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Bluesky Budget 2018 Review

February 28, 2018

Federal Budget 2018

 

Equality + Growth, A Strong Middle Class

 

Introduction

Minister of Finance Bill Morneau delivered his third federal budget today, focusing on strengthening the economy by promoting gender equality and bringing more women into the Canadian workforce. The 367-page budget document prioritizes science and innovation, improving housing for Indigenous peoples and putting protection measures in place for Canada against cyberattacks. It is a fiscal plan focusing on minor initiatives, shifting allocations and small tweaks in comparison to the more substantial budgets of 2016 and 2017.

 

Budget 2018 focuses on six key priorities:

  • Gender-Equity and Second Parent Leave

  • The creation of an Advisory Council on the Implementation of National Pharmacare

  • Taxes

  • Indigenous Housing and Skills

  • Targeted innovation funding

  • Infrastructure

Economic Outlook

The Canadian economy continues to steam for­ward. Canada has the fastest grow­ing economy among G7 nations, with second-quarter real gross domestic product (GDP) growth hitting 4.5% while Canada’s economy (real GDP) is expected to grow by 3.1% in 2017 and by 2.1% next year.

 

Currently Canada has a $18 billion deficit with a debt-to-GDP ratio of 30.1 per cent., This is also which is consistently decliningforecast to decline to 28.4 per cent in 2022–23. Further, the employment rate is at nearing historic highs. Since the Liberals entered office, Canada’s economy added over 600,000 jobs and the unemployment rate has fallen from 7.1 per cent to 5.9 per cent—close to its lowest level in over four decades.

 

What we DID See - Highlights

 

Gender equality

For the first time, the federal budget has been crafted using a new, mandatory government-wide, gender-based analysis. In the context of the budget, departments were tasked with identifying how line items might affect women and girls differently from men and boys. The goal is to empower women — but also to address looming productivity challenges caused by an aging population.  

 

Supporting Equal Parenting and the Flexibility for Earlier Returns to Work

A new five-week "use it or lose it" incentive would allow fathers or non-birth parents to take parental leave and share the responsibilities of raising their baby, allowing the women primary parent, typically a woman, to return to work earlier after having a baby, if they choose.  To support this, the Government will provide $1.2 billion over five years, starting in 2018–19, and $344.7 million per year thereafter, to introduce a new EI Parental Sharing Benefit. The Benefit will provide additional weeks of “use it or lose it” EI parental benefits, when both parents agree to share parental leave. This incentive is expected to be available starting June 2019.

 

National Pharmacare

Budget 2018 launches the creation of an Advisory Council to implement a national Pharmacare program. Leading the charge will be Dr. Eric Hoskins, former who resigned as Ontario Health Minister who resigned the day before the budget. Hoskins is  and the architect of Ontario’s “OHIP+” and a long-time advocate for a national Pharmacare program.

 

 Assuming there will be a consultation process and research on various options, pharmaceutical companies, the health sector, consumers and business will likely be given a voice on the design of the national program.

 

While the timeline is not set in stone, it is rumoured that Dr. Hoskins will report to the Federal Government in 2019 and deliver a blueprint for a national Pharmacare program prior to the next election. There are no details on the cost for the Advisory Council’s work. A national Pharmacare program, typically an NDP electoral pledge, has been strategically usurped by the Liberals in an eeffort to strengthen the left-wing flank of the voter-base.

 

Indigenous Housing and Skills

Budget 2018 proposes investments to help improve the quality of life of Indigenous Peoples and close the gap between Indigenous and non-Indigenous communities in areas such as support for families, health care and job opportunities.

 

To help close the employment and earning gaps between Indigenous and non-Indigenous people, Budget 2018 proposes to invest $2 billion over five years, and $408.2 million per year ongoing, to support the creation of a new Indigenous Skills and Employment Training Program, which will replace the Aboriginal Skills and Employment Training Strategy. This includes incremental investments of $447 million over five years, and $99.4 million per year ongoing, and a stronger focus on training for higher-quality, better-paying jobs rather than rapid

re-employment. This additional funding will assist approximately 15,000 more clients gain greater skills and find jobs that will support their long-term career success.

 

In Budget 2018, the federal government proposes dedicated funding to support the successful implementation of each of the distinctions-based housing strategies introduced in Budget 2017, this includes:

  • An additional $600 million over three years to support housing on reserve as part of a 10-year First Nations Housing Strategy that is being developed with First Nations.

  • $400 million over 10 years to support an Inuit-led housing plan in the Inuit regions of Nunavik, Nunatsiavut and Inuvialuit. This is in addition to the $240 million over 10 years announced in Budget 2017 to support housing in Nunavut, where additional funding was provided for Inuit housing.

  • $500 million over 10 years to support the Métis Nation’s housing strategy.

This is in line with the government’s broader Reconciliation efforts. Indigenous reconciliation has not been a smooth road for the Liberal government, and Budget 2018 serves as a reaffirmation of their commitment to this important campaign promise.

 

Taxes

In the leadup to the budget, there was significant pressure on the finance minister to There was some speculation that Canada would lower corporate taxes to remain competitive with the United States, following their recent tax cuts, . However, Minister Morneau held the lineinstead Canada has opted to hold the line, choosing measures to help businesses in other ways, including spending for women-led businesses, innovation, and diversification of trade.

The minister faced significant criticism over his initial plans to change small business taxes last year before backing down on some of the proposed changes and reviving a promise to reduce the small business tax rate. The new structure sets a threshold of $50,000 on passive income to allow for some personal savings. Private corporations who earn over  $50,000 in passive income, up to a maximum of $150,000, will see their ability to claim the small business tax rate of 15 percent eventually phased out. . Despite the softening of these tax measures, an additional $1 billion is still expected to flow from business pockets to the treasury.

 

With the pending legalization of cannabis for personal use, a tax framework of the higher of $1 gram or 10 per-cent of product price will generate hundreds of millions in new tax revenue with 25 per-cent to the federal government and the rest to the provinces. In Budget 2018, the federal government for the near term, will cap federal tax revenues at $100 million a year, flowing the excess to the provinces.  Of the federal portion, much is being pledged t