Program spending in Finance Minister Bill Morneau’s first federal budget is projected to rise by 7.6% in fiscal 2017, ending March 31, and by 4.5% in fiscal 2018. That follows a 6.7% increase in fiscal 2016.
The increases are no surprise given Prime Minister Justin Trudeau’s election promises, and the new spending is focused mainly on helping middle-class Canadians and building new infrastructure.
The Canada Child Benefit replaces the previous Canada Child Tax Benefit and National Child Benefit Supplement and the Universal Child Care Benefit — and will provide an additional $4.5 billion to families in fiscal 2017 and $5.4 billion in fiscal 2018.
The government has committed to a 10-year infrastructure plan focusing on public transit, green infrastructure and social infrastructure. That’s in addition to spending on federal and post-secondary education infrastructure. New infrastructure spending will amount to $5.2 billion in fiscal 2017, rising to $8.2 billion in fiscal 2018.
These are big numbers and they are mostly being paid for by increasing the deficit. However, the government is postponing $3.7 billion spending on big capital projects at National Defence for six years. This doesn’t have a big impact in fiscal 2017 but amounts to $1.3 billion in fiscal 2018. Without this postponement, program spending would have risen by 4.9% in 2018 rather than 4.5%.
The other measure that will make this spending more affordable is $2.6 billion in additional revenue from increased tax compliance over the next five years. Most federal budgets include revenue projected to come from tax compliance and a spokesperson from Canada Revenue Agency says that these revenue targets have been exceeded in recent years.
Although there isn’t much detail about the infrastructure spending, almost $1 billion in fiscal 2017 and $1.2 billion in fiscal 2018 will go to infrastructure for indigenous people. This is in addition to other measures for indigenous people amounting to $476 million in fiscal 2017 and $578 million in fiscal 2018.
The $3.4 billion for public transit over the next three years will be divvied up as follows: Ontario, $1.5 billion; Quebec, $924 million; British Columbia, $460 million; Alberta, $347 million; Manitoba, $83 million; Nova Scotia, $32 million; Saskatchewan, $29 million; New Brunswick, $9 million; Newfoundland and Labrador, $5 million; Yukon, $890,000; Prince Edward Island, $660,000; and Northwest Territories, $320,000. These funds will be used to cover up to 50% of the costs of projects.
It’s noteworthy that the government is also trying to accelerate already funded infrastructure projects. This includes the $583 million ring road in Calgary.
The ring road is one of the few references to providing help for provinces hit had by the plunge in oil prices. However, as the budget points out, the government recently announced a $251.4 million payment to Alberta and $31.7 million for Newfoundland and Labrador relating to the 2016 fiscal year. This was under the Fiscal Stabilization Program, which provides financial assistance when a province’s revenue drops by more than 5% in a given year or its natural resource revenue falls by more than 50%.