Briefing: "Building a Strong Middle Class" Federal Budget 2017
On March 22nd, Canada's Finance Minister Bill Morneau announced the Federal Budget for the 2017-2018 fiscal year. The Budget titled "Building a Strong Middle Class" focused largely on increased funding to government programs. Of specific interest to municipalities, Finance Minister Morneau addressed infrastructure, skills and innovation, housing, and building a strong Canada among other items.
The deficit projection for 2016-17 is $23-billion, rising to $28.5-billion by 2017-18 and down to $18.8-billion by 2021-22. But the budget shows the bottom line is sensitive to economic-growth projections. The federal debt-to-GDP ratio is projected to be 30.3 per cent by 2021-22. The more positive outlook projects the budgetary balance to improve by $5.8-billion a year, resulting in a debt-to-GDP ratio of 28.4 per cent by 2021-22. The more pessimistic projections believe the balance will worsen by $6.2-billion per year, on average, and the federal debt-to-GDP ratio would be two percentage points higher by 2021-22.
The budget provides more details about the government's previously announced $81.2-billion infrastructure plan, including $11 billion for affordable housing over 11 years.
INNOVATION AND SKILLS TRAINING
An "innovation and skills plan" will be implemented with $950 million over five years to support innovators and build hubs for "super-clusters" to foster high-tech growth in six sectors: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and clean resources.
Due to demographic challenges in the labour market, skills training initiatives were expected to play a key part in Wednesday’s budget. Employment insurance premiums are going up in 2018, raising approximately $1.4-billion over five years to partly offset some of the government’s skills-training promises. Premiums will rise from $1.63 to $1.68 per $100 by next year.
Other items include:
- $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.
- $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.
Soaring home prices in Canadian cities have prompted calls for further government intervention. The budget promises to give Statistics Canada almost $40-million over five years, and $6.6-million per year after that, to develop and implement a Housing Statistics Framework. This Framework is a national database of all housing properties in Canada, to track details on purchases, sales, demographics, and financing, as well as foreign ownership. Statistics Canada is expected to start publishing initial data in the fall of this year.
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.
One of the most striking aspects of Budget 2017 is a 26-page statement on gender equality and a discussion of the ways in which the government has run its policies, and its spending commitments, through a gender-based analysis.
To reduce inequity, the government says it is proposing key investments in areas where gender imbalances persist. They include enhancements to student financial assistance and training that the government says will disproportionately benefit women, $7-billion over 11 years for early learning and child care, $11.2-billion over 11 years for a national housing strategy, more flexible benefits for family caregivers, more supports for Indigenous women, and $101-million over five years to support a national strategy to address gender-based violence.
The federal government set aside $7 billion in spending over 10 years for early learning and childcare programs, including 40,000 new subsidized daycare spaces across Canada by 2019.
Also included was extended parental leave to 18 months, and allowing expectant mothers to claim maternity benefits 12 weeks before their due date. Parents who choose to stay at home longer, however, must make do with a lower Employment Insurance (EI) benefit rate of 33 per cent of their average weekly earnings, instead of the current rate of 55 per cent.
Indigenous communities have been promised an additional $3.4-billion over the next five years; most of the new money is directed at infrastructure and health.
The budget allocates $300-million over the next 11 years to build housing in the northern territories. And there is $225-million over the same time frame to provide affordable housing for Indigenous people who do not live on reserve.
The government is promising to spend $828.2-million over the next five years to improve medical outcomes of the First Nations and the Inuit.
That money will be used to expand health resources on reserves, where children sometimes die of treatable illnesses and where supports such as palliative care are often non-existent, and to decrease the gap in life expectancy for Indigenous people, which is currently years below the average for other Canadians.
The budget proposes listing naloxone, a drug used to treat fentanyl overdoses, to the list of GST/HST-free non-prescription drugs that are used to treat life-threatening conditions. The drug, and its salts, is already tax-free when prescribed, but since March 22, 2016, Health Canada removed the requirement for a prescription when the drug is used for emergency situations outside of a hospital.
Starting July 1, commercial ride-sharing services from Web applications will be subject to the same taxes as taxis. All taxi operators are required to register for GST/HST and charge tax on their fares. The budget says it will amend the definition of a taxi business to require ride-sharing services to register for GST/HST and charge tax on their fares in the same way taxis do.
The entire 2017 Federal Budget "Building a Strong Middle Class" can be found here.