WHAT’S IN? WHAT’S NOT? THE BUDGET AT A GLANCE
SIX THINGS YOU NEED TO KNOW
THE RED INK: The deficit came in as telegraphed at $29.4 billion, and the Liberals expect it will stay there for one more year before gradually declining to $14.3 billion by 2020-21. They did not provide a timeline for when they intend to return the budget to balance. However, they’re being conservative with their gross domestic product estimates: they’ve adjusted the privatesector forecast for nominal GDP down by $40 billion a year from 2016 through 2020. This assumes oil prices will average $25 US a barrel in 2016 — lower than even the lowest level hit during the recent rout.
THE SIGNATURE PROGRAM:
About $23 billion is expected to go to families in 2016-17 under the Liberals’ signature new social program which, Finance Minister Bill Morneau boasted, is “the most significant social policy innovation in a generation” and will “help families more than any other social program since universal health care.” As promised in the Liberal platform, it’s an attempt to focus aid on low-income families, and comes thanks to new spending of $2.5 billion this year, and $3.1 billion next. The government claims it will lift 300,000 children out of poverty in the next fiscal year.
A BIG BET ON INFRASTRUCTURE:
The Liberal government continues to trumpet infrastructure spending as a key driver of economic growth over the next two years. It is ready to spend $4 billion on infrastructure over the next fiscal year, and claims this and other spending will boost GDP by 0.5 per cent — with another $7 billion in the next fiscal year, and a claim that will boost GDP by one per cent. Infrastructure spending was a cornerstone of the Liberals’ election platform.
MONEY FOR FIRST NATIONS:
The Liberals pledged to spend $8.4 billion over the next five years on First Nations education and infrastructure, lifting the two per cent spending cap that has been in place since the 1990s. One-quarter of the money will be spent in schools on reserves. First Nations lobby groups like the Assembly of First Nations will likely applaud the budget — they got $96 million in new funding. BUILDING A
HOUSING STRATEGY:
Ottawa plans to tackle the thorny issue of foreign investment in the housing market, promising $500,000 so Statistics Canada can study it — but critics are already wondering what kind of study you can get for that type of cash. Ottawa is also pledging to spend $2.3 billion over the next two years to placate calls for more affordable housing. Among the initiatives will be cheap money for developers and municipalities to build rental units, with the hopes of creating 10,000 affordable units. HELP FOR THE HARDEST HIT: Regions where unemployment has increased by two percentage points since the oil price crash will have Employment Insurance benefits extended by an additional five weeks — providing relief to areas including Newfoundland and Labrador, southern Ontario and much of Alberta. From Jan. 1, the waiting period for workers to receive benefits drops to one week, from two.
NOT IN THE BUDGET
BOMBARDIER: Relief for the ailing aerospace giant was the subject of intense pre-budget speculation, but whatever form the government’s inevitable bailout will take, there was no hint of it on Tuesday. The company has asked for $1 billion US to match the October investment made by the Quebec government, setting off a fierce debate about corporate welfare and Bombardier’s future.
GUARANTEED MINIMUM INCOME:
The rumoured revamp- ing of the country’s social safety net, long championed by policy-wonks as a new means of managing welfare and benefits, went unmentioned. The government apparently continues to study the project, but for now it remains on the back-burner.
NO CHANGES TO STOCK OPTION DEDUCTIONS:
The Liberals stepped back from proposed changes to stock option deductions. The original plan was to cap the deduction on eligible stock option gains at $100,000, but Tuesday Morneau confirmed the idea has been dropped — a victory for Canada’s tech industry, which had rallied against the proposal.
NO CHANGE TO THE SMALLBUSINESS TAX RATE:
Small businesses cheered when the Liberals proposed lowering the small business tax rate to 9.5 per cent by the end of 2019, from 11 per cent at the end of last year, but that promise was broken. The rate, now at 10.5 per cent after a small cut in January, will remain unchanged.
OTHER HIGHLIGHTS
$10 billion more over two years for a new Canada child benefit, absorbing and replacing the Canada child tax benefit and the universal child care benefit. Targeted to low- and middleincome families, the new benefit provides an average increase of nearly $2,300 in 2016-17.
$2.5 billion over two years on a suite of changes to EI, including: reducing required work experience for new entrants and re-entrants; extending a pilot project to allow claimants to work while collecting benefits; simplifying job-search requirements; and extending the benefit eligibility window in specific regions with a higher unemployment rate.
An end to income splitting for couples with children, the children’s fitness tax credit and the children’s arts tax credit.
$10.4 million over three years for new women’s shelters in First Nations communities, and $33.6 million over five years and $8.3 million for support services.
$5.6 billion more in benefits to veterans and their families over five years, including a disability award that increases to $360,000, retroactive to 2006, and an earnings loss benefit to injured vets of 90 per cent of pre-release salary. Nine veterans’ service offices across the country will be reopened and a 10th added.