Etobicoke-Lakeshore 2014 Budget Brief Bernard Trottier, MP
February 22, 2014
Slide 2
Economic Action Plan 2014: Three Key Themes 2 Economic Action
Plan 2014 1.Working Towards a Balanced Budget 2.Promoting Jobs and
Economic Growth 3.Supporting Families and Communities
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Theme 1: Working Towards a Balanced Budget 3 Economic Action
Plan 2014: Balanced Budget Before global recession hit, our
Conservative Government paid down $37 billion in debt bringing
Canadas debt to its lowest level in 25 years. Fiscal responsibility
and aggressive debt reduction placed Canada in best possible
position to weather the global recession. When global recession
hit, we made deliberate decision to run temporary deficits to
protect our economy and jobs. While other countries continue to
struggle with debt that is spiralling out of control, Canada
remains in most enviable fiscal position among all G-7 countries.
Canadas net debt-to-GDP ratio is 36.5%, lowest level among G-7
countries with Germany being the second lowest at 56.3%, and the G7
average at 90.2%.
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The Government remains on track to return to balanced budgets
in 2015 4 Budgetary Balance After Measures Sources: Public Accounts
of Canada; Department of Finance Economic Action Plan 2014:
Balanced Budget
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Federal debt as a share of GDP is expected to decline next year
and to fall to 25 per cent of GDP by 2021 5 Canadian Federal
Government Debt as a Percentage of GDP Sources: Public Accounts of
Canada; Statistics Canada; Department of Finance. Economic Action
Plan 2014: Balanced Budget
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Government is taking fiscally responsible action to achieve
deficit reduction 6 Budget 2014 builds on previous efforts to
reduce spending by announcing an additional $9.1 billion in ongoing
savings, including: Making public sector wages and benefits
affordable for taxpayers, by ensuring compensation is fair and
in-line with other public and private sector employers. Improving
the fairness of the tax system, by closing tax loopholes and
strengthening tax enforcement to ensure low taxes for all taxpayers
not only a select few. In addition, our Government is also:
Controlling the size and cost of government, by freezing
departmental budgets to ensure efficiency in government operations
and administration. Reviewing government assets, to ensure assets
that can better create wealth and jobs for Canadians if were owned
by the private sector are divested. Our Government has reduced
government departmental spending for three straight years a trend
that has not been observed in decades. Economic Action Plan 2014:
Balanced Budget
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The Government's restraint measures since Budget 2010 ensure a
return to balanced budgets 7 Impact of Savings Measures Since
Budget 2010 on Budgetary Balance Source: Department of Finance.
Economic Action Plan 2014: Balanced Budget
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Spending reduction measures have been focused on controlling
direct program spending 8 Components of Federal Program Spending
Sources: Public Accounts of Canada; Department of Finance. Economic
Action Plan 2014: Balanced Budget
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Program expenses-to-GDP ratio to fall below its pre-recession
level 9 Program Expenses-to-GDP Ratio Sources: Department of
Finance; Statistics Canada. Economic Action Plan 2014: Balanced
Budget
Slide 10
Transfers to provinces and territories have increased
consistently during our Governments mandate 10 Federal Transfers to
Provinces and Territories, 2006-2015 Sources: Department of
Finance. Economic Action Plan 2014: Balanced Budget
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Budget will be balanced while not cutting transfers to
provinces 11 Overall, since 2010, actions weve taken to make
government more effective and efficient are saving taxpayers
roughly $19 billion a year. Unlike the previous Liberal government,
we will NOT cut major transfers to persons (i.e. seniors, pensions,
children, etc.) or other levels of government (i.e. health,
education, social services, etc.). In fact, major federal transfers
to provinces and territories for health care and social services
will reach a record high of almost $65 billion in 201415 an
increase of over 50% since 2006 Economic Action Plan 2014: Balanced
Budget
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Making Public Sector Wages and Benefits Affordable for
Taxpayers 12 Continue to work with public sector bargaining agents
in upcoming negotiations to ensure that the public service is
affordable, modern and high-performing in all 27 collective
agreements Already announced changes to employee pensions and are
eliminating severance benefits available to employees upon
voluntary departure Modernizing disability and sick leave
management system: introducing short-term disability plan, removing
banked sick days payout upon retirement Transitioning from
currently paying 75% of benefit costs to equal cost sharing for
retired federal employees, and increasing number of years of
service required to be eligible to participate in the plan from 2
to 6 Estimated that phasing in equal cost sharing for retired
employees and increasing the minimum years of service required for
eligibility would result in fiscal savings of roughly $7.4 billion
over 6 years under accrual accounting Economic Action Plan 2014:
Balanced Budget
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Improving the Fairness of the Tax System 13 A well-functioning
tax system is essential to keep Canada positioned as an attractive
place to work, invest and do business EAP 2014 proposes a number of
measures that reflect our ongoing commitment to improve integrity
of the tax system, including actions to address international
aggressive tax avoidance by multinational enterprises (e.g.
