Budget 2017: Liberals try to ease anxiety and get Canada ready for the future

OTTAWA (NEWS 1130) – The Trudeau government unveiled a budgetary crystal ball Wednesday that foresees slightly smaller deficits and a growth-lifting plan that places “big bets” on what the feds predict will be high-potential sectors.

Finance Minister Bill Morneau‘s second budget projects shortfalls of $23 billion for 2016-17, $25.5 billion next year and $24.4 billion in 2018-19, not including a $3 billion contingency fund — forecasts that have each shrunk between $1.5 billion and $2.1 billion since the fall.

Later in the outlook, the annual deficits are expected to be little bigger than previously thought.

But the government once again failed to outline a plan to return the books to balance, which it promised to do in its 2015 election platform.

Billons for Metro Vancouver transportation

Surrey Mayor Linda Hepner is welcoming the federal budget, but says province needs to do more.

Hepner says the contribution could help resolve issues of congestion around the Lower Mainland and believes the Mayor’s Council has already called on the province to begin talks. “We’ve got the federal contribution. We need significant provincial money, and we’ll be asking for that,” says Hepner. “We’ll [also] be certainly identifying what that means for us relative to all of the projects that are in the vision… and the electorate will have to decide that”.

The mayor of Surrey believes having a matched commitment by the province and regional leaders could mean projects in the 10-year vision could start within a year.

“We can be in the procurement readiness stage for at least the Surrey-Langley project next year.”

Meanwhile, Hepner believes the federal government’s announced $11.2 billion to address the country’s housing crisis will make a considerable difference… despite being slightly lower than Canada’s Big City Mayors’ original ask of $12 billion.

Statement from Mayor Gregor Robertson on major housing, transit investments:

“Vancouver is grappling with a tough affordability crisis and today’s federal budget is an encouraging step to tackle our biggest challenges — with meaningful investments in housing, public transit and social infrastructure.

I’m particularly pleased to see a commitment of $11.2 billion earmarked for housing nationally, plus maintaining operating agreements for co-ops, a magnitude of investment that is sorely needed. These federal dollars and support need to flow urgently to bring relief to the tremendous pressure facing residents across Vancouver who struggle to access housing. Cities across Canada are ready to work swiftly with the federal government to support the implementation of a new National Housing Strategy when it’s put forward in the coming months. Vancouver has 20 sites of City-owned land ready for the federal government to partner on to help us deliver thousands of new affordable homes.

Today’s historic $2.2 billion investment in transit and transportation, the largest in Metro Vancouver in 20+ years, is a game changer for our region. This dedicated funding will support our growing region, keeping people moving and growing the economy while protecting our environment. Metro Mayors are ready to roll up our sleeves and work with the BC government to take advantage of this opportunity from the Trudeau government and match this funding with additional dollars to deliver crucial new projects like the Broadway Subway.”

Affordable housing gets a boost

The budget details how $11.2 billion will be meted out to cities and provinces for affordable housing over 10 years, and an “innovation and skills plan” for six sectors: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and clean resources.

It also details $7 billion in spending over 10 years for Canadian families, including 40,000 new subsidized daycare spaces across Canada by 2019, extended parental leave and allowing expectant mothers to claim maternity benefits 12 weeks before their due date.

The leaner-than-expected deficit projections are largely tied to Canada’s stronger economic outlook.

However, the government is also anticipating changes in this year’s budget to boost revenues via new tax measures and higher premiums on the employment insurance program.

Ottawa’s bookkeepers also found another $933 million over six years, thanks to previously planned defence commitments that were not spent as quickly as initially expected.

And while the document contained little new spending, it did offer fresh details on commitments made in the Trudeau government’s curtain-raising 2016 budget, as well as sharpened strategies for enhancing skills development and driving the so-called innovation economy.

“To make the most of the opportunities that the new economy offers, the government will equip Canada’s workers with the skills and tools they need to succeed,” reads the 278-page budget.

“It will also make big bets in high-growth sectors of the economy, including clean technologies, digital industries and agri-food, to secure Canada’s place as a world-leading centre for innovation.”

Ottawa is banking on that plan to improve the country’s growth trajectory and eventually help eliminate the deficit.

The promising sectors identified by the feds also included health sciences, clean resources and advanced manufacturing.

