The 2018 “Fall Economic Statement” delivered by the Government of Canada last month was well-received by business organizations, both large and small, by a number of labour leaders, farm organizations, consumer groups, and many others – including the Saskatchewan Chamber of Commerce and the Canadian Federation of Agriculture.
It’s all about driving more economic growth and creating good, solid middle-class jobs. To do so, we’re providing tax incentives to stimulate more business and on-farm investment. We’re promoting exports to global markets, beyond the United States. We’re battling internal trade barriers and reforming regulations. And we’re supporting new technology and innovation.
All of this will have a positive impact in Saskatchewan.
The only completely negative reaction to our economic plans has come from the Conservative Party. They are claiming to be great champions of balanced budgets. But here is an interesting question – how many Conservative Prime Ministers actually balanced a federal budget for Canada in all of the 20th Century?
The answer is: One. It was Robert Borden in 1912. He inherited a balanced budget from his Liberal predecessor, Wilfrid Laurier, and managed to keep it balanced … for just one year.
So how have they done so far in the 21st Century? Immediately before the Harper Conservatives first came to power in 2006, Liberal governments balanced the federal books NINE times in a row. This provided Mr. Harper, on his first day in office, with fiscal flexibility totalling some $100 billion over the ensuing six years.
But through reckless fiscal decisions, the Conservatives burned through that whole margin in less than two years and put this country back into deficit BEFORE – not because of – the “great recession” that began in the latter part of 2008. The recession made it worse, but Mr. Harper started his deficit all on his own.
Far from balancing the books, the Conservatives ran up more than $150 billion in new federal debt. They added more than 200,000 Canadians to the ranks of the unemployed. And they delivered the worst average rate of economic growth since R.B. Bennett in the Dirty Thirties.
So despite all their excessive rhetoric, Conservative fiscal credentials are actually quite dismal.
By contrast, the Liberal plan over the past three years – to invest in growth and fairness – has been far more effective:
- Tax rates for the middle class and for small businesses have been reduced;
- Our new, indexed, tax-free Canada Child Benefit, to help with the cost of raising children, is boosting the disposable incomes of nine-out-of-ten families – the average middle-class family is more than $2,000 better off;
- We’ve upgraded Old Age Security, the Guaranteed Income Supplement and the Canada Pension Plan;
- We’ve reached new agreements with the provinces on child care, mental health, homecare and labour market training;
- We’ve invested aggressively in infrastructure, housing, education, science, innovation and agricultural diversification;
- And we’ve concluded three large trade agreements giving Canadians preferred market access to 1.5 billion consumers in Europe, Asia, Mexico and the United States.
The results from all this are encouraging.
Canada’s economic growth rate has been running consistently near the top of the G7. Our debt ratio is also the best in the G7 and getting steadily better. Canadian exports are high. Wages are improving. Unemployment is near a record low. And Canadian employers have generated more than 700,000 net new jobs, including more than 550,000 full-time.
It’s on this foundation that our Fall Economic Statement is aiming to build further momentum.
The key measure is accelerated capital cost allowances, which permit businesses (including those in the energy sector and farmers) to write-off more quickly their cost of buying new buildings, machinery and equipment. This is a powerful incentive to invest, grow and create jobs.
For all businesses, their normal capital cost write-off will be tripled in Year-One. For manufacturing, processing and clean energy equipment, their first year allowances will be fully 100%.
This change will give Canada the best marginal effective tax rates on new business investment in all of the G7 countries. We’ll be better than the average in OECD countries. And we’ll be nearly five percentage points better than the US – a key competitive consideration.
In addition, an important tax credit for junior companies involved in mineral exploration is being extended for five years. We are speeding up federal investments in trade corridors to move our products and commodities more efficiently to more markets in Europe and AsIa. We now have a revitalized northern export corridor through Churchill. And trade and marketing support services for all exporters are being enhanced.
Within Canada, we are redoubling efforts to reduce regulatory burdens and to tear down barriers to internal trade. Priority areas to be tackled include interprovincial transportation, food inspection, building codes across the country and the alcohol business.
And finally, to help Canadians adopt the latest and best technology, to add-value, succeed and grow, we are expanding and extending our Strategic Innovation Fund. We created this fund in the 2017 Budget, and it has already been put to work in the auto and aerospace sectors, smelting and fusion energy. A Saskatchewan firm like Evraz could potentially make use of this fund to upgrade its steel production facilities, and thus become more resilient in fending off illegal American tariffs.
The measures we have put in place will help Canada sustain a successful economy. This is especially important in the face of weak market prices for oil and gas, and global production cuts in the auto sector. Many of the key provisions in the 2018 Fall Economic Statement are directly helpful to Saskatchewan. The full Statement and supporting data are available on the Internet at: www.fin.gc.ca