insurance swaps, back-to-back loans through intermediaries, bogus
foreign affiliates) EAP 2014 announces public consultations on
income tax framework for non-profit organizations (NPOs) to ensure
that tax exemptions for NPOs are appropriately targeted and not
subject to abuse by organizations that claim the exemption but are
not operating in the manner intended In total, measures in EAP 2014
to improve tax integrity will provide savings of $44 million in
201415, rising to $454 million in 201819, for a total of $1.8
billion over 201314 and the following five years. Economic Action
Plan 2014: Balanced Budget
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Controlling the Size and Cost of Government 14 In November 2013
Update of Economic and Fiscal Projections, Government reintroduced
a 2-year freeze on departmental operating budgets, beginning in
201415 Operating budget freeze is expected to generate savings of
roughly $550 million in 201415 and $1.1 billion in 201516
Operational efficiencies are expected by: Streamlining departmental
information technology applications Simplifying processes and
reducing administrative costs of Governments procurement system,
while reducing administrative burden on suppliers Modernizing
federal office space management Rationalizing Governments vehicle
fleet Eliminate wasteful spending on late fees and interest charges
for delinquent payments to suppliers, on which approximately $5
million was spent in 201213 Economic Action Plan 2014: Balanced
Budget
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Reviewing Government Assets 15 Divestitures of Ridley Terminals
Inc. and portions of the Dominion Coal Blocks Plans to exit from
holdings in General Motors in an expeditious manner, while
maximizing value for Canadian taxpayers Economic Action Plan 2014
continues to include a potential gain from the sale of assets in
the forecast for other revenues of $500 million in 201415 and $1.5
billion in 201516 Economic Action Plan 2014: Balanced Budget
Through its review of federal corporate assets, the Government
intends to sell assets that have the potential to generate more
wealth and jobs for Canadians if they were owned by the private
sector
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Canadas net debt is expected to remain the lowest, by far, of
any G-7 country 16 International Monetary Fund Forecast for Total
Government Net Debt-to-GDP Ratio, 2018 Note: Total government net
debt-to-GDP ratio is ratio of total liabilities net of financial
assets of the central, state and local levels of government, as
well as those in social security funds, to GDP. For Canada, total
government includes federal, provincial/territorial and local
government sectors, as well as CPP and QPP. For international
comparability, adjustments are made to unfunded public pension
liabilities. Source: International Monetary Fund, Fiscal Monitor,
October 2013 Economic Action Plan 2014: Balanced Budget
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Benefits of Balanced Budgets 17 Canada is only G-7 country to
have a rock solid AAA rating with a stable outlook from all the
major credit rating agencies Moodys, Fitch, and Standard &
Poors Frees up taxpayer dollars that might otherwise be spent on
interest costs Instills confidence in consumers and investors,
whose dollars spur economic growth and job creation Strengthens
Canadas ability to respond to longer-term challenges, such as
population aging, and unexpected global economic shocks Ensure
fairness and equity for generations to come by avoiding future tax
increases or reductions in services Economic Action Plan 2014:
Balanced Budget
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Theme 2: Promoting Jobs and Economic Growth 18 EAP 2014 remains
focused on what matters to Canadians: jobs and growth. We will do
this by: Connecting Canadians with available jobs, by helping them
to acquire skills that will get them hired or help them get better
jobs Fostering job creation, innovation and trade, by keeping taxes