The budget called for the creation of growth strategies and more available cash to help each of these industries prosper.

The government also pledged $125 million to launch an artificial intelligence institute.

To provide further support, the budget contained commitments to expand federal investments in venture capital, to ease access to public procurement contracts for young, innovative firms and to develop an intellectual-property strategy, which is considered critical by some industry players.

“It’s probably worth a shot,” Scotiabank chief economic Jean-Francois Perrault said of Ottawa’s plan to take a more hands-on approach by pinpointing specific sectors with potential.

Perrault said other countries have had success in the interventionist approach for particular sectors, when it’s done intelligently. He was encouraged Ottawa seemed intent on taking more of a free-market approach.

Morneau’s budget also re-allocated infrastructure cash to add $150 million to a five-year, $800-million commitment the Liberals made in last year’s budget to support “superclusters” — a “dense” area of business activity that includes post-secondary institutions, companies, specialized talent and necessary infrastructure.

When it came to the headline numbers, the finance minister gave himself more breathing room on his so-called fiscal “anchor” to lower the debt-to-GDP ratio by the end of the Liberal mandate.

The ratio — a measure of the public debt burden — is now projected to only drop below 2016-17 levels in 2020-21.

The budget predicted a deficit of $15.8 billion in 2021-22, the final year of its forecast horizon.

The government also reinstated a $3-billion contingency fund, which increased the projected deficits swell to $28.5 billion next year, $27.4 billion in 2018-19, $23.4 billion in 2019-20, $21.7 billion in 2020-21 and $18.8 billion in 2021-22.

Asked about the lack of a road map to return to balanced books, Morneau sidestepped and told reporters the government’s approach is growing the economy.

“Our plan is to be responsible every step of the way,” Morneau said. “We’re making every dollar count.”

The Liberals won the 2015 election on a platform that vowed to invest billions in measures like infrastructure and child benefits as a way to re-energize Canadian growth.

They planned to run deficits to finance the investments, but promised annual shortfalls would not surpass $10 billion during the first couple years of their mandate.

The Liberals also vowed to return to balance by 2019-20. Since taking office, however, the government abandoned those promises, citing a weaker-than-expected economy.

None of the government’s forecasts Wednesday accounted for the potential fallout from policy changes being discussed in US, which many fear would have major consequences for the Canadian economy.

The US administration is eyeing cuts to corporate and personal taxes, the renegotiation of the North American Free Trade Agreement and a possible border tax.

Trudeau government hiking taxes on smokes, booze, pursues tax cheats

Canadians who drink, smoke and rely on public transit will be paying more thanks to changes in the federal budget.

Morneau also said Ottawa will scrutinize the private corporations wealthy professionals like doctors and lawyers use to reduce their taxes.

And he put tax cheats on notice, budgeting more than half a billion dollars in new money over five years to fund investigations.

“We will close loopholes that result in unfair tax advantages for some at the expense of others,” Morneau said in his speech.

“We will eliminate inefficient tax measures, especially those that disproportionately benefit the wealthy. And we will work with the provinces and territories to crack down on those who hide their identity to avoid paying taxes.”

Highlights from the 2017 federal budget tabled Morneau:

• Employment insurance premiums are going up five cents to $1.68 per every $100 of insurable earnings, up from $1.63 — the maximum allowable increase under the Employment Insurance Act.

• The deficit is at $23 billion, down from $25.1 billion in the last fiscal update, and is projected to reach $28.5 billion for
  2017-18 — including a $3 billion contingency fund — before declining to $18.8 billion in 2021-22.

