Tuesday, March 19, 2019 – The Government of Canada released its 2019 Federal Budget titled Investing in the Middle Class, which provides an update on the government’s finances and makes several policy announcements and spending commitments that will have an effect on businesses and the overall economy.
Key Policy Announcements:
- Commitment in which 95% of Canadian homes and businesses will have access to internet speeds of at least 50/10 Mbps by 2026 and 100% by 2030, no matter where they are located in the country.
- The Canada Infrastructure Bank will seek to invest $1 billion over the next ten years and leverage at least $2 billion in additional private sector investment to increase broadband access for Canadians.
- Establish a new Canada Training Benefit by investing $1.7 billion over five years and $586.5 million per year afterwards. This will be a personalized, portable training benefit to help people plan for and get the training they need to succeed in a changing economy. The Canada Training Benefit includes two key components:
- A new, non-taxable Canada Training Credit to help with the cost of training fees. Canadians aged 25-64 will accumulate $250 per year, up to a lifetime limit of $5,000, that can be applied against fees for occupational skills training.
- A new Employment Insurance (EI) Training Support Benefit to provide income support when an individual requires time off work. This benefit will provide up to four weeks of paid leave, at 55% of average weekly earnings, that will be offset for small businesses paying less than $20,000 in employer EI premiums by a tax rebate.
- Additional announcements include an Apprenticeship Strategy to address the barriers to entry and progression for those who want to work in the skilled trades and employers who face challenges in hiring and retaining apprentices.
- The government announced plans to align Canada’s employee stock option tax treatment with the United States by applying a $200,000 annual cap on stock options that may receive tax-preferred treatment for employees of large, long-established, mature firms.
- Eliminate the income threshold to access the enhanced 35% refundable Scientific Research and Experimental Development (SR&ED) tax credit.
- The government announced plans to work with provinces, territories and stakeholders to create the Canada Drug Agency, including $35 million over four years to establish a transition office in the development of this vision.
- Invest $1 billion over two years, with up to $500 million ongoing, to help Canadians with rare diseases access the drugs they need.
- The government announced plans to introduce three Regulatory Roadmaps to modernize regulatory frameworks in agri-food and aquaculture, health and bio-sciences, and transportation and infrastructure to specifically address stakeholder issues and irritants in these sectors.
- In the coming weeks, a release of the full Regulatory Roadmaps for each of the reviews, as well timelines for enacting each of the initiatives.
- The federal deficit is projected to continuously decline from $19.8 billion in 2019-20 to $9.8 billion by 2023-24.
- The federal debt-to-GDP ratio is expected to gradually decline from 30.7% in 2019-20 to 28.6% by 2023-24.
Vaughan Chamber Analysis:
Broadband expansion and the reduction of regulatory burden for specific sectors are welcome announcements for the business community. And we are glad to see that the federal Government has taken action to promote work-integrated learning, reskilling and upskilling. However, we are concerned about the government changing labour legislation to support new leave provisions and believe that time off for skills training should continue to be negotiated between the employer and employee.
Additionally, we remain concerned over a number of issues that have not been addressed, such as a lack of commitment to a full review of our tax system or a clear, realistic strategy for balancing the public books.
While reductions in budget deficits starting in 2020-21 are steps in the right direction, we continue to call on the federal government to provide a detailed plan for getting the books back to balance. Our current fiscal position leaves us vulnerable to potential economic downturns.
The Vaughan Chamber of Commerce will continue to work with the federal government to ensure the voice of the business community is heard in order to build a more prosperous Canada where all Canadians have the opportunity to succeed.