OTTAWA — While the Federation of Canadian Municipalities received its wish for permanent infrastructure funding, the manufacturing industry felt it got the short end of the stick in the federal budget.

The Conservative government tabled its third budget Feb. 26 and the minority government kept things fairly conservative, offering small tax breaks and a small increase in expenditures.

According to Finance Minister Jim Flaherty, Budget 2008 reduces debt and taxes, focuses government spending and provides additional support for sectors of the economy that are struggling in this period of uncertainty.

It’s no secret the rise of the Canadian dollar and a slowdown in the U.S. economy has hit certain sectors of the national economy harder than others. The forestry and manufacturing sectors received some relief through about $1 billion in funding, and an extension of the temporary rapid write-off of capital investments.

Although every dollar counts, some are more satisfied
than others with the recent federal budget.

Although the measures may provide some relief, industry stakeholders are worried they do not go far enough.

“This just doesn’t cut it,” said Jay Myers, president of Canadian Manufacturers and Exporters (CME). “Manufacturers are under the gun to innovate and this measure basically takes us back to where we started. With a one-year extension at current levels, it doesn’t fit into the business planning cycle for Canadian companies, so many hard-pressed businesses won’t be able to take advantage of this.”

Manufacturers asked the government to extend the two-year write-off for investments in manufacturing and processing equipment introduced in last year’s budget to five years; to give companies time to make investment decisions, customize equipment, and meet regulatory approvals.

Budget 2008 extends the two-year write-off for one year then provides two additional years of declining depreciation rates.

“We were very specific in what the nation’s most innovative industry needed and we received recycled ideas and pocket change at a critical time when we needed tangible solutions,” said Myers. “It’s disappointing.”

Municipalities on the other hand got exactly what they asked for: a permanent Gas Tax Fund to the tune of $2 billion a year.

The Gas Tax Fund will be available to provide local infrastructure improvements for large and small municipalities. The funds will not be needed for public transit as $500 million was set aside in the budget specifically for those projects.

Environmentally, the government is continuing with its biofuel initiatives and ecoACTION plan, but will also provide $250 million for research into capturing and storing carbon emissions.

“Our government is meeting the challenge of global economic uncertainty with a plan that is real, a plan that is responsible, a plan that is working,” said Minister Flaherty.

Overall, the budget projects $239.6 billion in spending for the upcoming fiscal year, an increase of 2.2 percent from the previous year.

— with files from Canwest News Service