• The 71-year-old Canada Savings Bond program, first established in 1946, is no longer cost effective and is being phased out.
• Higher taxes on alcohol and tobacco products: the excise duty rate on cigarettes goes up to $21.56 per carton of smokes from $21.03, while the rates on alcohol are going up two per cent. Both will be adjusted every April 1 starting next year, based on the consumer price index.
• The public transit tax credit, which allows the cost of transit passes to be deducted, is being eliminated effective July 1.
• The budget dedicates $11.2 billion to cities and provinces for affordable housing over 10 years as part of the second wave of the government’s infrastructure program, $5 billion of which is to encourage housing providers to pool their resources with private partners to pay for new projects.
• An “innovation and skills plan” to foster high-tech growth in six sectors: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and clean resources.
• $523.9 million over five years to prevent tax evasion and improve tax compliance, including more auditors, a crackdown on high-risk avoidance cases and better investigative efforts.
• $7 billion in spending over 10 years for Canadian families, including 40,000 new subsidized daycare spaces across Canada by 2019, extended parental leave and allowing expectant mothers to claim maternity benefits 12 weeks before their due date.
• $2.7 billion over six years for labour market transfer agreements with the provinces and territories to modernize training and job supports, to help those looking for work to upgrade skills, gain experience, start a business or get employment counselling.
• A national database of all housing properties in Canada, known as the Housing Statistics Framework, to track details on purchases, sales, demographics and financing, as well as foreign ownership.
• $400 million over three years through the Business Development Bank of Canada for a “venture capital catalyst initiative” to make more venture capital available to Canadian entrepreneurs.
• A comprehensive spending review of “at least three federal departments,” to be named later, to eliminate waste and inefficiencies, as well as a three-year review of federal assets and an audit of existing innovation and clean-tech programs.
• $59.8 million over four years, beginning in 2018-19, to make student loans and grants more readily available for part-time students, and $107.4 million over the same period for assist students with dependent children.
• $287.2 million over three years, starting in 2018-19, for a pilot project to facilitate adult-student access to student loans and grants.
• $225 million over four years, starting in 2018-19, for a new organization to support skills development and measurement.
• $395.5 million over three years for the youth employment strategy.

 

Text of the Finance Minister Bill Morneau’s budget speech

Mr. Speaker,

As Canadians come together to celebrate Canada 150, we proudly reflect on the generations that came before us.

Generations that built a country on the belief that, with hope and hard work, they could deliver a better future for themselves and for their kids and grandkids. That optimism — and that confidence — helped define us as a country.

Sharing those beliefs with others made Canada a beacon of diversity, openness, and generosity around the world. Yet, over the last few decades, the middle class and those working hard to join it have fallen behind.

Everyday folks who work hard to provide for their families are worried about the future. They’re worried that rapid technological change, the seemingly never-ending need for new skills and growing demands on our time will mean that their kids won’t have the same opportunities that they had. And who can blame them?

For a decade, middle-class struggles were simply swept under the rug. People were left without a clear vision for growth at a time of unprecedented change. But the good news is that Canadians, on their own accord, worked hard and persevered.

We have always been resilient and innovative, able to adapt, and prosper, in the face of change.

Knowing that, we put together a plan to ensure that, in a changing world, Canada’s middle class and those working hard to join it can, and will, succeed.

A year and a half ago, our government set out to deliver the kind of change that would make a real difference for Canadians.

We said we would help people retire with dignity. We said we would ask the wealthiest one per cent to pay a little more, so we could cut taxes for the middle class. We said we would make smart, responsible investments in our communities. That’s exactly what we did. We’ve delivered on behalf of Canadians. And we’re just getting started.

Now, we realize that there is much more work ahead of us than behind us. But I remain inspired that we’re on the right path.

One of the most memorable moments I’ve had as Canada’s finance minister happened in a taxi cab in Toronto. On my way home one night, my taxi driver, Mian, recognized me, and we started chatting. Then he did something that surprised me. He called his wife and put her on speakerphone. They wanted to talk to me about the difference the Canada Child Benefit had made in their lives.

You’ll remember, Mr. Speaker, that this benefit gives nine out of 10 Canadian families more help with the high cost of raising their kids. In Mian’s case, with three children aged 11, nine, and 10 months, the Canada Child Benefit means that he and his wife receive about $300 more per month than they did a year ago.

That’s an extra $3,600 every year, tax-free — money that can be put toward groceries, school supplies, and new clothes. There are countless other stories like this one across the country, each a sign that confidence is building and that our plan for middle class prosperity is working.

Stories like Dave’s, a plumber from British Columbia who took advantage of a training program supported by the federal government to get his Red Seal certification last year. Now he has a well-paying job and is able to return to work in his community. And Nebis, a mother of three from a remote Algonquin community in Quebec. The Canada Child Benefit has helped keep her three kids enrolled in hockey this season.

