Voters were promised a balanced budget in four years but no return to black ink is projected in Morneau’s five-year forecast.
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Canadians are going $29.4 billion in the hole this year and are on their way to adding $113 billion to the debt over the next five years, by the government’s own admission. There were also a number of line items targeted at Canadian investors.
Canadians like deficits in the abstract, but not so much when they’re concrete. “It’s stimulus on a modest – to at most moderate – scale”.
It is projected to be up slightly in fiscal 2016-2017 to 32.5 percent. This assumes oil prices will average US$25 a barrel in 2016 – lower than even the lowest level hit during the recent rout.
The industry will also benefit from an investment of $35 million over two years (2016-2018) for a new program to support the promotion of Canadian artists worldwide.
David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives, said broadly speaking the budget marks a major shift of tax breaks and government benefits from the wealthiest to the poorest families in Canada.
Anti-poverty advocates and housing providers had asked the government for much more – $3.2 billion to renovate old units and build 100,000 new units nationwide – to aid the estimated 200,000 people who experience homelessness annually and reverse years of declines in federal spending on affordable housing.
The prime minister had campaigned on three fiscal pillars, and Tuesday’s budget document confirmed they have all been cast aside. The proposed investments, picked with a focus on long-term value, are expected to result in an eventual $29.4 billion deficit.
By the end of the Liberals’ current mandate in 2019, Morneau vowed Canada’s debt-to-GDP ratio – which is already the lowest of any G7 nation – “will be lower than it is today”.
The move is created to help laid-off workers while they search for work, possibly in an entirely different industry.
To keep deficits manageable, Trudeau has revised pledges made during last fall’s election. The Liberals had promised a big programme of spending on infrastructure to fix the country’s creaking transport systems and invest in green technology. Trudeau will also defer C$1.6 billion in planned military spending until at least 2021.
“It means a father will make it to his daughter’s soccer game on time, a small business owner in rural Manitoba will get her website up and going, and our communities will be better places to live”, said Finance Minister Bill Morneau.
The median individual income in Canada is less than $28,000.
Trudeau’s government will revise Employment Insurance rules as Canada’s energy sector continues to struggle.
People earning more than $216,975 will get no benefit from the middle-class tax cut because that is the point where the increase in taxes for the wealthy will exceed how much they save from the tax cut on the second bracket.
“The challenge the government has faced is how do you actually deliver on as many of your election promises as you can, but with a binding fiscal constraint?” said Alexander.
In the budget: $781.1 million over five years for veterans’ services and $5.6 billion worth of benefits over six year. The two provinces account for over 71 per cent of public transit ridership, and will receive $2.41 billion. That money comes after a meeting with premiers this month failed to produce a consensus on national carbon pricing.
The federal budget includes $120 billion in infrastructure investments over 10 years – though only about 10 per cent of that total ($11.9 billion) is scheduled to be spent in the next five years.
Morneau earmarked billions of dollars in expenditures for new mass transit, water treatment plants and sewers, roads and bridges, social housing, modern research labs and student grants, and faster Internet connectivity.
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Through the recession Canada was largely sheltered from severe cuts to the arts; instead, Canada’s investment has been largely “stagnant” since the 1990s, he said.
