In the federal Liberals' first budget, in 2016, the word "gender" appeared twice. This time around, "gender" was used 358 times.
As expected, gender equality was a major theme of the 2018 federal budget, such that "every single decision on expenditure and tax measures was informed" by a gender-based analysis, according to the government.
To that end, the budget included new measures aimed at encouraging greater participation of women in the work force, along with a "use-it-or-lose-it" program to encourage more men to take paid parental leave.
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The budget included a host of other proposals, including final details on taxing passive investment income, a pharmacare advisory council and bulked-up funding for research.
Here are 12 things you need to know about the budget.
1. Budget balance
Federal budget balances, by fiscal year In billions of dollars $5 Proj. 0 Liberal platform, 2015 -5 Budget 2018 (current proj.) -10 Budget 2016 -15 -20 Budget 2017 -25 -30 -35 ‘14 FY ‘10 ‘12 ‘16 ‘18 ‘20 ‘22 Federal budget balances, by fiscal year In billions of dollars $5 Proj. 0 Liberal platform, 2015 -5 Budget 2018 (current proj.) -10 Budget 2016 -15 -20 Budget 2017 -25 -30 -35 ‘14 FY ‘10 ‘12 ‘16 ‘18 ‘20 ‘22 Federal budget balances, by fiscal year In billions of dollars $5 Liberal Party platform, 2015 Projections 0 -5 Budget 2018 (current proj.) -10 Budget 2016 -15 Budget 2017 -20 -25 -30 -35 2014 FY 2010 2012 2016 2018 2020 2022
This year's budget is mostly in line with previous estimates from Finance Canada that, for the foreseeable future, the federal government will be running a deficit. Budget 2018 revises the government's deficit projections downward by an average of $167-million each year compared with the fall update. At this point, the closest Ottawa will come to a balanced budget will be in fiscal year 2022, with a $12.3-billion deficit. Finance Minister Bill Morneau has repeatedly emphasized in past budgets that the government considers the federal debt-to-GDP ratio just as important as the overall balance. That measure is projected to continue to decrease, from 30.4 per cent in 2017-18 to 28.4 per cent by 2022-23.
More reading:
Rob Carrick's take: Seven changes that could affect your finances From pension protection to extended parental benefits, these measures in the 2018 federal budget could have an impact on your bottom line. (for subscribers)
Campbell Clark's take: Liberals deliver their version of an Orange Wave budget The 2018 federal budget took many of its ideas from the NDP. It was social-justice spending on a Liberal shoestring. (for subscribers)
2. Gender equality
Impact of women’s participation in the work force on real GDP per capita $60,000 55,000 Diff. 33% 50,000 45,000 Actual real GDP per capita 40,000 35,000 Real GDP per capita without higher female employment inclusion 30,000 1976 1983 1990 1997 2004 2011 THE GLOBE AND MAIL, SOURCE: BUDGET 2018 Impact of women’s participation in the work force on real GDP per capita $60,000 55,000 Diff. 33% 50,000 45,000 Actual real GDP per capita 40,000 Real GDP per capita without higher female employment inclusion 35,000 30,000 1976 1983 1990 1997 2004 2011 THE GLOBE AND MAIL, SOURCE: BUDGET 2018 Impact of women’s participation in the work force on real GDP per capita $60,000 55,000 Difference 33% 50,000 45,000 Actual real GDP per capita 40,000 Real GDP per capita without higher female employment inclusion 35,000 30,000 1976 1983 1990 1997 2004 2011 THE GLOBE AND MAIL, SOURCE: BUDGET 2018
The budget proposes pay-equity legislation for employees in the federal government and federal-regulated sectors but fails to put a dollar amount on that plan. The legislation, which will draw on models from Ontario and Quebec, will ensure that men and women receive the same pay for equal work. The government says it will continue to consult with employers, unions and other stakeholders over the coming months as it works to develop the pay-equity legislation, which will be included in the budget bill. Preliminary estimates suggest the legislation could reduce the gender-wage gap by about 2.7 cents on the dollar for the federal government and 2.6 cents for the federal private sector, according to the budget.
More reading:
Gender pay gap a persistent problem in Canada: Statscan Data released last March shows the split in annual earnings between men and women persists in Canada. Tavia Grant examines what it means.