Mian, Dave, and Nebis, like millions of middle-class Canadians, want to see progress for themselves and their families. They want government that puts people first. They want a government focused on creating good jobs today, while also preparing Canadians for the jobs of tomorrow.
They want a government that puts our skilled, talented, and creative people at the heart of a more innovative and globally competitive Canada.

Mr. Speaker, here’s how we’re doing it.

Across the country, we’re building stronger communities. We’re doing it by creating jobs, shortening commutes, ensuring clean air and water and improving quality of life for millions of Canadians.

In the last year and a half, 744 public transit projects have been approved and are creating good, well-paying jobs for Canadians. In Calgary and Ottawa, long-awaited and transformative light rail transit projects are underway. In Montreal and Vancouver, riders can look forward to a more enjoyable commute thanks to rehabilitation work being done to the metro and SkyTrain systems.

We’re repairing nearly 50,000 social housing units, to make sure families have a safe and secure place to live. We’ve lifted 18 long-term boil water advisories in First Nations communities, getting us closer to our ultimate goal of ensuring that every child in Canada has access to clean drinking water.

Ten years from now, our cities, towns, and northern and rural communities will be healthier and better connected. Our air and water will be cleaner. More Canadian goods will get to international markets. And modern, efficient public transit systems will get hard-working parents home more quickly at the end of a long day.

Mr. Speaker, as we look to the coming decades, we see the potential of new innovations to transform our lives.

Self-driving cars, artificial intelligence, genomics, quantum computing, mobile payments, the sharing economy. These ideas are changing our world for the better, just like the innovations that have preceded them. A few decades ago, we never could have imagined how mobile computing would impact our lives. Today, a five-year-old in Victoria can video chat every night with his snowbird grandparents in Florida on a phone or tablet.

Thanks to e-commerce platforms like Alibaba, an Alberta farmer can sell top-quality beef to 300 million potential buyers in China. And cutting-edge research from Montreal has led to breakthrough treatments for multiple sclerosis. Mr. Speaker, we must see the immense opportunities that these changes bring with them. Opportunities for progress and prosperity.

And while the rapid pace of change can seem dizzying at times, we must never lose sight of what’s driving these breakthrough innovations: people. People like Mian, Dave, and Nebis. And so, as we create the jobs of tomorrow, we will support a culture of lifelong learning and skills training to help workers and their families adapt to the changing demands of our time.

We will help students get the skills and work experience they need to kick-start their careers. We will make it more affordable for thousands of adult workers to learn new skills while raising their families. And we will give people who’ve lost their jobs the chance to go back to school for further training, helping these Canadians advance their careers, and turn challenges into opportunity.

To give our young people the best possible start, we will promote hands-on learning in science, technology, engineering, and math, especially for young women, girls, and Indigenous youth.

Building on work being done by impressive organizations like Ladies Learning Code and Actua, we will encourage students to learn coding in the same way they learn to read and write, preparing our kids for the jobs of the future. Mr. Speaker, Budget 2017 is about creating good middle class jobs — now and in the years to come.

And to do that, we need to focus on our strengths — areas where we can lead globally and create good jobs for Canadians.

In this budget, we are making investments in six economic sectors where Canada will lead the way: digital, clean technology, agri-food, advanced manufacturing, bio-sciences, and clean resources.

Mr. Speaker, in the realm of digital technology, I know two things to be true. One: Canada can be a world leader in digital innovation. And two: we can’t afford not to be. That’s why we will launch a Pan-Canadian Artificial Intelligence Strategy and bring together Canada’s main centres of expertise to drive investment and job creation across the country.

In agri-food, too, we’re positioned for success. By 2050, global demand for food is expected to rise significantly. That means more demand for Prairie canola, Atlantic crab and lobster, and BC berries. It also means more jobs in the fields of southwestern Ontario, and on the maple syrup farms of Quebec’s Eastern Townships. We will help farmers, producers, and processors build their businesses globally, and do so sustainably.

Mr. Speaker, Canadians know that our environment and our economy go hand in hand. It’s why we’ve worked with the provinces and territories to adopt the Pan-Canadian Framework on Clean Growth and Climate Change. This not only means cleaner air to breathe; it means business and investment opportunities, too. It means that jobs installing solar cells, manufacturing electric cars, or developing cleaner fuels will be in high demand.

