January 28, 2009

A Historic Budget for Historic Times

Ottawa (January 28, 2009)— On January 27th, Finance Minister Jim Flaherty released Canada’s Economic Action Plan designed to stimulate the economy and help Canadians weather the current global economic storm. The Conservative Government has laid out a multi-year plan to get the economy back on track that includes immediate investment in roads, bridges, housing and other critical infrastructure, tax relief for Canadians, investment for struggling industries and increased support for the Employment Insurance program.

“We have listened, we have heard and now we have acted,” said Komarnicki. “There has been a consensus of advice from various groups including the business community, the academic community and indeed from all Canadians that has been heeded by our Finance Minister and implemented in the form of a historic budget designed for such a time as this.”

“This session of Parliament is all about the economy,” continued Komarnicki. “It is about priming the economic pump to ensure our economy continues to adequately function during a worldwide economic crisis. It is about helping protect and create jobs, providing support to families, restoring consumer confidence and preparing our country for success in the years ahead with meaningful, timely and targeted investments.”

Canada’s Economic Action Plan includes initiatives to stimulate and protect the economy with:

Action to Build Infrastructure by increasing funding for infrastructure projects such as roads, bridges, water and sewer systems, community recreation facilities, green infrastructure and post secondary institutions. This investment will boost the economy, create jobs and make Canada stronger for the long-term.

Action to Reduce Taxes by providing tax cuts to low and middle income Canadians and businesses. This tax relief will serve to increase consumer spending and in turn contribute to economic growth.

Action to Stimulate Housing Construction by providing billions to build quality social housing, stimulate construction and enhance energy efficiency. The new renovation tax credit will provide up to $1,350 for eligible renovations which will benefit homeowners and provide much needed stimulus to the economy.

Action to Improve Access to Financing for businesses to obtain the resources they need to invest, grow and create new jobs and give consumers the adequate financing they need.

Action to Help Canadians Hit Hardest by the Economic Downturn including enhancements to Employment Insurance for Canadians who have lost their jobs and more funding for skills training to help people get back into the workforce.

Action to Support Communities by creating a $1 billion Community Adjustment Fund to help struggling communities adjust to the changing economic climate and providing $2 billion in low-cost loans to municipalities to improve housing related infrastructure projects.

The Budget also announces investments for agriculture. The government will be providing $500 million for an agriculture flexibility program to facilitate new agriculture initiatives. It will also be investing $50 million to strengthen slaughterhouse capacity to support the livestock sector. In addition to this action, the government recently announced that cattle and hog producers will now have until September 30, 2010, to repay cash advances under the Advance Payment Program with the first $100,000 of each producer’s advance to remain interest free.

This is a comprehensive budget that provides support for a broad base of Canadians including those who are most vulnerable, the unemployed, low income Canadians, seniors and Aboriginal Canadians. It also reaches out to middle income Canadians.

“Many of the initiatives contained in this budget are investments in our future,” said Komarnicki. “During a time when global economic variables are outside of our control, the best thing to do is build for the future to ensure our long-term competitiveness for decades to come. Investments such as those we will be making in infrastructure will provide an excellent return on the dollar.”

“Although I was aware that the Highway 39 Truck Bypass in Estevan was in the top tier of priority infrastructure projects that the government wanted to expedite, I was more than pleased that it was specifically referred to in the budget as the Saskatchewan example in a list of national/provincial projects,” commented Komarnicki. “It is a project my office and I have promoted over a number of years and through a number of ministers. It is personally gratifying to see these efforts come to fruition. This is a project that will provide significant benefits for improving the movement of goods and people in the southeast corner of our province. By investing today, we are preparing for tomorrow in an effort to efficiently manage and plan for the future growth of our economy.”

This is a time of unprecedented uncertainty in the global economy. Canadians know that the current financial crisis didn’t originate in Canada. They also need to be assured that their government is committed to provide them with the help necessary to address the needs they have in the short term to weather the current economic storm.

“We are experiencing a very unique time in which G-20 countries around the globe are taking substantial steps to drive the global economy out of the current recession,” said Komarnicki. “Canada’s Economic Action Plan will go a long way towards bringing our country back to a position of fiscal strength for the long term. One thing is certain, we will come out of this period of economic downturn more productive than ever and in a position of enduring strength.”

 

Budget 2009

Overview

Introduction

Budget 2009 provides a comprehensive plan to stimulate our economy, restore confidence, support Canadian families during the current global downturn and invest in the foundations of long-term economic growth.

This stimulus plan will enable Canada to emerge with a more modern and greener infrastructure, a more skilled labour force, lower taxes and a more competitive economy—when the global recession eases.

