‘Stand back budget’ disappoints farm groups

Federal budget made changes to passive income initiative, but some call it an overly simplified approach

OTTAWA — Farm leaders say the federal budget announced Feb. 28 is underwhelming as far as agriculture is concerned.

After last year’s budget, in which the sector was held up as a shining star of the economy, this year’s fiscal plan hardly mentions it at all.

At the Canadian Federation of Agriculture annual meeting last week, president Ron Bonnett described it as a “stand back budget.”

He said the government didn’t follow up on last year’s document, which established growth targets for the industry.

However, Scott Ross, CFA’s farm policy and business risk management director, told the meeting there were some interesting announcements.

One of the key commitments was to devote more resources to trade and emerging markets, particularly eastern Asia. For example, about $75 million will be spent on diplomatic and trade staff in China.

“Another was modernization of the trade commissioner services, looking at how we can on a number of different fronts improve the functioning of that and drive growth in new markets as a result,” Ross said.

Some trade promotion programming will be amalgamated, and the budget promises a “high impact agile trade commissioner workforce.”

Ross said finance officials described this as a sort of SWAT team on the ground to deal with trade issues.

One of the major pieces the farm community was looking for was a decision on passive investment income. Ross said more scrutiny is required, but on the surface it appeared the government is taking a simplified approach to a complex system.

“What they’re looking at doing is limiting access to the small business tax rate for those with excessive passive income,” he said.

“For every $1 of passive investment income you have over a $50,000 threshold, (the government is) going to remove $5 of income eligibility from the small business tax rate.”

Ross said the problem is that the small business and personal tax rates are so far apart that it gives businesses a reason to hold passive income. The idea is to use the gap as a lever.

“On face value, you look at $50,000 in income for passive investments that aren’t involved in a farm business, that’s a pretty high threshold for your average farm operation,” Ross added.

Answers are still needed to questions of what qualifies as an active business asset and what is incidental to the business. How rental income on farmland will be treated is also still unclear.

Other budget items include a commitment to Farm Credit Canada to promote access to capital for women in agriculture, regulatory modernization in agri-food and aquaculture to promote innovation and growth, and enhancing the capacity of agencies such as Western Economic Diversification.

Grain Growers of Canada said the budget took only baby steps when giant leaps are required.

President Jeff Nielsen welcomed commitments to expanded trade in Asia.

“But while more trade commissioners are nice, what our economy really needs is ratification of the CPTPP before Parliament breaks for summer, the launch of free trade negotiations with China and the passage of Bill C-49.”

The Saskatchewan Association of Rural Municipalities said it was looking forward to more details on a $100 million investment in the Strategic Innovation Fund that is supposed to focus on next generation rural broadband.

SARM also noted the budget proposes spending of $1.3 billion over five years to conserve land, waterways and wildlife and to protect species at risk. The organization said farmers and landowners are already good stewards and should be able to access some of those funds.

Rural crime fighting might also get a boost with $80 million in training for RCMP cadets.

“While there are some positive things in the 2018 budget, SARM is somewhat disappointed,” said president Ray Orb.

“The budget is lacklustre for the agriculture sector, and we remain opposed to the federal government imposing a carbon tax on the province.”

Conservative agriculture critic John Barlow said this budget forgot farmers completely.

Agriculture Minister Lawrence MacAulay said the 2018 budget builds on the achievements of agriculture. He said the recently awarded money for the protein supercluster is a key investment outside of the budget announcement.

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