Reaction to Tuesday’s 2006 federal budget from financial services industry associations was mostly favourable.

The IDA – Industry Association, gives the government high marks for positive steps taken in its first budget to improve the business climate and encourage investment and growth.

The Association, however, cautions that more needs to be done to improve Canada’s productivity.

“The federal government’s reductions in the personal and corporate tax burden provide a sound foundation for growth and future prosperity. However, to realize our long-term potential, more needs to be done to deliver productivity growth on a sustained basis,” said Ian Russell, president and CEO of the IDA – Industry Association.

Canada’s Chartered Accountants are encouraged that the federal government’s budget focuses on responsible fiscal management, while promising benefits to individuals, families and small businesses.

“The budget provides a focused range of measures directed to meeting the needs of Canadians,” said Ann Rooney, of Canada’s Chartered Accountants. “We are encouraged that the government recognizes the need to reallocate funding from existing programs, to support some of these measures, and will continue to focus on reducing the federal debt by at least $3 billion annually.”

The Certified General Accountants Association of Canada (CGA-Canada) said it welcomed the tax relief for business and individuals alike, while continuing to urge the federal government to stay on course with prudent fiscal management and reduced public spending.

CGA-Canada also welcomed new initiatives in support of a more skilled and educated workforce so that the economy, particularly in the small business sector, can continue to grow to meet the needs of a growing and aging population.

“The challenge now will be to follow up and implement the new directions set out in this budget,” said Anthony Ariganello, president and CEO of CGA-Canada.

The Association of Canadian Pension Management (ACPM) said it is very pleased that the federal government has taken initial steps towards dealing with the funding crisis currently affecting Canada’s defined benefit pension plans.

The changes announced in Minister Flaherty’s first Budget will assist federally regulated pension plans deal with solvency deficits by extending the period over which these shortfalls must be funded, subject to the consent of plan beneficiaries, and by allowing for the use of letters of credit to assist with such funding.

“We congratulate the federal government for beginning to deal with the funding challenges facing defined benefit pension plans. We hope that in leading by example, the federal government’s announcement will encourage those provinces that have yet to deal with pension funding issues in any meaningful way to also take action. The sooner governments deal with these critical issues, the sooner we might hope to witness improved funding of DB pension plans, and enhanced benefit security for members and pensioners”, commented Scott Perkin, President, ACPM.