The Liberals'
second budget builds on the work of the government's first fiscal plan, with a wide range of targeted and often relatively small measures.
Finance Minister Bill Morneau says his aim was to put Canadians to work, and to make Canada more innovative and more globally competitive.
It's also a budget that's infused with initiatives that appeal to Liberal interests, such as the more than $3-billion targeted toward Indigenous people and a massive investment in child care, and which the government says has been filtered through its own gender-analysis to ensure the lives of men and women are made more equal.
But it's also a fiscal plan to spread out much of its spending over the long term, with some of its promises extending 11 years into the future.
Below are some of the highlights.
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1. Budget balance and debt
The budget still doesn't include any plans to balance the books.
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.
Federal debt-to-GDP ratio projections
under various economic growth scenarios
33%
Projected
Weaker
growth
scenario
32
31
Average
growth
scenario
30
29
Stronger
growth
scenario
28
FY
‘15
‘16
‘17
‘18
‘19
‘20
‘21
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Federal debt-to-GDP ratio projections under
various economic growth scenarios
33%
Projected
Weaker
growth
scenario
32
31
Average
growth
scenario
30
29
Stronger
growth
scenario
28
FY ‘15
‘16
‘17
‘18
‘19
‘20
‘21
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Federal debt-to-GDP ratio projections under various
economic growth scenarios
33%
Projected
Weaker
growth
scenario
32
31
Average
growth
scenario
30
29
Stronger
growth
scenario
28
FY 2015
2016
2017
2018
2019
2020
2021
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Federal budget deficit projections under
various economic growth scenarios
In billions of dollars
$0
Projected
Stronger
growth
scenario
-5
-10
Average
growth
scenario
-15
-20
Weaker
growth
scenario
-25
-30
FY
‘15
‘16
‘17
‘18
‘19
‘20
‘21
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Federal budget deficit projections under various
economic growth scenarios
In billions of dollars
$0
Projected
Stronger
growth
scenario
-5
-10
Average
growth
scenario
-15
-20
Weaker
growth
scenario
-25
-30
FY ‘15
‘16
‘17
‘18
‘19
‘20
‘21
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Federal budget deficit projections under various economic growth scenarios
In billions of dollars
$0
Projected
Stronger
growth
scenario
-5
-10
Average
growth
scenario
-15
-20
Weaker
growth
scenario
-25
-30
FY 2015
2016
2017
2018
2019
2020
2021
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
During the 2015 federal election campaign, the Liberals repeatedly promised they would run deficits no greater than $10-billion a year, and would balance the budget by 2019, in time for the next election.
Asked when his government plans on balancing the books, Mr. Morneau said: "Our plan is to continue to be responsible every step along the way. That's what you're seeing here. You're seeing that we'll be able to show a decline in net debt to GDP, which is what we focused on as a fiscal anchor and will continue to take that approach moving forward."
More reading:
2. Skills training
Canadian population, in millions
Age 65 and older
14 and younger
12
Projected
10
8
6
4
2
0
‘95
‘00
‘05
‘10
‘15
‘20
‘25
‘30
Labour force participation rate
Actual
Trend
70%
Projected
68
66
64
62
60
58
‘76
‘85
‘95
‘05
‘15
‘25
‘35
‘45
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Canadian population, in millions
Age 65 and older
14 and younger
12
Projected
10
8
6
4
2
0
1995
‘00
‘05
‘10
‘15
‘20
‘25
‘30
Labour force participation rate
Actual
Trend
70%
Projected
68
66
64
62
60
58
1976
‘85
‘95
‘05
‘15
‘25
‘35
‘45
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Canadian population, in millions
Labour force participation rate
Age 65 and older
14 and younger
Actual
Trend
12
70%
Projected
Projected
10
68
8
66
6
64
4
62
60
2
58
0
‘95
‘00
‘05
‘10
‘15
‘20
‘25
‘30
‘76
‘85
‘95
‘05
‘15
‘25
‘35
‘45
THE GLOBE AND MAIL, SOURCES: BUDGET 2017
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 and expanding EI benefits so they're more flexible for parents and caregivers. Premiums will rise from $1.63 to $1.68 per $100 by next year.
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3. Gender statement
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.
Women in the work force: A snapshot of where Canada is right now
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4. Indigenous peoples
Indigenous communities, which were big winners in the Trudeau government's first budget, have been promised an additional $3.4-billion over the next five years as the Liberals continue their efforts to improve the socio-economic conditions of Canada's first peoples.
