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2017 Federal Budget Instant Reactions

Public transit tax credit to be eliminated

Canadians’ metro passes will no longer give taxpayers a little bonus come tax time. Budget 2017 takes action to eliminate the Public Transit Tax Credit, effective in respect of transit use occurring after June 30, 2017. According to the government, evidence suggests this credit has been ineffective in encouraging the use of public transit and reducing greenhouse gas emissions. As a result, the government will provide $20.1 billion over 11 years to provinces and territories, for improved public transit infrastructure.

Public transit to get $20 billion boost over next 11 years

The benefits of public transit are well understood—and so too are the costs of inaction. To improve public transit infrastructure across Canada, Budget 2017 proposes to invest $20.1 billion over 11 years through bilateral agreements with provinces and territories. Regional allocations will be determined by using a formula based on ridership (70 per cent) and population (30 per cent). Through the Public Transit Infrastructure Fund, Budget 2016 focused on investing $3.4 billion over three years to upgrade and improve public transit systems across Canada. What’s more, the proposed Canada Infrastructure Bank will invest at least $5 billion in public transit.

Canada pursues new approach to innovation

To lead the world in innovation, we need to equip Canada’s workers with the tools they’ll need to succeed in the new economy. In Budget 2017, Canada introduces its Innovation and Skills Plan, focusing on building Canada as a world-leading innovation economy. The budget looks to establish Innovation Canada, a new platform that will help to simplify dozens of innovation programs across many departments. What’s more, the budget also proposes to invest up to $950 million over five years, starting in 2017–18, to support business-led innovation superclusters with the potential to accelerate economic growth, $375 million to help innovate to solve Canada’s challenges in clean technology and smart cities, a new $1.26 billion Strategic Innovation Fund with a focus on aerospace and defence, technology and automotive innovation and $400 million in venture capital funding.

New Canada Infrastructure Bank to invest at least $35 billion over 11 years

The government will soon propose legislation to establish the Canada Infrastructure Bank, which will be responsible for investing at least $35 billion over 11 years through loans, loan guarantees and equity investments. These investments will focus on large projects, such as regional transit plans, transportation networks and electricity grid interconnections. The bank will be an arm’s-length organization that will work with provincial, territorial, municipal, Indigenous and private sector investment partners to change how infrastructure is planned, funded and delivered in Canada.

Canada expands tax support for geothermal energy

Geothermal energy has the potential to reliably meet part of Canada’s heating and generation needs, including in northern and remote communities where reliance on fossil fuels is high. To encourage greater use of renewable energy, Budget 2017 proposes to extend its accelerated capital cost allowance to a wider range of geothermal projects and expenses as well as and expand the range of geothermal energy project expenses that are eligible. Canada’s income tax system encourages businesses to invest in clean energy generation and energy efficiency equipment by allowing them to deduct the cost of eligible capital assets on an accelerated basis.

Health care to see $37 billion in federal funds next year

The federal government recognizes the need to strengthen the health care system to adapt, innovate and address the many new challenges that Canadians face each and every day. In 2017–18, the government will provide more than $37.1 billion to the provinces and territories, under the Canada Health Transfer. This year’s funding—an increase of $1.1 billion from last year—will provide predictable funding to the provinces and territories. Over the next five years, the Canada Health Transfer amounts provided to provinces and territories are expected to total approximately $200 billion.

Canada to help adults upgrade skills with $454 million over four years

To help Canadians pursue education and upgrade their skills, Budget 2017 proposes an investment of $454.4 million over four years, starting in 2018–19 (and $46.3 million per year thereafter) for a range of programs and services. To help adults who wish to return to school after spending several years in the workforce, the government intends to introduce a three-year pilot project to test new approaches to make it easier for adult learners to qualify for Canada Student Loans and Grants. The government also intends to expand eligibility for Canada Student Grants for students attending school part time. In addition, the eligibility threshold for Canada Student Loans for part-time students will be increased.

New skills strategy aims to draw global talent to Canada

To help support talent-strapped companies doing business in Canada, the government will launch its Global Skills Strategy to encourage faster access to global workers. The strategy will set a two-week standard for processing visas and work permits for global talent. As part of this strategy, Budget 2017 also proposes to provide an additional $7.8 million over two years, starting in 2017–18, to implement a new Global Talent Stream under the Temporary Foreign Worker Program. The government will also introduce a new work permit exemption for short-duration work terms.

Canada to develop and support Canadians’ digital skills

Digital skills are increasingly relevant, so the government intends to develop and support these skills in younger and older Canadians as well as other groups underrepresented in the digital economy. To start, Budget 2017 proposes $50 million over two years, starting in 2017–18, to help provide coding and digital skills education to more young Canadians. What’s more, the budget proposes a new Digital Literacy Exchange program to support initiatives that teach basic digital skills and a new Accessible Technology Development program to help develop new assistive devices and technologies.

