OTTAWA — A plan to help Canada compete with the neighbouring United States for investment dollars is the centrepiece of the Liberal Fall Economic Statement released by Finance Minister Bill Morneau on Nov. 19.
Conservative Huron-Bruce MP Ben Lobb was in Ottawa when the Liberals presented the economic statement. Lobb told the Times-Advance that the Fall Economic Statement has its risks, especially with increasing Canada’s debt when it was promised to be balanced by 2019 (an election year).
“The economy is doing OK in Canada. I know many employers in our area (Huron-Bruce) are having a tough time finding workers . . . However I think the long-term forecast for Canada could be slightly troublesome due to the fact our economic growth rate is trailing the United State and other developing countries,” Lobb said of the federal government’s fall update.
The plan will create more debt and Canada’s deficit will grow by $17.1 billion. Lobb says the Liberal government tried to bring in measures such as accelerated depreciation and he says that will help but it’s the added debt that is most concerning to him.
Referencing the Liberal party’s deficit forecast that came out at the 2015 election, Lobb said Canada was projected to have a $10 billion deficit this year but it’s expected to hit $19 billion instead – and the Fall Economic Statement plan will only add to the large deficit.
“What’s troublesome is that we have such a large deficit when the economy is growing. What is going to happen when the economy slows?” asked Lobb, explaining that numbers suggest an economic slowdown has happened already compared to 2016 and 2017.
“This would have been a fantastic time to cut red tape, balance the budget and maybe pay off a little debt to put us (Canada) in a better position when the next economic slowdown comes,” Lobb said.
When it comes to Huron-Bruce, Lobb says the riding is blessed to have “one of the most dynamic economies in Canada.” Lobb says that can be attributed to power company Bruce Power, light manufacturing, tourism and some of the best agricultural land in the country.
Lobb says there’s not a tremendous amount in the Fall Economic Statement that will impact Huron-Bruce other than benefitting from depreciating costs of manufacturing tools/equipment. He also says the update does not address any of the risks that affect the riding.
He lists risks as the retaliatory tariffs, the unavailability of skilled workers, a lack of expansion dollars for projects (sewer upgrades, facilities upgrades) and social issues (mental health, addiction).
Highlights of the Liberal Fall Economic Statement
- New measures over the next five years will cost the federal treasury $17.1 billion, with almost a third of that coming in the 2019-20 fiscal year to boost investment in Canada.
- Deficits won’t start to decline until 2021-22. In this fiscal year, Ottawa expects to be $18.1 billion in the hole, and the deficit will increase a bit next year to $19.6 billion.
- The reason the new costs don’t bulk up the deficits even more is because a strong economy has handed Ottawa an extra $22 billion in revenues over the next five years, compared to expectations in the February 2018 budget.
- The debt burden, as measured by the debt-to-GDP ratio, is expected to be 30.9 per cent in this fiscal year, before declining gradually to 28.5 per cent in 2023-24.
- New tax incentives to encourage investment in Canada are worth $14 billion over five years. The measures include allowing manufacturers and the clean-tech industry to write down all capital costs right away.
- Ottawa is putting another $800 million over five years into its strategic innovation fund to buoy investments across the economy. The forestry industry will receive $100 million of the $800 million.
- The government is setting up an export diversification strategy that aims to increase sales to countries other than the United States by 50 per cent by 2025.
- Canadian journalism gets a boost through a bundle of tax incentives that Finance Canada estimates are worth $600 million over five years. The measures include tax credits related to hiring and subscriptions. They also allow news outlets to become charities that can take donations.
- A new fund for social finance will allow charities and non-profit groups to finance new ideas. Ottawa will make $755 million available over 10 years in the hope of seeing $2 billion in economic activity and up to 100,000 jobs as a result.
- Regulations, red tape and internal trade anomalies will get an overhaul as Ottawa tries to work with the provinces to streamline and harmonize business requirements across the country.
- The monthly deficit for September 2018 was $1.4 billion, smaller than last year’s $3.3 billion. For the fiscal year to date, the federal government is in the black so far, posting a $1.2-billion surplus, compared to a deficit of $6.2 billion for the same April-to-September period last year.
– Files from National Post and Canadian Press