Funding for indigenous communities
In billions
0
2
4
6
8
10
12
14
$16
Federal spending
on programs for
First Nations, Inuit
and Métis people
Fiscal
year
2015
27%
increase
Federal spending
on programs for
First Nations, Inuit
and Métis people
FY
2021
Previously planned
funding increases
Budget
2016
Budget
2017
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Funding for indigenous communities
In billions
0
2
4
6
8
10
12
14
$16
Federal spending
on programs for
First Nations, Inuit
and Métis people
Fiscal
year
2015
27%
increase
Federal spending
on programs for
First Nations, Inuit
and Métis people
FY
2021
Previously planned
funding increases
Budget
2016
Budget
2017
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
Funding for indigenous communities
In billions
0
2
4
6
8
10
12
14
$16
Federal spending
on programs for
First Nations, Inuit
and Métis people
Fiscal
year
2015
27%
increase
Federal spending
on programs for
First Nations, Inuit
and Métis people
FY
2021
Budget
2017
Previously planned
funding increases
Budget
2016
THE GLOBE AND MAIL, SOURCE: BUDGET 2017
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.
On health, 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.
In addition, there is new money for child care, postsecondary education, employment initiatives, language and culture preservation, alternative sentencing, rehabilitation of Indigenous offenders, environmental fisheries (which get another $250-million over five years), help for urban aboriginals, land-claims settlement, and meeting the oversight recommendations of the Truth and Reconciliation Commission.
More reading:
5. Defence
Despite calls from the United States for Canada to increase its contributions to international military efforts, there is no increase in defence spending in the 2017 budget. In fact, the Department of National Defence is reallocating $8.48-billion that it expected to spend on capital projects, such as planes, ships, trucks and large infrastructure, before 2036 to future years when it will be used to purchase fixed-wing search-and-rescue aircraft and new light-armoured vehicles.
6. Veterans
The budget reiterates the promise, with no dollars attached, that the government will allow injured veterans the option of receiving a disability award through a lifetime pension rather than through a lump-sum payment. The details will be released this year.
In more concrete commitments, it goes some distance toward making life easier for the families of those who have been wounded in service. Most importantly, it offers $187.3-million over six years to create a Caregiver Recognition Benefit, which will provide veterans' caregivers, including spouses or other family members, with $1,000 tax-free per month.
The government will eliminate the one-year time window in which spouses of veterans who are permanently injured, or who have been killed while on duty, must decide whether they will apply for vocational rehabilitation. There is an additional $147-million over six years to expand Military Family Resource Centres. And there are new funds for veterans and family well-being, and emergencies.
The budget also commits $17.5-million over four years to create a new Centre of Excellence on Post-Traumatic Stress Disorder and related mental-health conditions.
More reading:
7. Housing
Teranet House Price index
for six major cities
260
Index, 2005 = 100
Vancouver
240
220
Toronto
200
180
160
140
120
100
Composite 6
index
80
2006
2008
2010
2012
2014
‘16
THE GLOBE AND MAIL, SOURCE: TERANET
Teranet House Price index for six major cities
Index, 2005 = 100
260
Vancouver
240
220
Toronto
200
180
160
140
120
100
Composite 6
index
80
2006
2008
2010
2012
2014
2016
THE GLOBE AND MAIL, SOURCE: TERANET
Teranet House Price index for six major cities
260
Index, 2005 = 100
Vancouver
240
220
Toronto
200
180
160
140
120
100
Composite 6
index
80
2006
2008
2010
2012
2014
2016
THE GLOBE AND MAIL, SOURCE: TERANET
Soaring home prices in some of Canada's biggest 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. The nationwide database of all properties in Canada would provide up-to-date information on purchases and sales, including the degree of foreign ownership, and information about demographics and financing. Statistics Canada is expected to start publishing initial data in the fall of this year.
More reading:
8. An Uber tax
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.
9. Opioid treatment
The budget also 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.
More reading:
10. No changes to capital gains
The business community is sure to be relieved there are no tax increases in the budget, including on capital gains. The tax would have applied to the earnings from investments such as stocks or real estate, potentially costing businesspeople or entrepreneurs millions of dollars. But tobacco and alcohol are in the crosshairs: The budget proposes to adjust tobacco excise duty rates to bring in $55-million next year alone, and to increase excise duty rates on alcohol by 2 per cent, for revenue of up to $160-million by 2021-22.
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