2016-17 federal budget: A deficit budget with no forecast on when it will return to balance

OTTAWA, March 22, 2016 – Examining the various measures in the 2016-17 budget announced today by federal Finance Minister Bill Morneau, the Conseil du Patronat, Quebec’s employers’ council, notes that the budget is in line with many of the election promises, except for the $30 billion deficit, rather than $10 billion, as originally expected.

The Employers Council applauds the federal government’s intention to invest in infrastructures, but it reiterates the importance of not slipping into structural deficits if the government wants to maintain its ability to react to the next fluctuation in the economy. Moreover, the budget forecasts indicate no return to a balanced budget in the next five years.

“There is a need to reinforce the Canadian economy in a sustainable manner, by encouraging investments that will lead to a resurgence in some of the nerve-centre industries, but it should be done by advocating policies that are mindful of leaving future generations with a prosperous country, in a healthy financial state,” said Employers Council President and CEO Yves-Thomas Dorval. “Yet, even though the budget contains some interesting measures, it is disconcerting there is no projection in it for a return to a balanced budget over the next five years.”

Many interesting measures

Among the proposed measures, the Employers Council has a positive reaction to the following aspects of the budget:

  • Significant spending in infrastructures that are well targeted – public transportation, for example – with federal participation of up to 50%, water quality, aqueducts, sewage systems, renovations to and repairing of existing infrastructures, funding to municipalities. But the details about these investments are still to come.
  • Spending and measures relating to initiatives to help attain greenhouse gas emission reduction objectives;
  • Measures to increase research and innovation and its commercialization, including the Strategic Investment Fund for post-secondary education, and to encourage clusters and networks;
  • Improvements in training and work-study co-op programs.

Measures that are less appealing

Among the less-appealing measures, the Employers Council notes:

  • Significant enhancements to employment insurance, which will slow down the planned reduction of payroll contributions;
  • Interventions that are focused more on public sector spending than on the growth of private investment;
  • The lack of measures for businesses seeking to improve their competitiveness; and even some tax loss for small and medium enterprises that saw a cancellation of the planned reduction in their tax rates.

The Employers Council would like to have seen measures to help the aeronautics industry, including financial assistance to Bombardier, and the Council hopes an announcement will be made to this effect very soon. The Council would also like to have seen an easing of measures regarding temporary foreign workers and the continuation of efforts pertaining to the administrative and regulatory streamlining plan.

Many question marks remain for the coming years in regard to the conclusions arising from many committees, studies and negotiations with the provinces, including the issue of public sector pension plans. Similarly, it is imperative the planned infrastructure spending is done promptly, without any inappropriate delays.

“This budget contains interesting measures for certain clientele, but not that much for businesses,” remarked Mr. Dorval. “And, it is noteworthy the government forecasts repeated deficits with no planned repayment schedule, and a hike in the overall deficit of more than $100 billion in five years, which is an increase of more than 20%.”

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The Quebec Employers Council brings together many of Québec’s largest companies and the vast majority of sector-based employers’ groups, making it Québec’s sole employer federation. It represents directly and indirectly more than 70,000 employers of all sizes in both the private and public sectors, with operations in Quebec.

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Camilla Sironi,
Senior Consultant – Communications and Media Relations
[email protected]
Office: 514-288-5161 extension 243
Cell.: 514-265-5471

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