The Canadian Government released its 2013 Federal Budget on March 21st, 2013, with a renewed focus on skills and training for workers, assistance for manufacturers and businesses to succeed in the global economy (including measures to support a globally competitive manufacturing sector), along with an unprecedented investments in public infrastructure. The Budget further provided a new infrastructure plan focused on projects that create jobs and economic growth. The government restated its support for investing in world-class research and innovation and for supporting families and communities.
Significantly, Finance Minister Jim Flaherty confirmed that an emphasis on economic growth and not budget cuts, were to assist the government to reduce and ultimately eliminate the Federal budget deficit by 2015. Cost reduction initiatives will also form a basis upon which the government will manage its fiscal affairs in 2013. Savings are to accrue from department and agency downsizing: a five-per-cent, $42.7-million reduction in public-service travel costs will be implemented, assisted “…through the use of technology…”.
Canada Revenue Agency is expected to reduce $60.6 million from its budget by fiscal 2015-16, by trimming “management administrative support” and leveraging “increased public use of automated tools to reduce spending on information technology.” It will achieve this, the budget book promises, while closing tax loopholes, to the tune of $316 million this year and $806 million next. Fisheries and Oceans Canada is to sustain a cut of $33 million in 2015-16, through measures such as “reducing management overhead.”
The net effect of the 2013 budget, in fiscal terms, is that total program spending for 2013-14 will be $252.9 billion, less than a $2-billion rise from last year’s $251 billion. Operating spending actually drops this year, from $80.5 billion to $76.5 billion.
As mentioned at the outset of this review, a budget that anticipates economic growth as an impetuous for fiscal performance is subject to the economy not performing as anticipated, with the result that projected budgetary targets will not be met. Time will tell, whether the budgetary targets set out in the 2013 Federal Budget of Canada, be realized as anticipated.
Set out below, is an extract from the 2013 Federal “Budget in Brief” document, which highlights the fiscal initiates and budgetary features that will be of particular interest to business owners and managers.
- Provides tax relief by extending the temporary accelerated capital cost allowance for new investment in machinery and equipment in the manufacturing and processing sector for an additional two years, providing the sector with support of $1.4 billion over four years for retooling that will enhance competitiveness and economic growth.
- Builds on the National Shipbuilding Procurement Strategy to better ensure that purchases of military equipment create economic opportunities for Canadians by developing key domestic industrial capabilities to help guide procurement, by promoting export opportunities, and by reforming the current procurement process to improve outcomes.
- Takes early action on the recommendations of the Aerospace Review by announcing stable funding of close to $1 billion over five years for the Strategic Aerospace and Defence Initiative, the creation of an Aerospace Technology Development Program, with funding of $110 million over four years starting in 2014–15 and $55 million annually thereafter, and consultations on establishing a National Aerospace Research and Technology Network.
- Renews the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) with funding of $920 million over five years to help create job opportunities and encourage economic growth in the region.
- Includes $200 million over five years for a new Advanced Manufacturing Fund in Ontario, funded from the renewal of FedDev Ontario.
- Expands and extends for one year the temporary Hiring Credit for Small Business, allowing Canadian small business to reinvest $225 million in job creation and economic growth in 2013.
- Increases support for small business owners, farmers and fishermen by raising the Lifetime Capital Gains Exemption to $800,000 and indexing the new limit to inflation, at a cost of $110 million over five years.
- Provides $92 million over two years to the forestry sector in support of its transformation to higher-value activities and its expansion into new export markets.
- Announces economic and security initiatives that will implement Canada’s commitments under the Canada-United StatesBeyond the Border Action Plan, with a view to ensuring the secure and efficient flow of legitimate goods and people across the border.
- Enhances Canada’s foreign trade zone policies and programs by reducing red tape, cutting costs, improving access to existing programs, and promoting Canada’s foreign trade zone advantage. This will support Canadian manufacturers and business, building on the success of the Government’s gateways and corridors approach to attract foreign investment.
- Extends Export Development Canada’s domestic activities in order to provide capacity in the domestic credit market to meet the needs of Canadian exporters, in a manner that complements private sector lenders.
World-Class Research and Innovation
- Announces $225 million to support advanced research infrastructure and the Canada Foundation for Innovation’s long-term operations.
- Provides $165 million in multi-year support for genomics research through Genome Canada, including new large-scale research competitions and participation by Canadian researchers in national and international partnership initiatives.
- Advances the Government’s Venture Capital Action Plan, by providing $60 million over five years to expand the services of business incubators and accelerators, establishing new Entrepreneur Awards to recognize excellence in entrepreneurship, and supporting young entrepreneurs with new resources of $18 million over two years through the Canadian Youth Business Foundation.
- Provides an additional $37 million annually to the granting councils in support of research partnerships with industry to create and deploy new technologies, products and services into the marketplace.
- Provides $20 million over three years to help small and medium-sized enterprises access research and business development services.
- Provides $325 million over eight years to Sustainable Development Technology Canada to support the development and demonstration of new clean technologies, which can save businesses money, create high-paying jobs and drive innovation.
Strengthening the Competitiveness of the Manufacturing Sector
- $1.4 billion in tax relief for Canada’s manufacturing and processing sector over the 2014–15 to 2017–18 period through a two-year extension of the temporary accelerated capital cost allowance for new investment in machinery and equipment.
- $920 million to renew the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) for five years, starting on April 1, 2014.
- $200 million for a new Advanced Manufacturing Fund in Ontario for five years, starting on April 1, 2014, funded from the renewed FedDev Ontario.
- Building on the success of the National Shipbuilding Procurement Strategy, the Government will better ensure that purchases of military equipment create economic opportunities for Canadians by developing key domestic industrial capabilities to help guide procurement, by promoting export opportunities, and by reforming the current procurement process to improve outcomes.
- Providing stable funding of close to $1 billion over five years for the permanent Strategic Aerospace and Defence Initiative, as well as providing $110 million over four years, beginning in 2014–15, and $55 million annually thereafter, for the creation of an Aerospace Technology Demonstration Program.
- $92 million over two years starting in 2014–15 to continue support for forestry innovation and market development.