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

Published on March 22, 2017

Minister of Finance Bill Morneau speaks during a press conference at the media lock-up, before tabling the budget in the House of Commons on Parliament Hill, in Ottawa on Wednesday, March 22, 2017. THE CANADIAN PRESS/Justin Tang

OTTAWA - The future is coming at you, fast, and the Liberal government says it knows you're getting anxious - and potentially angry.

Finance Minister Bill Morneau delivered a federal budget Wednesday that aims to get Canadians ready for a changing world and potentially shield the Liberals from the forces that brought U.S. President Donald Trump to power.

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“Everyday folks who work hard to provide for their families are worried about the future,” Morneau said in his speech to the House of Commons as he tabled the 2017 federal budget, the second since the Liberals formed a majority government in 2015.

“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?” Morneau said.

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After setting up the doom and the gloom, Morneau spoke of the good news: Canadians have always been able to adapt to changing circumstances.

And the lower-than-expected deficit projection of $25.5 billion for the coming fiscal year - it swells to $28.5 billion when a $3 billion contingency reserve is included - is designed to help them get there.

The budget includes about $5.2 billion for skills development as the government plans to help Canadians adapt their education and employment training to a diversifying economy at a time when the lower price of oil has meant the natural resource sector can no longer be counted on to provide jobs - or sustain federal revenues.

Measures include letting out-of-work Canadians go back to school or receive new job training without having to give up their employment insurance benefits, a pilot project to test ways to make it easier for adults who have already been in the workforce to access student loans and grants and doing more to promote careers in science, technology, engineering and mathematics to young people.

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The Liberals do not just want to help Canadians find jobs in the future. They also want to try and bring that future about.

The budget commits nearly $3 billion to support innovation over the next five years and promises to develop an innovation and skills plan that will target six sectors the Liberal government see as good bets for spurring economic growth and creating well-paying jobs: advanced manufacturing, clean technology, the agri-food sector, digital industries, clean resources and health and bio-sciences.

As the Liberals work to ensure everyone can find a job in the new economy, they are also giving a boost to many who were left behind by the traditional one, such as women and those from indigenous communities.

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The budget commits $7 billion over the next decade to help increase access to affordable child care, will allow women to begin maternity leave earlier and provides more financial support for those caring for an ill or aging relative - all seen as ways to help increase the participation of women in the workforce.

The budget document, for the first time in Canadian history, also includes a section on how many of its measures impact men and women in different ways, with a promise to do a deeper gender-based analysis for the 2018 budget.

While this budget is relatively thin on net new spending, all these new promises still come with a cost, especially since the federal government is still footing the bill for the gigantic, ongoing commitments from last year.

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Canadians can expect a five-cent increase in EI premiums in fiscal 2018-19, up to $1.68 per $100 of insurable earnings, with some of that additional cost coming from the measures that will give more people access to benefits.

The government is also looking for savings in other ways that will hit the pocketbooks of many Canadians, by eliminating the public transit tax credit, raising the tax on alcohol by two per cent - beginning Thursday - and changing the rules so that ride-sharing businesses, such as Uber, are subject to the same sales taxes as traditional taxis.

The deficit still remains nearly three times the $10-billion limit the Liberals promised in their campaign platform and while the budget's projections show it shrinking over time as the government expects economic growth to pick up steam, there is still no official word on when they expect to get back to balance.

This budget also removes a pledge to reduce the ratio of federal debt to GDP over the course of their mandate, which, after busting past their promise to eliminate the deficit by 2019, was the only fiscal target they had left.

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Highlights from the 2017 federal budget tabled Wednesday by Finance Minister Bill 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.