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Budget 2017: March 22

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UPDATED March 20, 2017 11:56amET

Watch the budget speech, reaction, and full coverage on CPAC / www.cpac.ca / CPAC TV 2 GO: Wednesday, March 22 at 4pm ET / 1pm PT

 

November 2016 Economic Update: Key Highlights

  • Projected 2016-17 deficit at $25.1BN and $25.9BN in 2017-18, but does not include the $6BN risk adjustment from the 2016 budget.
  • Projected deficit at $25.9BN in 2018-19, $19.3BN in 2019-20, $16.8BN in 2020-21, and $14.6BN in 2021-22.
  • Canada’s projected GDP lowered from 2016 Budget: $10BN for 2016 and $16BN for 2017. GDP growth was also downgraded to 1.2%.
  • $21BN in additional infrastructure spending was promised for the mid-2020s.
  • Planned creation of a Canada Infrastructure Bank, using $15BN of infrastructure funding.
  • Government pledged to raise the foreign investment review level to $1BN in 2017, two yrs earlier than planned.
  • $218M over five years for an “Invest In Canada Hub” and more trade commissioners to attract foreign investment.
  • Two-week standard to process visas and work permits for high-skilled jobs.
  • Work permit exemption for work terms under 30 days.
  • The Parliamentary Budget Officer to be made an independent officer of Parliament with more access to government data.
  • The House of Commons’ Board of Internal Economy meetings to be made public.

Budget 2016: Key Highlights

  • The federal deficit was projected to reach $29.4 billion for 2016-17, $29.0 billion for 2017-18, and $22.8 billion for 2018-19, with no clearly-defined timetable to return to balance.
  • Major infrastructure spending (more than $120 billion over 10 years) was possible because of Canada’s low debt-to-GDP ratio and low interest rates, according to Finance Minister Bill Morneau.
  • Canada’s indigenous peoples would receive $8.4 billion funding over five years, including money for education, infrastructure, and social services.
  • Employment Insurance benefits would be extended in regions hit hard by the global dip in commodity prices, including Alberta, Saskatchewan, and Newfoundland and Labrador.
  • The Liberal campaign pledge of a new Canada Child Benefit – a single, tax-free payment tied to income – would be in place by July 2016.

Here’s what the Bank of Canada said in January 2017 about the Canadian economy:

“The broader effects of the past deterioration of the terms of trade on real incomes and wealth will likely be an ongoing constraint on the growth of economic activity through 2017.”
“A modest expansion of exports and investment will be supported by strengthening foreign demand, although persistent competitiveness challenges are expected to restrain growth in production of non-energy goods. Export growth will be limited by the recent appreciation of the Canadian dollar, alongside that of the US dollar, vis-à-vis most other currencies.”
“While the precise trade policy measures to be taken by the incoming US administration remain to be determined, the protectionist tilt is already evident. More-negative effects are possible if US measures are material, especially if they prompt protectionist responses from other economies. Beyond the direct effects on Canadian exports and business investment, such policies could weigh on the global economy by dampening global trade and economic growth. The resulting weaker-than-expected foreign demand would be an additional drag on Canadian exports and business investment.”

And here’s what you might not know about the budget process!

“Budget” is derived from French and Latin words meaning leather bag or pouch (bougette). It was first used as a financial term in the 18th century to describe the collection of economic documents held inside such a case.

Canada’s first federal budget was delivered by Finance Minister John Rose over several hours on December 7, 1867. Revenue and expenses at the time totalled less than $20 million.

A 1733 pamphlet called The Budget Opened mocked Sir Robert Walpole, the British prime minister and chancellor of the exchequer, as a medical quack opening his bag to hand out wild economic prescriptions. Eventually the term “budget” became associated with a yearly financial statement.

A federal budget day has traditions of its own, though less resplendent than the pomp of a Speech from the Throne.

British custom dictates that the chancellor/finance minister can break the rules and drink alcohol inside the House of Commons while delivering the budget speech. Everything from whisky and wine to brandy and sherry has been spotted alongside the customary red despatch box carrying the budget speech — yet another Westminster routine.

Neither of these practices became commonplace in Ottawa. But there has been a unique Canadian contribution to the list of budgetary rituals: the finance minister donning a new pair of shoes before giving his speech. And only men’s shoes so far, since no woman has held the position.

According to the Library of Parliament, no one knows how or why this practice began. The first recorded instance of new footwear was Mitchell Sharp‘s 1966 budget. And there have been variations. John Crosbie wore mukluks. Paul Martin modelled work boots. Jim Flaherty instead bought Canadian-made skates for his son in 2007.

Current finance minister Bill Morneau got new new shoes in Toronto for last year’s budget speech. He returned to Toronto on Monday:

Why late in the afternoon? So that financial markets have already closed for the day. The budget’s content is kept secret (aside from a media lock-up) for the same reason.

-Andrew Thomson

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