Cleantech firms to access $1.4 billion in new financing

Financing fuels the growth of companies, providing the capital needed to hire staff, develop products and support sales. Budget 2017 proposes to increase financing support for Canada’s clean technology sector by making available more equity finance, working capital and project finance to promising clean technology firms. Nearly $1.4 billion in new financing, on a cash basis, will be made available to help Canada’s clean technology firms grow and expand. This new financing will be available through the Business Development Bank of Canada and Export Development Canada.

Natural resources sectors to get $200 million over four years for cleantech

To support clean technology research, and the development, demonstration and adoption of clean technology in Canada’s natural resources sectors, Budget 2017 proposes $200 million over four years, starting in 2017–18. This funding will be directed toward Natural Resources Canada, Agriculture and Agri-Food Canada and Fisheries and Oceans Canada. Technologies at varying stages of maturity will be eligible, and eligible recipients will include industry, academia, federal laboratories and other research organizations.

Canada to strengthen transportation system to promote trade

Canada needs to make sure people and products can move quickly and safely across the country and will invest $10.1 billion over 11 years in trade and transportation projects. This includes $2 billion to establish a new National Trade Corridors Fund to target congestion and inefficiencies at marine ports and along the busiest rail and highway corridors around urban centres in Canada.

VIA Rail to receive $867 million to improve rail service

For nearly 40 years, VIA Rail Canada Inc. has provided passenger rail services across the country, serving more than 400 communities on its 12,500-kilometre rail network. To make sure VIA Rail continue improve service, Budget 2017 proposes to provide $867.3 million over three years on a cash basis, starting in 2017–18, to support its operations and capital requirements.

Green infrastructure investments to help Canada transition to a clean economy

To advance efforts to build a clean economy, Budget 2017 lays out the plan to invest $21.9 billion in green infrastructure. For starters, $9.2 billion will be provided to provinces and territories over the next 11 years, on a base plus per capita allocation basis, to support priority projects, including those that reduce emissions, deliver clean water, manage wastewater and address climate change challenges. As well, at least $5 billion will be available over the next 11 years through the proposed Canada Infrastructure Bank, and an additional $2.8 billion will be invested over the same time period through a series of national programs.

Canada proposes high-speed Internet for all—no matter where they live

Canada will now work to adopt new ways of supporting better digital services for citizens, inspired by similar initiatives in the United States and the United Kingdom. Last year, the government committed $500 million to bring high-speed access to rural and remote communities. The new Connect to Innovate program is focused on investing in backbone networks, and the program’s application process is open until April 20, 2017. And to make sure Canadians continue to benefit from an open Internet, the government also proposes to modernize the Broadcasting Act and Telecommunications Act, examining issues like net neutrality.

Canada boosts funding for high-performance athletes

Canadians are proud of the achievements of their high-performance athletes who represent Canada on the world stage. To help support them, Budget 2017 proposes $25 million over five years, with $5 million per year ongoing, to the Athlete Assistance Program. This program provides grants to high-performance Canadian athletes in the form of a living and training allowance, plus tuition and special needs assistance. This will increase annual funding to $33 million, an 18-per-cent increase.

EI parental benefits extended to 18 months

To help working parents navigate the challenges that come with a growing family, Budget 2017 proposes to make employment insurance (EI) parental benefits more flexible. The proposed changes will allow parents to choose to receive EI parental benefits over an extended period of up to 18 months at a lower rate of 33 per cent of average weekly earnings. They will continue to be available at the existing rate of 55 per cent up to 12 months. This initiative is expected to cost $152 million over five years, starting in 2017–18.

Gender’s role in policy development takes centre stage

The presence of women in the workforce has grown considerably over the past 30 years. Today, women account for 47 per cent of the labour force, compared to 38 per cent in 1976. Budget 2017 takes an important step toward gender equality, with a Gender Statement that serves as a basis for discussions about the role gender plays in policy development. The Department of Finance Canada says it will continue to work with Status of Women Canada and outside partners to better understand the challenges women face, to develop policies that promote equality and to monitor progress.

The budget also features initiatives that promote more equal labour market participation as well as reducing poverty and violence affecting women and girls. Over the next 11 years, these include new investments of $7 billion toward early learning and child care, more than $11.2 billion towards a National Housing Strategy and $101 million over five years to support a National Strategy to Address Gender-Based Violence.

EI benefits to be extended to unemployed workers pursuing training

As it stands, if an unemployed worker is receiving Employment Insurance (EI) benefits, they may lose their eligibility if they return to school or undertake training for more than 14 hours per week. To help remediate this, Budget 2017 proposes $132.4 million over four years, beginning in 2018–19 (and $37.9 million per year thereafter) to allow unemployed Canadians to pursue self-funded training while receiving EI benefits. This means EI recipients can return to school to get the training they need to find a new job without the fear of losing benefits.

