2019 Federal Budget highlights
On March 19, federal Finance Minister Bill Morneau provided details for the 2019 Budget. The final budget to be tabled before the next federal election this fall contained many spending initiatives that are to be expected from a pre-election budget but no signature policy “game changer”.
Budget 2019 has a six-year fiscal horizon during which:
- GDP is projected to grow by 1.8% in 2019 and 1.6% by 2020 before increasing in subsequent years;
- The government will run deficits of $19.8 billion in 2019-20 and $19.7 billion in 2020-21 before those figures decrease somewhat in subsequent years; and
- The debt-to-GDP ratio will be reduced annually over the entire fiscal horizon.
In prior budgets, the government allocated significant funding to developing and implementing the Pan-Canadian Framework on Clean Growth and Climate Change, most notably a federal carbon pollution pricing system. In the 2019 Budget, the government released a backgrounder seeking stakeholder comment on refinements to the carbon pricing system, including proposals for expanded relief on fuel charges for farmers and certain types of fuel. The CPA has written to the government about the industry’s concerns regarding the exclusion of a propane exemption in agricultural applications from the new federal carbon levy “backstop” that is taking effect in New Brunswick, Ontario, Manitoba and Saskatchewan.
Budget 2019 also allocates $1.01 billion in 2018-19 to increase residential and commercial energy efficiency and specifies that the Canada Infrastructure Bank will prioritize clean hydroelectricity and electrical connectivity infrastructure projects moving forward.
Skills and Innovation
While past budgets placed an emphasis on those programs aimed to overhaul government support for innovation and foster private sector high-tech investment in Canada, Budget 2019 shifts the focus to individual-level skills training.
The central policy proposal in that regard is the Canada Training Benefit. Half of this program will be personalized credit accounts that individuals will be able to draw on to subsidize skills training and education as of 2020. Funded by $710 million over five years, the accounts will accumulate money to workers between the ages of 25 and 64 who earn between $10,000 and $150,000 per year, increasing by $250 per year, up to a lifetime limit of $5,000.
A linked EI Benefit, funded by $1.04 billion over five years starting in 2019-20, will provide up to four weeks of income support every four years for workers to take time off during training. The government will consult with the provinces and territories on changing labour legislation to ensure that workers can access the benefit without risk to their employment.
To support businesses and hiring, Budget 2019 proposes to make the Global Talent Stream (a pilot program inaugurated in Budget 2016) permanent and to eliminate the business income threshold for accessing the 35 per cent refundable credit under the Scientific Research and Experimental Development Tax Incentive Program.
Encouraging Aboriginal Business Growth
Budget 2019 includes $78.9 million over five years, starting in 2019-20, with $15.8 million per year to support Indigenous entrepreneurs and economic development. This funding will flow through the Community Opportunity Readiness Program and will provide targeted financing to launch Indigenous-led start-ups and expand existing Aboriginal businesses.
Federal Regulatory Reform
Budget 2019 introduces the first of three planned ‘Regulatory Roadmaps’ to create more user-friendly and simpler federal regulations. Initial funding will target the Canadian Food Inspection Agency, Health Canada and Transport Canada.
Budget 2019 makes a one-time transfer of $2.2 billion through the federal Gas Tax Fund to municipalities and First Nations for short-term infrastructure priorities. The government is also proposing a $6-billion plan to achieve near-universal internet connectivity in Canada over the next 10 years by making investments in everything from Low Earth Orbit satellite capability to ‘last-mile’ connections at the community level.