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Budget 2018 comes with $6-billion in new spending and projected $18 billion deficit.

The Liberals’ third federal budget since assuming power in 2015 was tabled in the House of Commons on Tuesday afternoon, and follows the major plot points of previous spending plans: more spending on social programs and infrastructure, and multibillion-dollar deficits without any clear path to return to the black.

Despite strong economic growth and surging employment numbers, the Trudeau government is calling for $6.3-billion in new spending in the 2018 budget and projecting an $18.1-billion deficit for the upcoming fiscal year.

The Liberals’ third federal budget since assuming power in 2015 was tabled in the House of Commons on Tuesday afternoon, and follows the major plot points of previous spending plans: more spending on social programs and infrastructure, and multibillion-dollar deficits without any clear path to return to the black.

However, the Liberals continue to point to the country’s ever-falling net GDP to debt ratio, the lowest among G7 states, as proof of the long-term viability of their economic programme.

Finance Minister Bill Morneau (Toronto Centre, Ont.) framed this year’s budget as a reflection of what voters opted for in the last election when they backed a Liberal Party calling for increased spending to grow the economy.

“They put their trust in a new government, because they knew that we put our trust in them,” he said of Canadians in his budget address to the House of Commons.

There was little new in the relatively stand-pat budget save for the expected announcement that the government would begin exploring the creation of a national pharmacare program. Former Ontario health minister Eric Hoskins was tapped to serve as the chair of a new panel on the concept.

According to the budget document, the deficit is forecast to drop to $14.5-billion in 2019-20, the year that the next federal election will be held, before falling further to $9.3-billion in 2022-23. It includes a $3-billion adjustment for risk each year. In the 2015 federal election, the Liberals promised to place a $10-billion cap on deficits.

With the Canadian economy still showing signs of impressive growth, revenue flowing into federal coffers will increase by $2.4-billion in the upcoming fiscal year, according to the budget.

The latest fiscal projections mark an improved outlook for the federal budgetary balance compared to last October’s Fall Economic Statement, with an approximate $3.3-billion improvement in estimates each year for the next five years. Meanwhile, projected real GDP growth remains the same from last October, anticipating two per cent annual growth for Canada’s economy between 2017 and 2022.

The budget document, titled “Equality and Growth,” also proposes billions of dollars in new funding for scientists, Indigenous peoples, and low-income workers.

Science:

The budget proposes almost $4-billion in new spending for research, what the budget document states is “single largest investment for fundamental science in Canadian history.”

The federal government will provide $1.7-billion over five years for its three granting councils and research institutes to be allocated to scientists for research, while $1.3-billion over the next half-decade will go towards boosting laboratories, equipment, and other research infrastructure.

In addition, the three granting councils will receive $925-million over five years to support its functioning. A new tri-council fund for higher risk and urgent research will also receive $275-million over the next half decade. An additional $210-million over the same period will go to increasing diversity in its Canada research chair program.

Also, $763-million over five years is earmarked for the Canada Foundation for Innovation, which funds research infrastructure projects, and $572.5-million over the next half-decade for implementing its digital research infrastructure strategy meant to deliver better access to big data resources for scientists.

Workers:

The Liberals plan to spend $1.2-billion over five years on an EI parental sharing benefit program through a “use it or lose it” system in an effort to increase the number of fathers who take parental leave and balancing its gender difference. For example, it will allow the second parent, likely the father, to have the option to take an additional five weeks of parental leave if the second parent opts for shared 40-week parent leave agreement.

The Liberal government will also morph the Working Income Tax Benefit into a new credit called the Canada Worker Benefit, which it says will allow low-income workers to get more money from the refundable tax credit that supplements their earnings. The federal government said that once in comes into effect in 2019, a worker earning $15,000 could receive up to nearly $500 more annually.

The government will also boost funding for the Canada Summer Jobs program, spending $448.5-million over five years, and $351.9-million over the next half-decade to make its existing pilot program allowing Canadians to claim EI while working permanent. It was slated to expire in August.

The budget also earmarks funding for a new pre-apprenticeship program intended for women, visible minorities, and Indigenous peoples, and for a provincial-federal labour market development agreement meant to support workers in seasonal industries.

Indigenous Peoples:

A total of $5-billion in spending will go towards programs meant for Indigenous people, making it second out of the Liberals’ three budgets in terms of amount of new spending. In 2016, the government earmarked $8.4-billion for Indigenous-related spending.

The biggest chunk this year is $1.4-billion in new funding over six years for First Nations child and family services. The money will “address funding pressures” facing child and family service agencies and increase prevention resources.

The budget will also provide an additional $172.6-million over three years to help the federal government meet its goal of ending all boil water advisories on First Nations reserves by 2021. The Parliamentary Budget Office had published a report in December that found that the Liberals needed to commit more spending in order to meet their goal.