Budget 2009 will:

• Improve access to financing for consumers and businesses with support of up to $200 billion.
• Reduce taxes for Canadians and businesses by more than $20 billion over 2008–09 and the following five years.
• Undertake the most ambitious building project in Canada’s history with almost $12 billion in new infrastructure funding and $7.8 billion to build and renovate housing.
• Protect Canadians now affected by the global economic slowdown with enhanced benefits and training opportunities.
• Create or maintain up to 190,000 jobs for Canadians by the end of 2010.
• Provide total stimulus equal to 1.9% of GDP this year.

Stimulus for Canada

Over the next two years, Canada’s Economic Action Plan will:

• Provide almost $40 billion in stimulus.
• Boost the gross domestic product by an estimated
1.9 per cent.
• Produce a net increase of 190,000 jobs.
• Provide tax relief to Canadians.
• Provide $8.3 billion for skills and training.
• Reduce greenhouse gas emissions with clean energy and lower consumption.
• Strengthen Canada’s capacity with new and renewed infrastructure.
• Fulfill our G20 commitment to support the global economy.

Action to Build Infrastructure

Budget 2009 invests almost $12 billion to build a more modern and greener infrastructure. This includes:

• $4 billion over two years to restore aging infrastructure.
• $2 billion for repair, maintenance and construction of post-secondary institutions.
• $1 billion over five years for a green infrastructure fund.
• $1 billion over two years to expedite new "ready-to-go" provincial, territorial and municipal projects.
• $1 billion for clean energy research, development and demonstration projects.
• Up to $500 million over the next two years to accelerate infrastructure projects in small communities.
• $500 million over two years to Recreational Infrastructure Canada (RInC) to build and renew community recreational facilities.
• $750 million to the Canada Foundation for Innovation to support leading-edge research infrastructure.
• $50 million to the Institute for Quantum Computing for a new research facility.
• $250 million over two years for deferred maintenance at federal laboratories.
• $500 million to Canada Health Infoway for electronic health records.
• $225 million over three years to extend broadband coverage to unserved communities.
• $407 million for improvements to VIA Rail service.
• $72 million over five years to improve railway safety.
• $130 million to Parks Canada for Trans-Canada Highway twinning.
• $150 million for visitor improvements and upgrades to Parks Canada.
• $212 million to renew the Champlain Bridge in Montréal.
• $57 million for the renewal of other key federal bridges across Canada.
• $80 million over three years to expand and modernize border service facilities.
• $217 million for core commercial fishing harbours across Canada.
• $323 million over two years to restore federal buildings.
• $87 million over two years for key Arctic research facilities.
• $20 million in each of two years to improve the accessibility of federally owned buildings for persons with disabilities.
• $296 million to enhance air passenger security.
• $110 million over three years for space robotics research and development.
• $81 million over two years to accelerate the cleanup of federal contaminated sites.
• $10 million to improve government environmental reporting.

Action to Reduce Taxes

Budget 2009 proposes personal income tax relief. This includes:

• Increasing the basic personal amount that all Canadians can earn without paying federal income tax.
• Raising the upper limit of the two lowest personal income tax brackets by 7.5 per cent so that Canadians can earn more at lower tax rates.
• Raising the level at which the National Child Benefit supplement for low-income families and the Canada Child Tax Benefit are phased out, providing a benefit of up to $436 for a family with two children.
• Investing $580 million to effectively double the tax relief provided by the Working Income Tax Benefit.
• Providing tax savings of up to $150 a year for seniors by increasing the Age Credit amount by $1,000.

Budget 2009 provides tax relief for business, including:

• An increase to $500,000 in the amount of small business income eligible for the reduced federal tax rate of 11 per cent.
• A two-year, 100-per-cent capital cost allowance (CCA) rate for investment in computers.
• A two-year extension of the temporary 50-per-cent straight-line accelerated CCA rate to investment in manufacturing or processing machinery and equipment undertaken in 2010 and 2011.

Action to Stimulate Housing Construction

Budget 2009 provides up to $7.8 billion for housing construction and renovation. This includes:

• The temporary Home Renovation Tax Credit of up to $1,350 for eligible home renovations and alterations.
• An increase to the Home Buyers’ Plan withdrawal limit to $25,000 from $20,000 to help Canadians buy a first home.
• A new First-Time Home Buyers’ Tax Credit that will provide up to $750 in tax relief when purchasing a first home.
• $300 million over two years to the ecoENERGY Retrofit program.
• $1 billion over two years for renovation and energy retrofits to social housing.
• $400 million over two years to build housing for low-income seniors. $75 million over two years to build social housing for persons with disabilities.
• $200 million over two years to support social housing in the North.
• $2 billion over two years in low-cost loans to municipalities to improve housing-related infrastructure.
• 400 million over two years for social housing for First Nations on reserves.