3. Parental leave
The government is proposing $1.2-billion over five years to create a new five-week "use-it-or-lose-it" incentive for new fathers to take parental leave. The Employment Insurance Parental Sharing Benefit would increase EI parental leave to a maximum of 40 weeks in cases where the second parent agrees to take at least five weeks off. The benefit covers 55 per cent of the second parent's income for as much as 12 months.
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In cases where families have opted for the extended parental leave of 18 months, the second parent would be able to take as much as eight weeks of additional parental leave, paid out at 33 per cent of their income.
The benefit would also be offered to adoptive and same-sex couples and will be made available starting in June, 2019.
It is meant to encourage parents to share the responsibilities of raising a child and to provide greater flexibility for mothers so they can return to the work force sooner.
The budget also proposes $90-million over three years to ensure that claimants continue to receive timely and accurate benefit payments, plus another $127.7-million over the same period to improve EI call-centre accessibility.
More reading:
A dad’s discovery: Raising a child is thankless work Over 10 months of paternity leave, Globe reporter Tim Kiladze discovered that being a primary caregiver means having to jump over some big structural barriers in Canadian society. Here's what he learned about ways we can better accommodate parents.
4. Indigenous issues
The government is proposing to invest $447-million over five years to create a new Indigenous Skills and Employment Training Program. The program, which will replace the Aboriginal Skills and Employment Training Strategy, will help close the employment and pay gap between Indigenous and non-Indigenous people by focusing on training for higher-quality, better-paying jobs.
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The budget also proposes more than $1.4-billion over six years for First Nations child and family services. Indigenous children under the age of 14 comprise 7.7 per cent of all children in Canada but represent more than half of all children in foster care. The money will help alleviate pressures on child and family services agencies and increase prevention resources in First Nations communities so families can stay together.
More reading:
Opinion: Indigenous people are not Canada's incompetent children Justin Trudeau’s Liberal government was supposed to signal a new ‘nation-to-nation relationship.’ But until Canada recognizes the right to Indigenous self-determination, the future will be the same as the past, Alicia Elliott argues.
5. Canada Workers Benefit
Ottawa wants to increase the take-home pay of low-income workers through a revamped tax credit. The budget unveiled the Canada Workers Benefit, which takes effect in 2019 and is essentially a "more generous" and "more accessible" version of the Working Income Tax Benefit, according to the government. The proposal calls for maximum benefits to increase, as well as raising the income level at which the benefit is phased out. A single parent or couple earning $25,000 a year could receive as much as $717 more from the program in 2019 than in 2018.
6. Pharmacare
Eric Hoskins, who resigned his position as Ontario's health minister Monday, will chair an advisory council tasked with performing an economic assessment and running consultations on the feasibility of a national pharmacare program.
National pharmacare could represent significant savings for both patients and the government. A 2016 Parliamentary Budget Office analysis estimated that of the $28.5-billion spent on prescription drugs in 2015, $24.6-billion would be eligible for coverage under a national pharmacare program and that a true national prescription drug program would cost $20.2-billion. In other words, national pharmacare could represent a savings of roughly $4.2-billion annually, in large part because governments would have a stronger position in price negotiations.
7. Small business tax reform
How passive income will affect private corporations $600,000 500,000 400,000 Income eligible to be taxed at small business rate 300,000 200,000 100,000 0 0 25 50 75 100 125 $150 Investment income, in thousands of dollars THE GLOBE AND MAIL, SOURCE: BUDGET 2018 How passive income will affect private corporations $600,000 500,000 400,000 Income eligible to be taxed at small business rate 300,000 200,000 100,000 0 0 25 50 75 100 125 $150 Investment income, in thousands of dollars THE GLOBE AND MAIL, SOURCE: BUDGET 2018 How passive income will affect private corporations $600,000 500,000 400,000 Income eligible to be taxed at small business rate 300,000 200,000 100,000 0 0 25 50 75 100 125 $150 Investment income, in thousands of dollars THE GLOBE AND MAIL, SOURCE: BUDGET 2018
The budget unveiled new details on the taxation of passive investment income inside private corporations.
When companies earn between $50,000 and $150,00 in a given year from passive investments, a reduced amount of their active business income will be eligible for the small business tax rate, which will be 9 per cent in 2019. (The upper limit for business income that can be taxed at the small business rate is $500,000.) The reduction will occur on a straight-line basis, with eligible income decreasing by $5 for every $1 of passive income above the $50,000 threshold.
