigrants choose to take their skills to other countries with more responsive immigration systems rather than remain in the queue to have their applications process in Canada”.

With this in mind, the decision was reached to not only return the approximately 300,000 applications, but to focus on creating a system that would streamline processing and “reduce duplication and overlap” in the overall structure.

Government Rationale

The applications being returned are currently only from the FSW program. No additional plans have yet been announced to address backlogs in other immigration categories.

CIC hopes that reducing application numbers will allow it to streamline its programs in a way that will eliminate overhead costs currently incurred by dealing with the backlog. For instance, some visa offices devote significant amounts of time and money to processing pre-2008 applications. With these out of the way, visa officers will be free to devote time and energy to processing applications that have a higher likelihood of approval under current government standards.

The decision is also part of a larger effort by CIC to “transition to a faster and more flexible economic immigration system”. This new system will be aimed at more accurately addressing Canadian labour market needs as well as better serving those applicants still in line to be processed. Currently, Canada is facing severe labour shortages, specifically in Western provinces where skilled tradespeople are in great demand.

It is important to note that, despite widespread austerity measures being imposed on most government departments, CIC is one of only five that are being asked to reduce operating costs by less than six percent. In fact, proposed upgrades to the Canadian immigration system are likely to cost over $25 million in upcoming years.

Advice for Returned Applicants

The promise of new, streamlined immigration systems is no comfort for the thousands of individuals and their families who have now seen their hopes for Canadian immigration come to an end.

“This is such awful news for the people who have been waiting patiently in line,” says Attorney David Cohen, “Of course, they are free to submit a new application, but that will be of little solace at this time. I truly feel badly for them”.

Applicants who will see their files returned but are still keen to come to Canada are by no means excluded from re-submitting an application, either through the FSW program or one of the over 60 other available Canadian immigration programs. As the government more thoroughly outlines its plans for immigration in the future, prospective applicants should make sure to keep abreast of new developments that may be of benefit to themselves and their unique skill sets.