This presentation discusses the upcoming Federal Budget for the government of Canada. The presentation will look at the following areas: 1. Taxation 2. Program Spending 3. OAS 4. Deficits 5. Debt 6. Structural deficits 7. Raising Taxes 8. What if scenarios

1. Canada – Federal Budget –
2016-2017
By: Paul Young, CPA, CGA
March 19, 2016

2. Disclaimer
• This presentation is one opinion of what to expect in the 2016-2017
Budgets

3. Paul Young - Presenter
Bio
• CPA/CGA
• 25 years of experience in Academia, Industry and Financial solutions
• Youtube Channel -
https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

4. Agenda
• Government Revenue
• Expenses
• Deficits
• Outlook

5. Federal Government Revenue
• Forecasted Revenue
• Revenue
• Driven by economic growth
• Low economic growth predicted world-wide 3.2 and 3.5 for 2016 and 2016
• Canada growth is predicted to be 1.2% and 2.5%
• Keys
• Strong Consumer spending 2.2% forecast
• Demand for exports 3-4% forecast
• Strong housing starts
• Issues
• Low Canadian Dollar
• Low Commodity Prices
• New Taxation (ORPP, Carbon Tax/Pricing, PST hikes)

6. Government Spending
• OAS
• Moving the age back to 65 from 67
• Program cost $44.1B
• Changes will push future budgets up by $4B
• EI/CPP
• Raising of Premiums
• Military
• Capital spending
• Size of military
• Foreign Aid
• Canada spends $4.9B in foreign Aid
• LPC plan pledge $2.65 to poor countries for climate change.
• UN has .70% of Gross National Income commitment for aid
• Clean Technology
• $300M more for Clean Technology
• Refugee
• $800B in 2015-2016
• Could see additional $200-400M per year
• Infrastructure
• Promised $5B, but could be 8-10 Range
• Government Transfers
• New accord required
• Changes will push up the costs
Elderly Benfits $ 2.3
EI $ 0.8
Child Benefit $ 1.2
HST/CST $ 2.1
Equalization $ 0.8
Gas Fund $ 2.1
New Gas Fund $ 8.0
Crown $ 0.1
National defense $ (1.0)
All Department/Agencies $ 1.5
Refugee $ 0.3
First Nations $ 0.8
Foreign Aid $ 2.5
Clean Tech $ 0.3
Total $ 21.8
New Revenue $ 5.6
Deficit $ 16.2
Debt Charges $ 1.5
Total Deficit $ 17.7
Project spending
for 2016-2017

7. What are structural deficits
• A budget deficit that results from a fundamental imbalance in government
receipts and expenditures, as opposed to one based on one-off or short-
term factors. [1]
• A government budget deficit occurs when a government spends more than
it receives in tax revenue, while a structural deficit is when a budget deficit
persists for some time.
• Structural deficits will eventually pose a problem for any government.
Deficits are financed by borrowing, and continued borrowing leads to an
accumulation of debt. The ability to pay off this debt is measured by a
country’s debt relative to its GDP, referred to as its debt-to-GDP ratio.
• If a country’s debt-to-GDP ratio gets too high, investors will worry that the
government will either default on this debt, or will deflate its value away by
monetising the debt and thereby engineer a high inflation rate.

8. What if Scenarios
• Government runs $17.5 to $25B deficits
• Structure deficit
• The federal government could move to a structural deficit unless spending is cut or the
federal government to raises taxes
• HST each point raise increases the government tax by $5B
• Corporate tax hike can bring in about $1.1 to $1.5 new tax revenue
• Personal income tax hike could generate $1.5B to $2.5 new tax revenue
• Carbon Pricing/Taxation
• Transfer to provinces are kept at 4%
• It will cost government $2.2 to $2.8B
• Refugee re-settlement disappears in 3 years
• Saves about $200M
• Infrastructure money is promised for 10 years
• Scaling back the money

9. Federal Government deficit plan
Quote: TD Bank
Quote: Scotia
Bank
Quote: BMO

10. Summary:
• Deficits can become structural
• Today’s deficits/debt are tomorrow taxes
• Slow economic growth world-wide
• No transparency on foreign Aid
• Clean technology can take years to commercialized
• Infrastructure
• Exports
• Profitable transit projects