Companies exceeding $150,000 in passive income will no longer be eligible for the small business tax rate. Those with passive income under $50,000 will not be affected, as was mentioned in a revised proposal.
More reading:
Small businesses with large passive investment income to be taxed more 'The wealthiest Canadians should not be able to use private corporations to pay less tax than the middle class,' Mr. Morneau said in his budget speech.
8. Research and innovation
In total, the budget commits $3.8-billion more over the next five years to support science. A large share of this will be aimed at stepping up funding in physical and life sciences, social sciences and health for fundamental research at universities and other institutions. By 2023, scientists will have roughly half a billion more for fundamental research than they do today. That's a far cry from the $1.3-billion increase that an independent review of Canada's fundamental science ecosystem recommended last year, but it's enough for the government to claim that it has just made its largest increase to fundamental science ever – about 25 per cent.
More than $600-million of the new science funding will be directed toward beefing up the government's own laboratories and bringing together federal scientific activities across departments. Significantly, it includes a reimagined role and partial return to high-risk, far-reaching research bets for the National Research Council, an agency previously seen as needing a new direction.
As for innovation, the Liberals have slashed the number of business innovation funding programs but increased overall funding, including $700-million in new funding for the Industrial Research Assistance Program over the next five years. They've also increased funding for female entrepreneurs, committed $85.3-million to the intellectual property strategy laid out in last year's budget and set aside $572.5-million to give researchers "open and equitable access" to advanced computing and big data resources, a field in which Canada is a world leader.
More reading:
Michael Byers: Canada is losing the race for space Although many countries are competing with new regulatory regimes, subsidies to attract and develop cutting-edge space companies, we are not one.
9. Cybersecurity
The 2018 budget has allocated $508-million, spread out until 2022-23. The funds will be used primarily by the Communications Security Establishment to create a new Canadian Centre for Cyber Security, as well as a National Cybercrime Coordination Unit for the RCMP. In the weeks leading up to the budget, news reports suggested the government could invest as much as $1-billion in cybersecurity resources and infrastructure. Wesley Wark, a professor at the University of Ottawa and an expert in cybersecurity, said he expects "they'll spend a lot more than they're suggesting" in the budget. "It's just a first shot in what will have to be a longer term and more expensive effort" as Canada shifts its national security priorities from terrorism to cyber aggression. Cyberattacks have become increasingly common as state espionage and warfare moves online, and the Canadian government has been targeted for cyberattacks several times. Since 2011, the Treasury Board, the Department of Finance and Defence Research and Development Canada have all been hit by attacks originating from Chinese internet addresses. Observers say Canada's cybersecurity strategy was due for a refresh after having last been updated in 2010.
10. Phoenix pay system
The federal government announced in the budget that it will eventually move away from its problem-plagued Phoenix pay system - which has overpaid, underpaid or completely failed to pay tens of thousands of public servants - and invest $16-million over two years to develop a new pay system.
In the meantime, Ottawa is planning to continue to invest in Phoenix for years to come. The budget proposes the government invest $431.4-million over six years to deal with ongoing issues. The money will help hire more staff at the Phoenix pay centre in Miramichi, N.B., and satellite offices across Canada, as well as additional payroll support staff in government departments.
11. G7 summit funding
Canada is planning to spend $594-million on its 2018 presidency of the G7 and the corresponding leaders' summit it will host in Charlevoix, Que., this June, according to the budget. The funding will also cover security and logistics for other high-profile G7 ministerial meetings across Canada throughout 2018.
12. Journalism
As expected, the government will explore ways for news outlets to benefit from non-profit status. It also proposed providing $50-million over five years to one or more non-governmental organizations supporting local journalism "in underserved communities." The funding is far less than what some groups had wanted. News Media Canada, an association representing more than 800 outlets across the country, has called for a journalism fund with $350-million of annual funding.
More reading:
What does it mean to give news organizations charitable status? A measure in the 2018 federal budget would allow news outlets to find new sources of funding to help them cope with lagging advertising revenue, Daniel Leblanc explains.
Miscellaneous items
The budget proposes $81.4-million over five years to create a redress system for Canadians whose names falsely match those on the no-fly list. Parents of children unfairly targeted by the no-fly list have been advocating for a redress system for more than two years. They are hoping the system will give wrongly flagged Canadians a redress number so they no longer face delays and discrimination at airports.
The budget proposed funding to replace VIA Rail’s cars and locomotives for use in the Windsor-Quebec City corridor, though amounts were not released due to “an upcoming procurement.”