Action to Improve Access to Financing

Budget 2009 improves access to financing that Canadians and businesses need to invest, grow and create jobs. Under the Extraordinary Financing Framework, it supports up to $200 billion in financing, including:

• Committing an additional $50 billion to the Insured Mortgage Purchase Program, increasing the overall size of this program to $125 billion. This will provide lenders with stable long-term financing, allowing them to continue lending to Canadian consumers and businesses.
• $13 billion to increase the lending of Crown corporations, of which $5 billion will be delivered through the new Business Credit Availability Program.
• $12 billion for a Canadian Secured Credit Facility to support financing of vehicles and equipment.
• An increase in the loan limit for small businesses under the Canada Small Business Financing Program.
• Extending the deadline for issuing guaranteed instruments under the Canadian Lenders Assurance Facility, which helps ensure that lenders are not put at a competitive disadvantage when raising funds in global markets.
• Establishing a new Canadian Life Insurers Assurance Facility to guarantee wholesale term borrowings for life insurers, modelled on the Canadian Lenders Assurance Facility.
• Facilitating the provision of extraordinary liquidity to financial institutions by the Bank of Canada, as required, through the modernization of the Bank’s authorities in Budget 2008.
• Adding a 10-year maturity to the Canada Mortgage Bond program to raise supplementary funding for financial institutions.

Action to Help Canadians Hit Hardest by the Economic Downturn

Budget 2009 will support those Canadians affected by the global slowdown with:

• $500 million to extend EI benefits for workers in longer-term training.

• Increasing for two years all regular Employment Insurance (EI) benefit entitlements by five extra weeks and increasing the maximum benefit duration to 50 weeks from 45 weeks.

• A 14-week extension of work-sharing agreements to a one-year maximum.

• Continued low EI premium rates of $1.73 for 2009 and 2010, providing relief of $4.5 billion over two years.

• Extending the Wage Earner Protection Program to cover severance and termination pay owed to eligible workers impacted by employers’ bankruptcy. The enhanced protection is estimated to cost $50 million over two years.

• Consulting with Canadians and developing options to provide self-employed Canadians with access to EI maternity and parental benefits.

Budget 2009 will support an unprecedented level of training with:

• Increasing funding for training delivered through the Employment Insurance program by $1 billion over two years.

• Investing $500 million over two years in a Strategic Training and Transition Fund to support the particular needs of individuals who do not qualify for EI training, such as the self- employed or those who have been out of work for a prolonged period of time.

• $55 million over two years for youth employment.

• $60 million over three years for the Targeted Initiative for Older Workers.

• $40 million a year to launch the $2,000 Apprenticeship Completion Grant.

• $87.5 million over three years to expand the Canada Graduate Scholarships program.

• $50 million for a foreign credential recognition framework.

• Allocating an additional $3.5 million over two years to offer an additional 600 graduate internships through the Industrial Research and Development Internship program launched in Budget 2007.

Action to Support Communities

Budget 2009 targets support to those small businesses and parts of Canada most affected by the economic downturn, including:

• $1 billion over two years for a Community Adjustment Fund to lessen the impact of economic adjustment.
• $2 billion over two years in low-cost loans to municipalities to improve housing-related infrastructure.
• $30 million over two years for the Canada Business Network.
• $200 million over two years to support industrial research for small and medium-size businesses.
• More than $1 billion over five years for a Southern Ontario development agency to support economic development in Southern and Eastern Ontario.
• $50 million for a new regional agency, and economic development in the North.
• A one-year extension of the temporary 15-per-cent mineral exploration tax credit.

Agriculture

Budget 2009 provides support for farmers by:

• Investing $500 million over five years to facilitate new agricultural initiatives.

• Investing $50 million over three years to strengthen slaughterhouse capacity.

• Amending the Farm Improvement and Marketing Cooperatives Loans Act to help make credit available to new farmers, support inter-generational farm transfers, and modify eligibility criteria for agricultural co-operatives.

Aboriginal Canadians

Budget 2009 provides significant new investments for Aboriginal Canadians, including:

• $515 million over two years to accelerate "ready-to-go" First Nations projects in three priority areas: schools, water, and critical community services.
• $400 million over two years for social housing for First Nations on reserves.
• $100 million over three years in the Aboriginal Skills and Employment Partnership.
• $75 million in a two-year Aboriginal Skills and Training Strategic Investment Fund.
• $305 million over two years to improve health outcomes for First Nations and Inuit people.
• $20 million over two years to improve child and family services on reserves.

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