Canadian Federal Finance Minister Bill Morneau delivered the government's fall economic statement today, noting that the federal deficit will decline from $19.6 billion in 2019-20 to $11.4 billion by 2023-24. To put the deficit in perspective, Ontario’s deficit is currently projected at $14.5 billion, with the deficit for all of Canada is $19.6 billion. The statement focused on growing the economy and investing in middle class jobs, as opposed to new spending on social programs seen previously. Additional highlights include:
There is no plan to return to balance in the election year or over the next term of government.
Economic growth was 3% in 2017 and the Canadian economy will continue to lead the G7 in economic growth over the next two years.
Economists are concerned that global economic growth will decline in 2019 and 2020. These deficits could increase dramatically in the event of a recession or tough economic times.
The federal government is focused on the debt-to-GDP ratio, which is expected to continuously decline and reach 28.5% by 2023-24. This compares favorably with other G7 nations.
Interest rates are increasing, protectionism is rising globally and oil prices have seen declines threatening the Canadian economy.
The economy is currently growing, unemployment is at a 40 year low, wages are increasing modestly, consumer confidence is strong and business profits are up.
Moving to allow businesses to write off the full cost of machinery and equipment used in manufacturing and the processing of goods immediately, in response to tax changes in the United States. This comes at a $14.4 billion cost to the government and is the biggest ticket item in the fall economic statement.
Maintaining the corporate tax rate at the same rate despite cuts in the United States, due to the impact it would have on the budget.
Introducing the Accelerated Investment Incentive to support investment by businesses of all sizes and across all sectors of the economy.
Focusing on increasing investment in the clean technology sector by allowing specified clean energy equipment to be eligible for an immediate write-off of the full cost.
Accelerating support for business innovation by providing a further $800 million over five years through the Strategic Innovation Fund.
Launching an Export Diversification Strategy aimed at increasing exports by 50% by 2025.
Modernizing federal regulations and advancing pay equity.
Launching a new Social Finance Fund to gives charitable, non-profit and social purpose organizations access to new financing, and connect them with non-government investors.
The Canada Child Benefit, National Housing Strategy, increasing the Guaranteed Income Supplement and strengthening the Canada Pension Plan were all highlighted in Minister Morneau's speech, but no new funding was announced for child care, housing or poverty reduction, and there was no mention of new Indigenous funding.
The federal government will deliver their election year budget in the spring, with the next federal election expected in October 2019. OMSSA looks forward to consulting with our members and participating in federal and provincial budget deputations in January.