As Finance Minister Jim Flaherty prepares the upcoming federal budget, Financial Executives International Canada is urging him to focus on revenue neutral short-to-medium-term initiatives and to not engage in reactionary spending that could result in a structural deficit.

“We urge the government to continue to take a prudent and pragmatic approach to developing the 2009 federal budget with any resulting deficit spending to be recovered by fiscal 2011,” said Michael Conway, CEO and national president of FEI Canada — a professional membership association of senior financial executives.

“Today’s focus should be on short-to-medium-term targeted spending recovery initiatives designed to alleviate the immediate negative impact of job losses, reduction in the value of seniors’ pension plans, declining profits and cash flow with any significant economic stimulus initiatives held off until credible analysis can be conducted.”

Implementing certain infrastructure spending initiatives would be beneficial, creating near-term employment benefits and better long-term economic positioning as Canada emerges from recession, according to FEI Canada.

Since the 2009 budget is expected to result in a deficit, financial executives urge the government to adopt a three-year budget horizon, with a clearly outlined framework for achieving a balanced budget position by fiscal 2011.

“Any consideration of deficit spending must be approached as a temporary measure with a view to short-term recovery so as to not burden future generations with another round of ongoing deficits,” said Conway.

Among its recommendations, FEI Canada calls for measures that provide relief to Canadians experiencing job losses and undertaking job-related education or re-training. In addition, taxing financial settlements derived from early retirement or job reduction could temporarily be averaged over a three-year period to provide taxable relief for displaced employees.

“With the rate of job loss increasing exponentially over the last few months, these measures will assist displaced workers in repositioning themselves for re-employment or to gain interim tax relief,” said Conway.

To assist seniors, financial executives call for an extension of the mandatory RRSP to RRIF conversion from age 71 to age 75. This would allow for a period of recovery from the current catastrophic markets and resulting state of Canadian’s pension and savings plans, FEI Canada said.

The organization also suggests help for Canadian businesses. Specifically, measures could include a tax holiday for new start-ups launched by entrepreneurs coming out of employment displacement, relief for corporations that renegotiate their debt, and measures to enhance the CCA write-off for manufacturers and corporations in the waste management and landfill sector.

IE