low and continuing to provide Canadian businesses and investors
with the market access they need to succeed in the global economy
Ensuring responsible resource development, by supporting the
mining, forestry and agriculture sectors Conserving Canadas natural
heritage, by investing in national parks and conservation
initiatives and expanding tax support for clean energy Investing in
infrastructure, by continuing record investment in roads, bridges,
ports, and transit via the new Building Canada plan and other
measures Economic Action Plan 2014: Jobs & Growth
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Canada has outperformed all other G-7 economies in job creation
over the recovery 19 Improvement in Employment Over the Recovery
Note: Monthly data for Canada (July 2009 to Jan 2014), USA (Feb
2010 to Jan 2014), Germany (July 2009 to Dec 2013), Japan (Dec 2012
to Dec 2013) and Italy (at its lowest as of Dec 2013). Quarterly
data for France (2009Q3 to 2013Q4) and the UK (2010Q1 to 2013Q3)
Sources: Haver Analytics; Department of Finance calculations %
Increase in Employment Economic Action Plan 2014: Jobs &
Growth
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Job creation during the recovery has been in high-wage,
full-time, private-sector employment 20 Change in Employment Over
the Recovery, July 2009 to January 2014 Notes: Calculations are
based on Statistics Canada data for 105 industries. High-wage
industries are defined as those with average hourly wages above the
aggregate average. Totals may not add due to rounding. Sources:
Statistics Canada; Department of Finance calculations. Economic
Action Plan 2014: Jobs & Growth
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Private sector economists expect both real and nominal GDP
growth to pick up this year and next 21 Canadian GDP Growth Outlook
Source: Department of Finance December 2013 survey of private
sector economists Economic Action Plan 2014: Jobs & Growth
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Canada has performed better than most other G-7 economies
during the global recession and the recovery 22 Change in Real GDP
Since Pre-Recession Peak Note: Pre-recession peak was 2007Q3 for
Italy; 2007Q4 for USA; 2008Q1 for UK, France, Germany and Japan;
and 2008Q3 for Canada. Last data point is 2013Q3 for all countries
except USA and UK, for which it is 2013Q4. Sources: Haver
Analytics; Department of Finance calculations. Economic Action Plan
2014: Jobs & Growth
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Difficulty in Hiring Over the Recovery Has Become Significant
in Certain Occupations 23 Job Vacancy Rate Sources: Number of
online job postings: WANTED Analytics. Employment: Statistics
Canada (Labour Force Survey); Department of Finance calculations.
Economic Action Plan 2014: Jobs & Growth
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Connecting Canadians with Available Jobs: Highlights 24
Launching the Canada Job Grant: so that Canadians can get the
skills training they need to get in-demand jobs Creating the Canada
Apprentice Loan: which will provide apprentices in Red Seal trades
access to over $100 million in interest- free loans each year
Launching a Job Matching Service: this new service will match
Canadians looking for work with employers looking to hire them More
paid internships for young Canadians: investing $55 million to
create paid internships for recent graduates in both small and
medium- sized business and high-demand fields Helping older workers
get back to work: investing $75 million in the Targeted Initiative
for Older Workers program to support older workers who want to
participate in the job market Economic Action Plan 2014: Jobs &
Growth
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Fostering Job Creation, Innovation and Trade: Highlights 25
Landmark investments in research & innovation: $1.5 billion
over the next decade for post-secondary research through the Canada
First Research Excellence Fund $500 million to support a
competitive auto sector through the Automotive Innovation Fund $46