With legalization of cannabis set for late summer, Ottawa is spending another $62.5-million on public education campaigns on the dangers of drug use and $10-million on research, including assessing the impact of legalization on mental health. The new funding for public education – on top of a previously announced investment of $46-million – will targeted communities at risk and Indigenous organizations.
The budget included vague details on improving federal election leaders’ debates. The government claims “the way leaders’ debates have been negotiated have put at risk the structure and potential usefulness of leaders’ debates.” As such, it proposed providing $6-million over two years, repeated every election cycle, to “support a new process that would ensure that federal leaders’ debates are organized in the public interest.” The budget also floated the possibility of legislation on this matter.
The budget included vague details on improving federal election leaders’ debates. The government claims “the way leaders’ debates have been negotiated have put at risk the structure and potential usefulness of leaders’ debates.” As such, it proposed providing $6-million over two years, repeated every election cycle, to “support a new process that would ensure that federal leaders’ debates are organized in the public interest.” The budget also floated the possibility of legislation on this matter. The government is spending $191-million over five years to help to defray the cost of NAFTA and WTO legal challenges related to the ongoing softwood lumber dispute.
With reports from Ivan Semeniuk, Barrie McKenna and Sean Silcoff
CANADA'S ECONOMY: MORE FROM THE GLOBE AND MAIL
Savers, conservative investors, low-income families and workers with company pension plans are all affected by measures in the federal budget. Here's a rundown of seven key points:
Modernizing deposit insurance
Following up on public consultations in 2016, the federal government is poised to announce improvements to Canada Deposit Insurance Corp. Government officials said the consultations looked at adding registered disability savings plans and registered education savings plans to the list of registered accounts that are covered and adding foreign currency deposits to covered products. This would benefit snowbirds keeping large deposits in U.S.-dollar accounts. Other reforms could add coverage for guaranteed investment certificates of longer than five-year terms. Increasing the current $100,000 coverage limit for eligible deposits does not appear to be in the government's plans.
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Introducing the Canada Workers Benefit
Replaces the Working Income Tax Benefit, which supplements the earnings of low-income workers by letting them keep more of their pre-tax wages. The new program will increase benefits by as much as $170 a year in 2019 for single parents and couples and will increase the income limit at which the benefit is completely phased out to $36,483 from $32,339. The Canada Workers Benefit remains a refundable tax credit, which means it can result in a tax refund as well as offsetting tax payable. Noting that some low-income people have not claimed the WITB in the past, the government said it will allow the Canada Revenue Agency to automatically check eligibility for individuals.
As expected, gender equality was a major theme of the 2018 federal budget. The budget includes new measures aimed at encouraging greater participation of women in the work force, along with a program to encourage more men to take paid parental leave.
Read more: The 12 most important things you need to know about the federal budget
Opinion: The boat for a return to a balanced budget in Ottawa has sailed
Read more: Small businesses with large passive investment income to be taxed more
Pension protection
In apparent response to the collapse of Sears Canada, the government will consult with retirees, workers and companies to address the security of pensions. The bankruptcy of Sears will result in the company's pensioners receiving lower benefits than they expected. The Sears pension plan was underfunded, and the bankruptcy process prevented it from being topped up.
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EI Parental Sharing Benefit
Starting in June, 2019, provides an additional five weeks of parental benefits when parents share parental leave. The idea is to encourage more men to take leave.
The end of big bank notes
To fight counterfeiting and money laundering, the government will remove the legal tender status of denominations no longer issued by the Bank of Canada, including $1,000, $500, $25, $2 and $1 bills. The Bank of Canada will continue to honour these notes and exchange them at face value. However, as of a date yet to be determined, you will no longer be able to use them for the payment of goods and services. The Bank of Canada says the number of $1,000 bills in circulation at the end of last year was 741,638. It stopped issuing this bill in 2000.
Medical expenses
The medical expense tax credit will be expanded to include costs related to service animals that help people with severe mental impairments. An example would be a dog helping someone with post-traumatic stress disorder. Some service animal costs are currently covered when their owners are dealing with blindness, deafness and other conditions. The METC is a 15-per-cent non-refundable tax credit.
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Consumer protection in banking
The federal Financial Consumer Agency of Canada is getting a boost from the government to strengthen its oversight of bank sales practices and to defend the interests of consumers against the banks.
