Skip to main content

Minister of Finance Bill Morneau speaks to reporters after leaving a cabinet meeting on Parliament Hill in Ottawa on February 6, 2018.Justin Tang

The Liberal government will release its federal budget on Feb. 27, with the major themes expected to be gender equality and science.

Finance Minister Bill Morneau announced the date in Question Period on Tuesday, saying his government has made improvements to the lives of middle-class Canadians, "but there is more work to do."

The budget is expected to include funding for pay-equity legislation for employees in the federal government and federally regulated sectors, as well as measures to encourage the participation of women in the workforce, in leadership roles and in science, a government source told The Globe and Mail.

Read more: Budget will show how far Morneau will go to put money where Trudeau's mouth is

"We're going to be talking about how we can invest in research, in making sure that we have the foundational science for tomorrow, and also to help Canadians to have the sort of skills they need to deal with the economy of tomorrow," Mr. Morneau told reporters after Question Period.

Mr. Morneau is scheduled to meet with economists from the private sector on Friday in Toronto, where they will give him their views of where the economy is headed.

Some are urging the government to cut corporate tax rates or provide incentives to Canadian businesses to stay competitive with the United States and match the reforms undertaken by U.S. President Donald Trump and the Republican Congress. The budget also lands amid uncertainty over the fate of the North American free-trade agreement.

Prime Minister Justin Trudeau has already said his government won't be cutting corporate taxes or regulatory red tape to compete with Mr. Trump's America. During a keynote speech to the World Economic Forum in Davos last month, Mr. Trudeau called on corporate chief executives to put workers before profits and take major steps to boost the role of women in the work force and tackle sexual harassment.

Mr. Morneau is expected to signal that Finance Department officials will watch how the U.S. cuts impact the economy, and investment in Canada, to determine if there is a need to respond.

Avery Shenfeld, managing director and chief economist at CIBC Capital Markets , said he expects the government will hold off on major announcements until 2019, in preparation for the federal election.

But he said the Liberal government could offer tax benefits to Canadian companies purchasing new equipment or expanding their stock in order to stay competitive with the United States.

"I think if we want to do something to address our competitiveness, particularly when there are uncertainties over NAFTA, and the U.S. is also applying a lighter regulatory touch, it's a way that we can do so in a cost-effective way," Mr. Shenfeld said.

Craig Alexander, senior vice-president and chief economist at the Conference Board of Canada, said the economy did better than expected last year and he expects the deficit will come in about $4-billion smaller than what the government had previously projected. But he said the economy is expected to slow and Mr. Morneau will have to respond.

"I think the government is going to present a budget that's going to continue to run deficits, which is likely to have the debt-to-GDP ratio on a very slowly declining path. I think that they're going to focus on inclusive growth," he said.

In October, the government projected it would run an $18.6-billion deficit in the 2018-19 fiscal year, an improvement over the $27.4-billion deficit it had projected in the spring.

The Liberal Party's 2015 election platform said that a Liberal government would run annual deficits of no more than $10-billion a year before returning to balanced budgets in 2019.

The Liberal government has abandoned that plan and does not currently have a target date for erasing the deficit. Instead, the government says its goal is to keep the federal debt-to-GDP ratio on a stable and declining trend.

Mr. Morneau told reporters that the government will continue to make investments "while reducing the amount of debt as a function of our economy."

"That will continue to be our anchor," he said.

Conservative finance critic Pierre Poilievre called on the government to balance the budget and lower taxes.

"There's no doubt that Donald Trump wants to steal Canadian jobs but the Liberal tax policy is helping him do it. And that's why we're telling, we're demanding, the government cancel its out-of-control spending increases and lower our tax rates so Canadians can keep our jobs here," Mr. Poilievre told reporters.

Mr. Morneau and Science Minister Kirsty Duncan held a closed-doors meeting in Toronto in December with leaders of the research community, which was billed as a pre-budget event.

Last April, a government-commissioned panel called for major new investments in academic research funding. The panel said the funds given to granting councils should increase to $4.8-billion a year from $3.5-billion.

"We're looking for a significant embrace of the Naylor report, a significant investment in discovery research and a trajectory going forward," said Paul Davidson, president of Universities Canada.

"It's fair to say that the folks in the department of finance considered the total cost of the report ambitious, but I think it's a realistic assessment of what it will take to get back to global standing in the research community."

Innovation Minister Navdeep Bains is set to announce on Thursday the winners of a government competition to form technology "superclusters" around the country. The winning projects bring together academia and businesses and will receive hundreds of millions of dollars.

The budget is also set to include legislation enacting the government's changes to how it taxes passive investments. The Liberals raised the ire of the small-business community last year when it moved to modify the tax rules for private corporations.

Earlier on Tuesday, NDP Leader Jagmeet Singh announced the priorities his party wants to see in the upcoming budget, including closing tax loopholes for the wealthy and cracking down on international tax havens, and using the savings to lower the cost of prescription drugs for Canadians through a national pharmacare program.

With a report from Campbell Clark in Ottawa