million in new funding to the granting councils to support research
and scientific discoveries across Canada Cutting red tape for small
business: eliminating the requirement for 800,000 payroll
remittances by 50,000 small and medium-sized businesses Modernizing
Canadas intellectual property framework to better align it with
international practices Promoting Canadian-made products:
Developing a Made-in- Canada campaign to promote high-quality
Canadian products here and around the world, while also working to
reduce internal barriers to trade Economic Action Plan 2014: Jobs
& Growth
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Canada leads the G-7 with the lowest overall tax rate on new
business investment 26 Marginal Effective Tax Rate 1 on New
Business Investment, 2014 1 Marginal effective tax rate (METR) on
new business investment takes into account federal, provincial and
territorial statutory corporate income tax rates, deductions and
credits available in the corporate tax system and other taxes paid
by corporations. 2 OECD average excludes Canada. Source: Department
of Finance. Economic Action Plan 2014: Jobs & Growth
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Sustained growth is pushing corporate tax revenues higher 27
Federal Corporate Income Tax Revenue and the General Corporate
Income Tax Rate Sources: Public Accounts of Canada; Department of
Finance projection for 201314 to 201819 Economic Action Plan 2014:
Jobs & Growth
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Substantial Tax Reductions for Small Businesses 28 Federal
Corporate Income Tax Paid by a Small Canadian- Controlled Private
Corporation with $500,000 of Taxable Income Sources: Public
Accounts of Canada; Department of Finance projection for 201314 to
201819 Economic Action Plan 2014: Jobs & Growth
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Fostering Small Business 29 Economic Action Plan 2014: Jobs
& Growth Reduced small business tax rate from 12 percent to 11
percent Eliminated the corporate surtax for all corporations in
2008, which was particularly beneficial to small business
corporations as the surtax represented a larger proportion of their
overall payable tax In EAP 2014, maintaining the freeze on
Employment Insurance (EI) premiums Lifetime Capital Gains Exemption
(LCGE) on qualified small business shares was increased to $750,000
from $500,000 in 2007. In EAP 2014, increasing LCGE limit to
$800,000 for 2014, and new limit is now indexed to inflation No
change to CPP contribution rate this year. Expanding CPP would
require an increase in contributions, which would impose a burden
on employers and employees. E.g., doubling CPP rate would result in
estimated increase in annual CPP contributions of up to $2,600 per
worker, shared equally by employers and employees. Self-employed
individuals would need to contribute the entire amount
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Ensuring Responsible Resource Development: Highlights 30
Economic Action Plan 2014: Jobs & Growth Canada's natural
resources sector represents 18% of the economy, over half of our
exports, and supports 1.8 million jobs EAP 2014 proposed new
measures to support natural resources sector, including: Supporting
mineral exploration, by extending the 15-per-cent Mineral
Exploration Tax Credit for flow-through share investors Ensuring
comprehensive and timely reviews of pipelines, such as the
TransCanadas Energy East Project, by investing $28 million in the
National Energy Board for such reviews Helping Canadas North
realize its economic potential, by providing $40 million to the
Strategic Investments in Northern Economic Development program
Supporting the forestry industry, by investing over $90 million in
the Forest Industry Transformation program to advance leading- edge
technologies to enhance the competitiveness of Canadas wood
products and pulp-paper sectors.
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Conserving Canadas Natural Heritage: Highlights 31
Environmental protection goes hand-in-hand with economic growth.