What’s not to love? Whether you’re a woman, child, family, veteran or student hitting the books to retrain, the Trudeau Liberals’ second federal budget has something for everyone. But before you get too excited, note that there are no show-stopping measures. Here are 15 ways Budget 2018 will affect your finances:
1. The government is turning the Working Income Tax Benefit into a new Canada Workers Benefit (CWB). The changes mean that if you are single and earn $15,000 or less in 2019 you may earn an extra $500 per year. In the past you had to check a box on your return to apply, but this is no longer the case. You will now be automatically enrolled.
Individuals who are eligible for the Disability Tax Credit may also receive Canada Workers Benefit Disability Supplement. The budget also proposes that the maximum amount of this supplement will be increased to $700 in 2019. It will be phased in at $24,111 for singles without dependents and will disappear at $36,483 for families.
2. The Canada Child Benefit will be indexed to inflation starting July 2018.
3. In the previous budget you were able to take additional time off for parental and caregiver care and get the EI Caregivers Benefit. This has now been extended to include maternity and sickness benefits.
4. You will be able to open an RESP and claim the $500 Canada Learning Bond grant at the same time that you apply for a birth certificate for your child. This will automatically enroll children born into low-income families for the grant.
5. As of June of 2019, the government will offer five additional weeks of “use-it-or-lose-it” EI Parental Sharing Benefits when both parents commit to sharing parental leave. It’s available to all two-parent families, including adoptive and same-sex couples. If you’re going for the standard parental leave option of 55% of EI benefits over 12 months, you’ll have a total of 40 weeks of leave instead of just 35. As well, where families have opted for extended parental leave at 33% of earnings for 18 months, the second parent would be able to take up to 8 weeks of additional parental leave.
6. Canada Student Grants and Loans has expanded eligibility for part time students, as well as full and part time students with children, and introduced a three-year pilot project that will provide adults returning to school on a full-time basis after several years in the workforce with an additional $1,600 in grant money starting Aug 1, 2018.
7. A new Apprenticeship Incentive Grant for Women would give women in male-dominated trades fields $3,000 per year of training (or up to $6,000 over two years). Almost all Red Seal trades are eligible.
8. The government will invest $90.6 million over the next five years to combat tax avoidance.
9. The government is going to lower taxes on small businesses from 10.5% to 9% in 2019, while making sure the small business tax rate is not being used for personal advantage. Going forward, there is a $50,000 threshold on passive income held in corporations. When passive income reaches $150,000, a business owner will lose the Small Business Tax Rate. They’ll be taxed as a large corporation at that time. The government numbers show that it’s only the top one per cent of income tax filers whose corporations will be affected by the changes but this change will still reap a windfall for federal coffers. With recently announced changes to income sprinkling, the government expects to raise $925 million per year by 2022.
Who should worry about the passive income thresh holds? Anyone who has over $1 million in passive investments in their corporation because they will no longer receive the full benefit of the small business tax rate. (Note, this $1 million in passive investments is the accumulated value in your corporation.)
10. The CPP death benefit is now $2,500 for all eligible contributors (whereas before it was pro-rated.)
11. The Medical Expense Tax Credit is extended to psychiatric service dogs in order to help Canadians cope with conditions like post-traumatic stress disorder (PTSD). This is directly aimed at benefitting veterans and others in the disability community who rely on psychiatric service dogs.
12. The government will introduce legislation for the Pension for Life plan, which will include benefits to support Canada’s veterans. The benefit would recognize pain and suffering caused by a service-related disability up to a maximum amount of $2,650. Another option is income replacement for veterans who are facing barriers returning to work after military service at 90% of their pre-release salary. Pension For Life means that a 25-year-old retired Corporal who is 100% disabled would receive more than $5,800 in monthly support, a 50-year-old retired major who is 100% disabled, monthly support would be almost $9,000.
13. Cigarette taxes are going up again—from 54 cents to 60 cents per five cigarettes
14. As expected, there will be a tax on cannabis as well, which depends on whether the plant product is a seed, flower, trim or seedbag. In the meantime cannabis growers and manufacturers will be required to obtain a cannabis license from the CRA and remit the excise duty where applicable. Details to come at the time when non-medical marijuana becomes available for legal retail sale.
15. If you have a Health and Welfare Trust you need to convert it to an Employee Life and Health Trust by the end of 2020.
MORE ABOUT FEDERAL BUDGET 2018:
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