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2017 Canada Federal Budget Update

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Edelman Canada shares highlights from the 2017 Canadian Federal Budget. To learn more about Edelman Canada, please visit www.edelman.ca.

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2017 Canada Federal Budget Update

  1. 1. Edelman Ottawa | 155 Queen St. Suite 1302 | Ottawa, ON K1P 6L1 | 1.613.569.9000 2017 FEDERAL BUDGET UPDATE OUR PERSPECTIVE – A BUDGET BUILT FOR UNCERTAINTY Bob Richardson Executive Vice-President & National Practice Lead 416.849.1913 | bob.richardson@edelman.com Darcy Walsh Senior Vice President & General Manager 613.569.9000 | darcy.walsh@edelman.com Christopher Vivone Senior Vice President 613.569.9000 | chris.vivone@edelman.com BY THE NUMBERS Finance Minister Bill Morneau struck a stay-the-course tone with his second budget, Building A Stronger Middle Class. This is the first federal budget to contain a Gender Based Analysis, identifying through data the ways in which public policies affect women and men differently – further proof that women are considered key to the Liberals’ re-election efforts. This will also be the last budget the Federal Liberals will bring forward with a leaderless opposition. The Conservatives and New Democrats will be electing new leaders later this year. The Trudeau government has made the middle class their focus and governing mantra. To that end, Budget 2017 is largely an extension of the 2016 Budget and 2016 Fall Economic Statement, building out their previously announced spending on infrastructure, innovation and skills training. Canada-US relations remain the top priority for the government, and what’s most important about Budget 2017 is what it doesn’t include. With the Trump Administration’s tax plan expected in mid-May, and NAFTA renegotiations not expected to begin until later in the year, it will likely be the 2017 Fall Economic Statement that will contain specifics on defense spending, taxation, and a more detailed response to the Trump Administration’s trade and commerce policies. 0 5 10 15 20 25 30 Billions Projected Deficits: 2020/212019/202018/19 Deficit for 2017/18 $28.5 billion $27.4 billion $23.4 billion $21.7 billion Debt as a percentage of GDP for 2017/18 (projected) 31.6% Nominal GDP Growth 2.0% 2016 (actual) 4.1% 2017 (projected)
  2. 2. Edelman Ottawa | 155 Queen St. Suite 1302 | Ottawa, ON K1P 6L1 | 1.613.569.9000 2017 FEDERAL BUDGET UPDATE KEY THEMES & HIGHLIGHTS Innovation & Skills Training ›› Up to $950 million over five years, starting in 2017/18, to be provided on a competitive basis in support of a small number of business-led innovation superclusters that have the greatest potential to accelerate economic growth such as; clean tech, advanced manufacturing, digital technology, health/ bio-sciences, clean resources and agri-food, as well as infrastructure and transportation. ›› $50 million over two years to support organizations delivering digital skills training to girls and boys from kindergarten to grade 12. ›› Increased federal funding through the Labour Market Transfer Agreements to Provinces by $2.7 billion over six years. ›› An additional $400 million through the Business Development Bank of Canada on a cash basis over three years, beginning in 2017/18, for a new Venture Capital Catalyst Initiative. Infrastructure ›› No mention of a plan to privatize airports or ports. ›› The Government will accelerate the implementation of the Canada Infrastructure Bank, with the goal of having the Canada Infrastructure Bank operational in late 2017. ›› The introduction of a National Housing Strategy, supported by an investment of more than $11.2 billion over 11 years, starting in 2017/18. ›› New investments of $21.9 billion over 11 years to support social infrastructure in Canadian communities. ›› Budget 2017 proposes to provide $2 billion over 11 years to support a National Trade Corridors Fund to address urgent capacity constraints and freight bottlenecks at major ports of entry, and to better connect the rail and highway infrastructure that delivers economic growth across Canada. Tax Reform ›› No increase in the capital gains tax. ›› Broadly closing loopholes and investing an additional $523.9 million – over five years – to prevent tax evasion and improve tax compliance. ›› Federal Excise Tax on Alcohol – up 2%. ›› Ride sharing services (e.g. Uber) now required to charge & pay GST/HST. ›› 15% Public Transit Tax Credit – Eliminated. STAKEHOLDER REACTIONS “From a taxpayers point of view this budget is a nightmare scenario, we have the Liberals borrowing way beyond the $10M deficit promise, no plan to create the jobs we need in Canada right now, and we have taxes going up – this is a bad day for the tax payers of Canada.” - Hon. Rona Ambrose, PC, MP, Interim Leader of the Conservative Party of Canada “I have been travelling the country and have heard from Canadians about the realities of job loss, crushing household debt and retirement insecurity…Unfortunately, today’s budget failed to deliver the change promised by the Prime Minister to start closing the gap between the rich and everyone else.” - Tom Mulcair, Leader of the New Democratic Party of Canada “Business needs a modern, well-trained and constantly-evolving workforce to compete in the economy of the 21st Century. We commend the government for its measures on skills, but urge it to do more to ensure our businesses can compete on all levels.” - Perrin Beatty, President CEO, Canadian Chamber of Commerce “The Federal Budget is broadly being viewed as a cautious step forward in Prime Minister Trudeau’s mandate. With total expenditures of $304.7 billion, there was only $1.3 billion in new spending announced. Some of the more controversial proposals that had been rumored - such as a capital gains tax increase and the sale of airports - were not included in the budget, but may in future budgets.” - James Moore, former Conservative cabinet minister “The payroll budgets of every business and the take home pay for Canadian workers will now drop for six straight years, with an EI hike in 2018 and 5 years of CPP premium hikes starting in 2019.” Dan Kelly, President, Canadian Federation of Independent Business (CFIB)

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