Luckily, our energy sector is already well positioned — to not only compete, but to lead. By investing in clean technology and responsible resource development, we will preserve our environment for future generations, create great jobs, and re-stake our claim as a leading supplier of energy to the world for the next 150 years.

Mr. Speaker, our plan is clear. Smart, ambitious investments in people, communities, and high-growth industries lead to opportunities. Opportunities lead to jobs. Jobs lead to a more confident and growing middle class. And a more confident, growing middle class is the only path to strong and sustained economic growth.

The government’s role in all of this is to lend support to those who are driving us forward, and to make sure everyone has a real and fair chance at success. This means ensuring our most basic needs are met. And health and well-being are at the top of that list.

Though our universal health care system is a source of pride for many Canadians, we know that more can be done for families caring for aging or disabled loved ones. It’s why this budget provides support for caregivers helping loved ones at home, and makes it easier for Canadians living with disabilities to get the tax relief they need. Mr. Speaker, we believe that, whether their ailments are physical or mental, Canadians from coast to coast to coast deserve the best possible care that we can provide.

They deserve our help.

And I’m pleased that, with leadership from the minister of health, over the last several months we have reached health agreements with nearly every single province and territory. Through these landmark agreements and historic health transfers to provinces and territories — which represent over $200 billion over the next five years — we will reduce stress for families, and ensure that every young person under the age of 25 gets the mental health support they need.

Mr. Speaker, having had the honour of representing and meeting families in St. James Town and Regent Park, I’ve seen first-hand the challenge of affordable housing.

And so, it is my privilege to announce that the Government will be investing over $11 billion — the largest single commitment in budget 2017 — in support of a National Housing Strategy, to help ensure every Canadian has a safe and affordable place to call home. Our government has shown, and will continue to show, national leadership on housing.

And we will prioritize support for vulnerable citizens, including: seniors, Indigenous Peoples, survivors fleeing domestic violence, persons with disabilities, those dealing with mental health issues, and veterans.

Mr. Speaker, the decisions we make, and the policies we create, impact men and women differently. In order to make laws and develop policies and programs that are in the best interests of all Canadians, we have to know what kind of impact they’ll have.

We know, for example, that while Canadian companies are getting better when it comes to hiring more women, they’re still less effective at promoting women to senior roles. And we know that fewer women join or stay in the workforce than men.
That means that as a country, we aren’t taking full advantage of the talents, insights, and experience of more than half of our population.
It seems unfathomable. But it’s true. It’s why we need to do better.

And so, as a first step, we’ve asked the Canada-United States Council for Advancement of Women Entrepreneurs and Business Leaders to quickly advise us on how we can better empower women entrepreneurs, and remove barriers for women in business. But not all obstacles to progress are as obvious.

So, in budget 2017, we did something that, frankly, should have been done a long time ago. We published the Government’s first ever gender statement, an assessment that ensures all budget measures — not just those aimed specifically at women — help us advance the goals of fairness, stronger workforce participation, and gender equality.

Mr. Speaker, we realize that this is just the start, and we look forward to feedback on this first effort, which we’ll then build into future budgets.
Another one of those barriers, Mr. Speaker, is access to quality child care.

Too often we hear stories of single parents living in poverty because the cost of child care is so high, they can’t afford to go back to work. And that’s not right.

To help low- and middle-income families with the costs of child care, we are committing $7 billion dollars over the next decade to increase the number of high-quality child care spaces available across the country. In order to provide immediate relief to Canadian families, we could create up to 40,000 new subsidized child care spaces over the next three years by working with the provinces and territories.
Canadian parents deserve our support, and they’re going to get it.

Mr. Speaker, we know that strong partnerships between the federal government and Indigenous communities are crucial for our success. By 2021-22, as a result of the investments made in this budget, funding for Indigenous Peoples will be over three billion dollars higher than when we took office. This represents an increase of 27 per cent — well in excess of what would have been provided under the decades-old two per cent funding cap — and will contribute to a higher quality of life on reserves. All this, while setting Canada on a path toward true reconciliation with Indigenous Peoples.

This work continues today, both because it is a recognition of the rights of Indigenous Peoples, and because it’s essential to our economic future.