Thats why EAP 2014 proposes measures to: Expand tax relief for
green energy generation, to include water- current energy equipment
and equipment used to treat gases from waste Protect Canadas
national parks, by providing over $390 million to make improvements
to highways, bridges and dams located in our national parks and
historic canals Support conservation, by investing an additional
$15 million in the Recreational Fisheries Conservation Partnerships
Program Improve and expand Canadas recreational trails, by
investing $10 million to improve trails across the country
Encourage donations of ecologically sensitive land, by making tax-
relief for such donations more generous and flexible Support
family-oriented conservation, by providing $3 million to allow the
Earth Rangers Foundation to expand its ongoing work Economic Action
Plan 2014: Jobs & Growth
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Investing in Infrastructure: Highlights 32 In 2007, we launched
the $33 billion Building Canada plan, supporting over 12,000
infrastructure projects across Canada During the stimulus phase, we
supported an additional 30,000 infrastructure projects that created
immediate jobs We doubled the Gas Tax Fund to $2 billion per year,
made it permanent and indexing it at 2 per cent per year, beginning
in 201415 Invested $1.8 billion in affordable housing since 2006,
and another $1 billion for renovations and energy retrofits for up
to 200,000 affordable housing units EAP 2014 maintains the
commitment made in the 2013 Building Canada plan, a $53 billion
investment in predictable infrastructure funding for the next ten
years the largest and longest federal investment in job creating
infrastructure in Canadian history EAP 2014 proposes new $305
million investment in broadband internet in rural and northern
communities and $200 million to establish a National Disaster
Mitigation Program Economic Action Plan 2014: Jobs &
Growth
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Theme 3: Supporting Families and Communities 33 Economic Action
Plan 2014: Families and Communities EAP 2014 builds on previous
actions by our Government to support families and communities,
improving the quality of life for hard-working Canadian families
Supports Canadians by encouraging a consumer-friendly marketplace
and better protecting financial consumers EAP 2014 supports
Canadian families by keeping taxes low, encouraging inclusive
communities, and providing further tax recognition of the costs of
adopting a child and health-related expenses
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Building a Consumer-Friendly Marketplace: Highlights 34
Economic Action Plan 2014: Families and Communities Invest $390
million over five years to strengthen Canadas food safety system
Encourage competition and lower prices by introducing legislation
to cap wholesale domestic wireless roaming rates Introduce
legislation to prohibit unjustified cross-border price
discrimination to reduce the gap between consumer prices in Canada
and the US Launch a review of the Canadian deposit insurance
framework to ensure continued protection for the savings of
Canadians Eliminate the practice of pay-to-pay billing
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Investing in Families: Highlights 35 Economic Action Plan 2014:
Families and Communities $44.9 million over five years to expand
the focus of the National Anti- Drug Strategy from illicit drugs to
also address prescription drug abuse in Canada Enhance access to EI
sickness benefits for claimants who receive Parents of Critically
Ill Children and Compassionate Care benefits Increase the maximum
amount of the Adoption Expense Tax Credit to help make adoption
more affordable for Canadian families Restore the effectiveness of
the excise duty on tobacco products in support of the Governments
commitment to reducing tobacco consumption Expanding health-related
tax relief under the Goods and Services Tax/Harmonized Sales Tax
(GST/HST) and income tax systems to better reflect the health care
needs of Canadians
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Canadian Families Keep More of Their Hard-Earned Dollars as a
Result of the Governments Actions to Reduce the Tax Burden 36
Economic Action Plan 2014: Families and Communities Total Federal
Tax Relief for a Family of Four, 2014 Source: Department of
Finance
Slide 37
Governments Actions to Reduce the Tax Burden Are Leaving More
Hard-Earned Dollars in the Pockets of Seniors 37 Economic Action
Plan 2014: Families and Communities Total Federal Tax Relief for a
Senior Couple With Pension Income, 2014 Source: Department of
Finance
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Investing in Communities: Highlights 38 Economic Action Plan
2014: Families and Communities $105 million per year in support of
culture-related programs, $9 million per year for the Canada Book
Fund and $8.8 million per year for the Canada Music Fund $10.8
million over four years to support the efforts of Special Olympics
Canada $25 million over five years to continue efforts to reduce
violence against Aboriginal women and girls $323.4 million over two
years to continue the First Nations Water and Wastewater Action
Plan $8.1 million to create a DNA-based Missing Persons Index to
match DNA from missing persons and unidentified remains to the
National DNA Data Bank Proposing changes to the Public Service
Employment Act and the Public Service Employment Regulations to
enhance employment opportunities in the federal public service for
veterans
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Economic Action Plan 2014: Conclusions 39 Economic Action Plan
2014: Families and Communities I encourage you to visit
www.budget.gc.ca to look over the Budget in detail to learn more
about how it will make our economy stronger and benefit Canadians
We will eliminate the deficit in 2015; we will remain focused on
the economy; and we will make job creation our overarching priority
We remain committed to keeping tax low We will not spend recklessly
to pile on endless debt for our children and grandchildren to worry
about Remaining focused on these goals is the best way to ensure
that Canadas future is a prosperous one, with a healthy,
competitive economy, sustainable for generations to come