Finance Minister Bill Morneau delivered his Fall Economic Statement today entitled ‘’A Plan for Middle Class Progress’’. As expected, there is no projection to balance the budget. The deficit is expected to be $25.1 billion in 2016-2017. The deficit is also expected to gradually shrink over the next five years to $14.6 billion in 2021-2022, not including any provisions set aside for a rainy day. To add, over the next five years, the government will add a total of $31.8 billion more to deficits than was expected in the last budget, mostly because of changes to expectations for the economy. Minister Morneau pointed to slow growth around the world especially in the United States. The debt burden — the size of the federal debt as a percentage of GDP — will slowly slide to 30.4% in 2021-22 from 31.8% in 2016-17.
The major announcement today was the Canada Infrastructure Bank with seed capital of $35 billion. With this $35-billion, the government hopes to attract private sector dollars at a ratio of $4 to $5 in private funding for every $1 of federal money. The idea here is to reduce the cost of borrowing so larger infrastructure projects can get done. Of that $30 billion, $15 billion will be taken from the $60 billion in existing funds set aside for infrastructure and another $20 billion will be financed and booked as equity or debt so as not to affect the government's bottom line.
Minister Morneau also provided an update on the $120-billion infrastructure plan announced in March’s budget, set to roll out over 10 years. The plan now calls for a $186-billion unfolding over 12 years. This addition of $86-billion is a sign the Liberals see infrastructure spending as their best path forward for economic growth. In fact, in the Fall Economic Statement, it is highlighted under a “long-term plan to build strong communities, create jobs and grow the economy.”
$21.9 Billion Over 11 years is dedicated to green infrastructure. Projects that may receive these additional investments include, among others: inter-provincial transmission lines that reduce reliance on coal-fired power generation; the development of new low-carbon/renewable power projects; the expansion of smart grids to make more efficient use of existing power supplies; water treatment projects on reserve; and the construction of infrastructure to help manage the risk associated with floods and wildfires.
Attracting Foreign Investment and Talent
Under the messaging of creating jobs and prosperity for the middle class, attracting foreign investment was highlighted. Minister Morneau announced an Invest in Canada Hub to attract foreign investment. At the same time, to ensure that the government’s legislative framework supports investments, the threshold for review under the Investment Canada Act will be raised to $1 billion in 2017, two years sooner than the planned date in 2019.
A Global Skills Strategy was also announced that will speed up work permits and visas for foreign workers. In other words, improvements to Canada’s immigration system, to help Canadian and international companies access foreign talent and skills.
Social Infrastructure and Public Transit
The government also committed $25.3 Billion over 11 years in public transit infrastructure investments and $21.9 Billion over 11 years for Investments in social infrastructure, which will focus on affordable housing and homelessness prevention, early learning and child care, and cultural and recreational infrastructure.
Transparency in Government
Although not a big focus of the announcement, the Fall Economic statement highlights that the parliamentary budget officer will become accountable only to Parliament, rather than the Library of Parliament. The House of Commons' board of internal economy, which adjudicates disputes, sets office budgets and polices the expenses of MPs, will conduct its business publicly for the first time. Other transparency-related announcements include more independence for the chief statistician among others.
As with the Budget 2016 and the Liberals election platform, the key announcements were aimed at the middle-class with a focus on infrastructure investment. In Budget 2016, the government announced an immediate investment of $11.9 billion in public transit, green infrastructure and social infrastructure. The Fall Economic Statement proposes an additional $81 billion through to 2027–28 in public transit, green and social infrastructure, transportation infrastructure. There is also mention of a few transparency initiatives – in line with the Liberal’s election promise of delivering a more open and transparent government.
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