In response to criticism on Canada's 2012 budget, Finance Minister Jim Flaherty said here Friday that cuts are moderate and necessary in light of the fragile world economy and in keeping Canada on track to a balanced budget.
"As many countries have learned, Greece and others, if we do not have our fiscal house in order, if we do not have balanced budgets, if we do not run surpluses, then when the next crisis comes, which is inevitably will, we will not be in a position to react," Flaherty said during his speech at the Canadian Club.
In order to keep up with the strong economies in Asia and South America, Flaherty said, a moderate budget is crucial and will protect Canada from the fragile world economy.
"We could have more shocks from Greece and so on, so I think it's important that we act in a moderate way, we will balance the budget in a medium term that's important for the good of the country overall in the longer term," said Flaherty.
The budget, which aims to improve conditions for business investments and promote resource development, will see about 500 billion Canadian dollars (some 500 billion U.S. dollars) invested in over 500 major economic projects across Canada over the next 10 years. In order to minimize delays and red tapes for investors, the process for environmental review of natural resource projects will be streamlined, a move that will impose a stricter timeline on decisions.
Flaherty maintained that the move is crucial for growth and job creation in Canada and will not pose a threat to environmental protection as critics have worried about.
"What we've seen is some of the processes quite frankly get out of control," he said about the lengthy delays. "Resulting in some projects in being uneconomical, so there will be time limits with respect to these processes, and our basis will be one project, one review with a time limit."
He said,"This is not an infringement in any way on environmental protection, it just means that these matters will have to be dealt with in a more expeditious manner as we go forward."
Plans to expand trade is also on the agenda. As outlined in the budget, Canada will be seeking deeper trading relationships with fast-growing economies, he said.
Flaherty cited the ongoing negotiations between Canada and the European Union, as well as talks of free-trade with Japan and Thailand that are currently underway.
"These are the pillars for jobs, growth and longterm prosperity in Canada," he said.
While the reduction in federal spending will mean a loss of about 12,000 government jobs over the next three years, he said, "This is the largest work force in Canada of just under 400,000 people, so I say it's relatively modest."
Another move that has faced criticism is the changes to Old Age Security (OAS), a pension program for seniors, which will see an increase in the age of eligibility from 65 to 67 beginning in 2023.
Flaherty said that the change comes from the increased average lifespan, and is on par with other developed countries.
"We are in accord with the U.S., the UK, Germany, France and Australia and most of the developed economies of the world, all of which indicated that they're going to push up their OAS ages." Released on Thursday, this year's 498-page budget called Economic Action Plan 2012: Jobs, Growth and Prosperity aims to cut spendings of up to 5.2 billion Canadian dollars (some 5.2 billion U.S. dollars) a year for the next three years.