Together, we will build stronger, more resilient communities and renew our nation-to-nation relationship with First Nations, Inuit, and Metis. We will help break down employment barriers, with a focus on skills development, training, and better education. And we will provide greater access to mental health, wellness, and suicide prevention services, while working with Indigenous communities to combat substance abuse.

This is our plan for Canada. For it to succeed, we all have to do our share.

Mr. Speaker, I have been very fortunate in my life to have had a successful career in business. And I’ve always paid my fair share of taxes. But it can be tempting for some to take someone’s advice here, and plan a little more strategically there.

Our review of federal tax expenditures, for example, highlighted a number of issues around tax planning strategies using private corporations.
Strategies that can result in some very wealthy individuals getting unfair tax breaks at the expense of others.

Mr. Speaker, Canadians expect a fair tax system. Our government is committed to taking action on this issue, and we will have more to say on this in the near future. One of our government’s very first actions was to raise taxes on the wealthiest one per cent of Canadians, so that we could cut taxes for the middle class.

And because of this tax cut, nine million Canadians see more money on every single paycheque. That, Mr. Speaker, is change that makes a real difference in people’s lives.

We also gave the Canada Revenue Agency more resources to detect, audit, and combat illegal tax evasion and aggressive tax avoidance. Going forward, we will close loopholes that result in unfair tax advantages for some at the expense of others.

We will eliminate inefficient tax measures, especially those that disproportionately benefit the wealthy. And we will work with the provinces and territories to crack down on those who hide their identity to avoid paying taxes.

Because, Mr. Speaker, let me be clear: All Canadians must pay their fair share of taxes. Period.

Mr. Speaker, Canada has always played an important role on the international stage. And, going forward, as needs change, so too will our approach.

In international assistance, for example, we remain committed to helping the world’s poorest and most vulnerable. And we will continue to modernize our efforts so we can deliver better results, improve transparency, and foster innovation around the world.

To support our women and men in uniform in increasingly complex and unpredictable times, our government will soon release a new defence policy for Canada, following extensive consultation and analysis.

Mr. Speaker, we know that as a trading nation, our future depends on openness and investment. And that means never missing an opportunity to remind the world of what makes Canada a great place to live, play, and do business. Nowhere is this truer than with our neighbours to the south.

Canada and the United States have the most successful economic relationship in the world, supporting millions of middle class jobs on both sides of the border. We’re proud of this fact.

And we’re also proud to have recently concluded the Comprehensive Economic and Trade Agreement — a free trade agreement that will create jobs, reduce red tape, and give Canadian businesses preferred access to half a billion potential customers across the European Union.

And as we prepare for the global economy of tomorrow, we will put our best foot forward, always looking to develop strategic partnerships to attract talent and investment.

Partnerships that will help our companies succeed globally, and create good middle class jobs here at home. Mr. Speaker, Canada 150 reminds us that we have a lot to be thankful for.

Economically, our talented, skilled, educated, diverse, and innovative workforce gives us tremendous potential for growth. Our values, our stories, and our cultures shine for the world to see. Our official languages are flourishing.

Our natural resources, and natural beauty, are unparalleled, allowing us to share the joys of building a campfire with our kids, hiking with a college friend, or swimming in cool, clean waters.

In fact, this year we’re putting our national parks, historic sites, and marine conservation areas on full display as we invite Canadians and families from around the world to enjoy them, free of charge.

Most importantly, Mr. Speaker, we’ve begun to see signs of confidence and optimism return to our middle class.

Consumer spending is up since we introduced the Canada Child Benefit.

In the last seven months, the Canadian economy has created a quarter million new jobs, the largest seven months of job gains Canada has seen in a decade. Unemployment has fallen in the time since we took office. These are good, early signs of a plan that is working. That’s why we will continue to invest in our people, our communities, and our economy while maximizing every dollar and ensuring it is well spent. Mr. Speaker, our approach to investing deliberately will enable us to maintain our enviable position as the G7 nation with the best balance sheet.
Most importantly, at the same time, we will have built a better future for our kids.

But Mr. Speaker, we know there is more work to do on behalf of middle class Canadians. Middle class Canadians like Mian, Dave, and Nebis. Working together, we will embrace the change in front of us, and deliver prosperity for all.

Thank you, Mr. Speaker