Hill Update: Fall Economic Statement 2018
Finance Minister Bill Morneau delivers Fall Economic Statement
Today the Canadian Government released their fall economic statement which should serve as a mid-term check up on the state of the nation’s economy. The government provided their next steps to grow the economy by investing in middle class jobs, with a focus on luring investment and boosting business growth. In the fall fiscal update Finance Minister Bill Morneau touted Canada’s strong economic performance but warned that global uncertainty, unpredictable oil prices, lingering trade disputes and deep tax cuts brought in by U.S. President Donald Trump are all posing serious challenges.
The Liberal government is spending billions to help corporate Canada compete with the U.S. and to prop up struggling news organizations — showing a willingness to go deeper into deficit with no timeline for returning to a balanced budget.
The government made clear they are tracking mandate accomplishments closely, noting that of the 289 commitments made in November 2015, 97 have been completed, and 189 have had action taken and progress made.
Some key figures:
- Debt-to-GDP ratio is projected to fall each year, 28.5 by 2023-2024
- The revised deficit for 2017-2018 is now $19 billion, down $0.9 billion
- Projected deficit for the current fiscal year is $18.1 billion
- Debt is expected to grow by $96.7 billion to $765 billion by 2023-2024
- Economic growth is forecast at 2 per cent (up from 1.6) and slightly higher inflation
Click here to access the full economic statement.
Here are your top 5 takeaways from today’s announcement:
Helping Canadian Innovators
To accelerate support for business innovation in Canada, the Government is proposing a further $800 million over five years to the Strategic Innovation Fund, which will continue to be available to support innovative investments across the country and in all economic sectors.
Accelerating Business Investment
The government proposes immediate changes to Canada’s tax system in order to enhance business confidence in Canada to the tune of $14.4 billion. First, by allowing businesses to immediately write off the cost of certain machinery and equipment in regard to the manufacturing and clean-tech industries. Second, by introducing the Accelerated Investment Incentive, an accelerated capital cost allowance for businesses that are making capital investments.
Making it Easier for Businesses to Grow
The government will create an External Advisory Committee on Regulatory Competitiveness, which will allow regulators to identify changes that promote economic growth and innovation, and help deliver growth. With an investment of up to $11.4 million over 5 years and $3.2 million ongoing, the government is also creating the Centre for Regulatory Innovation.
Removing Barriers to Trade Within Canada
The government proposes accelerated action to remove regulatory and other barriers in four specific areas: transporting goods between jurisdictions, harmonizing food regulations, aligning construction regulations, and facilitation of inter-provincial alcohol trade.
Support for Northern Communities
To ensure that northern families have access to affordable, healthy food, the Government is investing $62.6 million over five years starting in 2019–2020, with $10.4 million ongoing, in the Nutrition North Canada program.
There were several new investments unveiled in today’s statement totaling $17.6 billion over 6 years:
- $14.4 billion to allow businesses to write off some capital costs more quickly.
- Infrastructure: Spending moved up and other measures to promote trade. The goal is to boost overseas exports by 50 per cent by 2025.
- Support for Journalism: Charitable status for non-profits, local news tax credit and tax deduction for subscriptions.
- Francophone media: $14.6 million over 5 years to create digital platform for French public broadcasters.
- Strategic Innovation Fund: Additional $800 million over 5 years, including $100 million for forestry sector.
- Social Finance Fund: $755 million over 10 years to help charities and non-profits fund social projects.
- Wild fish stocks: $202 million more over 5 years to support sustainability.
- Nutrition North: $62.6 million over 5 years and $10.4 million per year after that for food security program.
- Avalanche Canada: $25 million one-time endowment to promote avalanche safety.
If you require more information on any of these items or the fall economic statement, our team of consultants is available to provide further detail.