With no major changes to the retirement income system or shiny new tax cuts, there was relatively little to cheer about in Thursday’s federal budget for the financial services industry’s lobbyists.

About the best that can be said for the financial services industry is that Finance continues to plug along with plans for a national securities regulator. While there is nothing much that’s new on that front in the budget, it’s noteworthy that the government reiterated its commitment to the plan in the latest budget; noting that it expects the new authority to be up and running within three years.

Apart from that, there wasn’t much on the industry’s wish list that made it into this year’s budget. The government is not hiking RRSP contribution limits, expanding the utility of TFSAs, or postponing the RRIF conversion deadline, as some had hoped.

The Investment Industry Association of Canada, for example, called for the government to provide more room for tax-assisted savings via RRSPs and TFSAs — recommending that older Canadians be permitted to make retroactive contributions to TFSA accounts, and that the minimum annual withdrawal limits from RRIFs for Canadians over the age of 71 be eliminated.

None of that came through. Instead, the government has promised that it will initiate public consultations on the government-supported retirement income system later this month; with an eye to possible reform recommendations coming out later this year, when the provincial and territorial finance ministers hold their next meeting in May.

The government is sticking with promised tax cuts, but has not taken up the IIAC’s recommendation that it also move to lower the capital gains tax on common shares. Instead, the budget actively promises to crack down on some gaping tax loopholes related to stock options, among other things.

That’s not to say that the budget was a complete shut out for the financial services industry. Although none of the treasured sources of retail investment funds were touched (RRSPs, etc.) in today’s budget, it does propose to create a new vehicle and equipment financing program as part of its overall effort to support the availability of business credit. The program will receive an initial funding allocation of $500 million, and will be managed by the Business Development Bank of Canada, in partnership with private market players. Further details on this program are slated to be announced in the coming weeks.

From a big picture perspective, and perhaps most importantly, the budget does set out a plan to eliminate the federal deficit over the next five years. And it does so, without raising taxes, as many in the financial services industry hoped. Whether that plan proves credible with investors, will be played out in the markets in the months and years ahead.

IE