Labour Code to be modernized with targeted amendments

The way Canadians work is changing, and Budget 2017 looks to support workers with targeted amendments to the Canada Labour Code. For starters, to more easily recover wages owed to workers by their employer and punish employers who repeatedly offend, Budget 2017 proposes to invest $13 million over five years, starting in 2017–18 to strengthen compliance and enforcement efforts. The budget also looks to give federally regulated workers the right to request flexible work arrangements and to eliminate unpaid internships in federally regulated sectors where the internships are not part of a formal educational program.

Canada to continue its support for Indigenous communities

Indigenous Peoples represent one of the fastest-growing groups in Canada. Building on an investment of $8.4 billion over five years in support of education, clean water and reconciliation, Budget 2017 proposes $3.4 billion over five years. Included are investments to improve infrastructure, establish a new Indigenous framework for early learning and child care, deliver better health outcomes, advance reconciliation and provide support for post-secondary education and training. What’s more, the government will continue to work with First Nations to establish a new fiscal relationship that provides communities with sufficient and predictable funding.

Education and Training Benefit to help veterans transition to civilian life

After putting themselves in harm’s way in service to the country, a smooth transition to civilian life is important for the well-being of veterans and their families. To help with this, Budget 2017 proposes a new Education and Training Benefit. In short, this benefit would provide more money for veterans to go to college, university or a technical school after they complete their service, through an investment of $133.9 million over six years, starting in 2016–17. The new program would begin in April 2018 for veterans honourably released on or after April 1, 2006.

New caregiver credit to simplify existing tax credit system

The current caregiver credit system is confusing and does not serve families well, with the existing Caregiver Credit, Infirm Dependant Credit and Family Caregiver Tax Credit having different eligibility rules. Budget 2017 proposes to simplify the system by replacing these credits with a single new credit: the Canada Caregiver Credit. This new, non-refundable credit will provide better support to those who need it and apply to caregivers whether or not they live with their family member.

Canada to close loopholes to strengthen integrity of the tax system

Effective enforcement of tax laws are important factors to combat tax evasion and avoidance at home and abroad. To start, Budget 2017 proposes to prevent the avoidance or deferral of income tax through the use of offsetting derivative positions in straddle transactions. The budget also states it will clarify the intended meaning of “factual control” under the Income Tax Act for the purpose of determining who has control of a corporation in order to prevent inappropriate access to benefits, such as the small business tax rate and the refundable 35-per-cent Scientific Research and Experimental Development Tax Credit for small businesses.

Canada cracks down on tax evasion and avoidance

Canada will continue to crack down on unfair practices to help make sure all taxpayers pay their fair share. Budget 2017 will invest an additional $523.9 million over five years to prevent tax evasion and improve tax compliance. The investment will be used to fund new initiatives and extend existing programs. The measures in Budget 2017 will build on previous investments to support the CRA in its continued efforts to crack down on tax evasion and combat tax avoidance by increasing verification activities, hiring additional auditors focused on the underground economy, developing robust business intelligence infrastructure and risk assessment systems and improving the quality of investigative work that targets tax evaders.

Canada supports lifelong learning to prepare for the workforce of tomorrow

To help equip Canadians with the skills they need to be competitive in the workforce, Budget 2017 proposes to invest an additional $1.8 billion over six years, starting in 2017–18, to expand the Labour Market Development Agreements. Through four Labour Market Transfer Agreements with the provinces and territories, the government invests nearly $3 billion so provinces and territories can offer a range of programs, from skills training to career counselling to job search assistance, to help unemployed and underemployed Canadians improve their skills and get their next job. This means more opportunities to upgrade their skills, gain experience or get help to start their own business.

Canada to uphold its place in the world through trade and international assistance

As a global leader, Canada has a responsibility to implement policies that create opportunities for Canadians and people around the world. Over the past year, the government says it has strengthened relationships with our top trading partners and is taking final steps to put in place the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). What’s more, as part of its new approach to international assistance, Canada will provide $650 million to address gaps in sexual and reproductive health and rights in the world’s poorest communities.

Access to training and employment assistance to be expanded

Canada’s long-term success depends on a skilled workforce that can adapt quickly to change. Under existing Labour Market Transfer Agreements, the Government provides nearly $3 billion each year to provinces and territories for the design and delivery of skills training and employment supports aimed at helping Canadians prepare for, return to or maintain employment. Working with provinces and territories, Canada is developing a more responsive approach to labour market programming. Budget 2017 proposes to provide an additional $2.7 billion over six years, starting in 2017–18, to expand these agreements and help more Canadians access training and employment assistance. With this funding comes a renewed commitment to increase the participation of underrepresented groups—such as women—in the workforce. 
 

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