Nov 21, 2018
By Michael Kramer
Finance Minister Bill Morneau unveiled his fall fiscal update on Wednesday – rolling out Ottawa’s response to competition challenges posed by aggressive moves by the Trump administration.
An overview shows that new measures over the next five years will cost the treasury $17.1 billion – with almost a third of that coming in the 2019-20 fiscal year – to boost investment in Canada.
Deficits won’t start to decline until 2021-22. In this fiscal year, Ottawa expects to be $18.1 billion in the red – and the deficit will actually increase somewhat next year – to $19.6 billion.
A strong economy has handed Ottawa an extra $22 billion in revenues over the next five years – compared to expectations in the February 2018 budget.
Measured by the debt-to-GDP ratio, the debt burden is expected to be 30.9 per cent in this fiscal year – before declining gradually to 28.5 per cent in 2023-24.
There are new tax incentives to encourage investment in Canada – worth $14 billion over five years – The government is allowing manufacturers and the clean-tech industry to write down all capital costs right away.
The government is injecting another $800 million over five years into its strategic innovation fund – to bolster investments across the economy. Of that amount – the forestry industry will get $100 million.
The government is also setting up an export diversification strategy – aiming to increase sales to countries other than America – by 50 per cent by 2025.
Canadian journalism gets a boost through a bundle of tax incentives that Finance Canada estimates are worth $600 million over five years – including tax credits related to hiring and subscriptions. Some news outlets can become charities – that can accept donations.
There’s also a new fund for social finance – that will allow charities and non-profit groups to finance new ideas. $755 million will be available over 10 years – in hopes of seeing $2 billion in economic activity – and up to 100,000 jobs as a result.
Red tape and regulations will be overhauled – as Ottawa tries to work with the provinces to streamline and harmonize Canadian business requirements.
There’s even something for fish. Morneau’s fiscal update gives about $49 million a year to rebuilding wild fish stocks – and setting up fisheries funds in Quebec and British Columbia.
Money for Nutrition North will be enhanced by $13 million per year – to bring down the cost of food in the North – and to lower the costs of traditional hunting and harvesting.
And Avalanche Canada will receive a $25-million endowment – to strengthen its work on avalanche safety.
Canada’s monthly deficit for September 2018 was $1.4 billion – smaller than last year’s $3.3 billion.
And for the fiscal year to date – the federal government is in the black so far – posting a $1.2-billion surplus – compared to a deficit of $6.2 billion for the same April-to-September period last year.