In addition, the federal government will spend an extra $447-million over five years to morph the current Aboriginal Skills and Employment Training Strategy into a new Indigenous Skills and Employment Training Program. It will focus on training Indigenous workers for higher-quality and better-paying jobs rather than “rapid reemployment.”

The budget also proposes $1.5-billion in spending over five years on Indigenous health care, providing isolated community better access to doctors and nurses, support addiction treatment services, and provide better access to health benefits. A total of $188.6-million over five years will also go towards programs meant to help establish a new fiscal relationship between First Nations and the Crown, with the money going toward helping communities establish stronger fiscal and administrative capacity.

More than $1-billion will also go towards better health care and housing services for Inuit and Metis communities. Almost $250-million over three years will also be dedicated towards better services for residential school survivors.

Health:

The government has also signalled that it wants to move towards establishing a national pharmacare program, creating the Advisory Council on the Implementation of National Pharmacare, appointing recently-resigned Ontario Health Minister Eric Hoskins to chair it.

More than $230-million over five years will be earmarked to help the federal government address the opioids crisis, and includes $150-million in one-time emergency funding for the provinces to spend on treatment centres.

With cannabis legalization on the horizon, $63.5-million over five years will go to a public education program. About $20-million will also go towards studying cannabis’ effects on mental health and addiction.

Combatting gender-based violence and harassment

The Liberals have strongly emphasized that its 2018 budget includes a gender-based analysis to ensure its budgetary measures will fairly impact women.

But with the #MeToo movement as a backdrop, the Liberals will spend $34.9-million over five years to support the implementation of Bill C-65, which will require stricter anti-harassment policies in federally-mandated workplaces. The government plans to spend more than $50.4-million on addressing sexual harassment in Canadian workplaces as well.

The budget also provides an additional $86-million over five years to expand its strategy to addressed gender-based violence, which will support anti-bullying policies and enforcement by police.

Innovation

About $700-million over the next five years is slated to be spent on the Industrial Research Assistance Program, which is meant to assist business owners develop better technologies that can be commercialized in the global marketplace.

The $950-million Strategic Innovation Fund will be re-adjusted to focus on larger projects that can lead to more jobs. The government is also proposing to spend an additional $510-million for regional development agencies to support female entrepreneurs, skills development, and economic diversification activities.

The federal government is also proposing creating a new Intellectual Property Strategy, planning to spend $85.3-million over five years. The strategy will establish a “patent collective” to better enable small and medium-sized firms to access and share intellectual property.

The environment

The federal government plans to spend $1.3-billion over five years on nature conservation in Canada. $500-million in federal funds will go towards establishing a public-private “nature fund” to support securing private land for preservation, collaborating with provincial governments, and helping build Indigenous capacity to conserve land. Funding will also go towards federal capacity to protect at-risk species and managing natural parks and expand wildlife sanctuaries.

The federal government will also spend $109-million over the next half-decade towards enforcing and monitoring carbon pricing, and improving the quality of experts in Environment and Climate Change Canada at a cost of $20-million.

Tax changes:

Adding onto Finance Minister Bill Morneau’s October 2017 tax reform proposals, the budget proposes that Canadian-controlled private corporations (CCPCs) no longer be allowed to obtain refunds of taxes paid on investment income while distributing dividends from income taxed at the general corporate rate.

The budget proposes to introduce another eligibility mechanism for the small business deduction, based on the corporation’s passive investment income. The result is that the amount of income eligible for the small business tax would be less for corporations earning more than $50,000 of passive investment income in a given year. For companies earning that level of passive income its active business income would likely be taxed at the general corporate income tax rate.

The budget stated that its proposals on passive investments will affect about 50,000 private companies – three percent of all private companies in Canada.

Culture and democracy

The Liberals will also provide $400-million in new funding over five years to support their Action Plan for Official Languages, which will support French and English language minority media and make it easier for Canadians to learn a second language.

Local journalism will be provided a boost of funding, with $50-million over five years to go to one or more independent non-governmental organizations that will support media in underserved communities.

The government will also spend $6-million over two years, and to be repeated every-pre-election and election year, to support a new process for election leaders’ debates, while the Office of the Commissioner of Canada Elections will receive a $7.1-million boost over five years.

The budget also gives Statistics Canada a large boost of funding for a variety of reasons such as conducting the 2021 census at a cost of $757.3-million spread over 10 years. Tens of millions of dollars of spending will also go towards improving the agency’s data collection capacity.

The government will also fund a new National Cyber Security Strategy, which will focus on making Canada’s digital systems more cyber attack-proof and support multi-national and cross-governmental collaboration. More than $507-million over five years is earmarked for the project.

Source: hilltimes.com