Edelman 2018 Federal Budget Update
Edelman 2018 Federal Budget Update
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Edelman 2018 Federal Budget Update

  1. Edelman Ottawa | 155 Queen St. Suite 1302 | Ottawa, ON K1P 6L1 | 1.613.569.9000 Finance Minister Bill Morneau’s third Budget, Equality + Growth, continued the Liberals’ goals of advancing social inclusion and supporting the innovation economy. However, announcements are modest, with most investments directed at the public sector. Uncertainty from stalled NAFTA negotiations and the impacts of U.S. tax cuts seem to be driving the cautious approach. Politically, the Liberals may also want to hold any bold program announcements for 2019 where they could support their re-election efforts. 2018 FEDERAL BUDGET UPDATE OUR PERSPECTIVE – EQUALITY + GROWTH Darcy Walsh Senior Vice President & General Manager 613.569.9000 | darcy.walsh@edelman.com Christopher Vivone Senior Vice President & Deputy General Manager 613.569.9000 | chris.vivone@edelman.com BY THE NUMBERS 0 5 10 15 20 DeficitBillions 2020/212019/202018/192017/18 $19.4 billion $18.1 billion $17.5 billion $16.9 billion $13.8 billion $12.3 billion 2021/22 2022/23 0 10 40 15 20 25 30 35 DebttoGDPPercentage 30.4% 30.1% 29.8% 29.4% 28.9% 28.4% Unemployment Rate (projected 2018) 6% Nominal GDP Growth 5.2% 2017 4.0% 2018 (average private sector forecast) Despite a 2015 campaign promise to balance the books by 2019, the Budget projects a deficit of $18.1 billion for 2018-19, down slightly from $19.4 billion in 2017-18. In the face of the projected deficit, the Budget stresses Canada’s strong economic fundamentals and declining debt to GDP percentage.
  2. Edelman Ottawa | 155 Queen St. Suite 1302 | Ottawa, ON K1P 6L1 | 1.613.569.9000 2018 FEDERAL BUDGET UPDATE Increasing Economic Opportunities for Women › The Budget launches a $105 million Women Entrepreneurship Strategy which will invest in women-led businesses and initiatives to support female entrepreneurship. › The Federal Government also aims to triple the percentage of female-owned small and medium-sized businesses participating in federal procurements to 15%. › New Parental Leave rules that increase EI support by 5 weeks if both partners take at least 5 weeks of leave (to a maximum 40 weeks combined – up from 35). Small Business Tax Changes – Passive Investments › Building on changes debated last summer, Budget 2018 introduces a requirement that small businesses can claim a maximum of $50,000 in passive investment income annually, beyond which the company will lose eligibility for the small business tax rate. Support for Science and Research › $4 billion in new funding to support Canadian scientists and researchers. › This includes boosts in funding for Canada’s research funding agencies (NSERC, CIHR, SSHRC) and academic research chairs. › Investments in national laboratories, equipment and infrastructure, including new facility building. › $572 million (over 5 years) to implement a Digital Research Infrastructure strategy. › A reimagining of the National Research Council, with $540 million in new funding, to reinforce research strengths and increase collaboration with industry. STAKEHOLDER REACTIONS “Sad reality after 3 years of Justin Trudeau. Never has a politician boasted so loudly and spent so much to achieve so little. Justin Trudeau promised that he would borrow $10 billion a year – this year’s deficit is $18 billion. Justin Trudeau is failing to balance the budget by 2019 as he promised, ensuring that the future generations of Canadians will have more and more debt to pay back” - Andrew Scheer, MP, Leader of the Conservative Party of Canada “For all their talk on helping the middle class, this is a very timid budget that will actually increase the gap between the super-wealthy and the rest of us. Canadians are rightfully asking, ‘if the economy is doing so well, why am I not feeling those benefits?.” - Jagmeet Singh, Leader of the New Democratic Party of Canada “Although the budget sets out many positive measures, including support for women entrepreneurs, a clearer path to Indigenous self-determination and improved skills development, it doesn’t address the most basic issues facing our economy.” - Perrin Beatty, President & CEO, Canadian Chamber of Commerce Expert Panel to Study the Viability of a National Pharmacare Program › Former Ontario Minister of Health, Eric Hoskins, will lead a national study on the viability of a national pharmacare program. The committee will report back in 2019 – making it highly likely that pharmacare will be a central plank in the Liberal re-election platform. IT Modernization and Cyber Security › $507.7 million to fund a National Cyber Security Strategy including: $155.2 million for Communications Security Establishment to create a new Canadian Centre for Cyber Security that will integrate expertise from across government, and $116 million for RCMP to create a National Cybercrime Coordination Unit › $2.2 billion over six years to improve Government of Canada IT services, including cyber security. › $110 million (over 6 years) for Shared Services Canada to support agencies migrate to modern data centres and the cloud. › $431.4 million (over 6 years) to continue making progress on pay issues related to Phoenix, plus $16 million to work with experts, public sector unions and technology partners on a new way forward for the federal pay system. Innovation Program Rationalization › The Budget builds on moves from 2017 to consolidate innovation funding program, consolidating 92 innovation programs across government into 35, that will be primarily delivered by four flagship innovation platforms: IRAP, Strategic Innovation Fund, Canadian Trade Commissioner Service,and Regional Development Agencies. KEY HIGHLIGHTS