Budget 2010 will deliver Year 2 of Canada's Economic Action Plan, with $19 billion in new federal stimulus in 2010–11, by:
Canada's Economic Action Plan is a two-year $62-billion plan to protect and create jobs in response to the deepest global recession since the Second World War. Chapter 5 describes the full Action Plan and reports on the Government's progress in its implementation. This section briefly reviews the main elements of the Action Plan that will be in effect for 2010–11.
In the first year of the Action Plan (2009–10), a significant amount of stimulus has been provided to support the economy and Canadians. The Government is ready to begin delivering Year 2 of the Economic Action Plan. The Action Plan will continue to maintain and create jobs, and help Canadian workers and families manage through still difficult economic conditions. Year 2 delivers $19 billion in new federal stimulus spending, with an additional $6 billion in stimulus from provinces, territories, municipalities and other partners. Even before the start of the fiscal year, 92 per cent of Year 2 funding is committed and ready to be delivered. This includes:
Actions under the Economic Action Plan that come into effect in 2010–11 are described below.
Tax reductions in the Economic Action Plan are an essential part of the Government's effort to stimulate the economy and to create and maintain jobs. The Economic Action Plan will deliver $3.2 billion in personal income tax relief in 2010–11. This includes allowing Canadians to earn more income before paying federal income tax and before being subject to higher tax rates. It includes the enhanced Working Income Tax Benefit, which reduces the welfare wall by making work pay better for many low-income Canadians. Eligible beneficiaries will begin to receive enhanced benefits upon filing their 2009 tax returns. Tax measures for 2010–11 also include higher child benefits for parents and lower taxes for low- and middle-income seniors.
Tax measures in 2010–11 will continue to support the housing market. First-time home ownership is being encouraged through the First-Time Home Buyers' Tax Credit and additional access to Registered Retirement Savings Plan savings to purchase or build a home.
Millions of Canadian families took advantage of the Home Renovation Tax Credit before its expiry on January 31, 2010, and will be able to claim the credit when they file their 2009 income tax returns.
Tax relief will also continue to benefit Canadian businesses in the coming year. The measures included in Canada's Economic Action Plan, as well as actions taken by this Government since 2006, are positioning Canadian businesses to emerge stronger and better equipped to compete globally as the economy recovers.
The Government is lowering the federal general corporate income tax rate from 22.12 per cent (including the corporate surtax) in 2007 to 15 per cent in 2012. Canada's business tax advantage is being strengthened as the Government of Canada, provinces and territories progress toward the goal of a 25-per-cent combined federal-provincial corporate income tax rate. These broad-based corporate income tax reductions foster investment and help build a strong foundation for job creation and higher rates of productivity growth. As a result of these actions, Canada will have the lowest corporate income tax rate in the G7 in 2012.
The Government has reduced taxes on individuals, families and businesses by an estimated $220 billion over 2008–09 and the following five fiscal years. The Government's tax reduction efforts began in 2006—well before the introduction of Canada's Economic Action Plan.
Individuals and families at all income levels are benefiting from tax relief, with proportionately greater savings for those with lower incomes. For example:
The Government has also introduced measures targeted to help families, students, seniors and pensioners, workers, persons with disabilities and communities. Examples of such measures include:
This Government's previous tax achievements also include actions to make Canada's business tax system more competitive, which is essential to encouraging new investment, growth and job creation in Canada. Examples include:
While the unemployment rate has stabilized and there are signs that the economy is improving, too many Canadians are still unemployed. In 2010–11, Canada's Economic Action Plan will provide more than $4 billion in additional benefits, training opportunities and Employment Insurance (EI) premium relief to help unemployed Canadians through this difficult period, and help ensure that they are equipped to re-enter the workforce and prosper in the future.
The Government is providing $1.6 billion in 2010–11 to strengthen benefits for the unemployed. This support includes providing up to an extra five weeks of EI regular benefits for all EI-eligible claimants, providing greater access to EI regular benefits for long-tenured workers, and extending the duration and the scope of the work-sharing program.
The Government is providing almost $1.0 billion in 2010–11 to enhance training opportunities for all Canadian workers. This includes additional support to the provinces and territories to expand training and skills development. It also includes helping youth to gain work experience and necessary skills and offering more opportunities to Aboriginal Canadians.
The Government is maintaining the freeze of the EI premium rate at $1.73 per $100 of insurable earnings to the end of 2010—the lowest rate since 1982 (Chart 3.1.2). In Budget 2009, this action was estimated to leave more than $1.6 billion in the hands of employers and employees in 2010–11.
When the temporary freeze of EI premiums is lifted in 2011, premium rates will be set by an independent arms's length Crown corporation, the Canada Employment Insurance Financing Board (CEIFB). Under the EI financing regime announced in Budget 2008, the CEIFB will set EI premium rates in order to balance the EI program over time, subject to a 15-cent limit on annual changes. Consistent with the Government's commitment in Budget 2009, the CEIFB will not be mandated to recover any EI deficits resulting from the benefit and training enhancements announced in Budget 2009.
Canada's Economic Action Plan is a $62-billion stimulus plan aimed at creating and maintaining 220,000 jobs by the end of 2010. The Action Plan is on track to meet its objective, with 130,000 jobs created or maintained to date.
Canada's Economic Action Plan also targets $7.0 billion over two years in direct support to those workers most affected by the recession, providing them with additional benefits and expanded access to training and skills development.
During 2010–11, communities, businesses and individuals from across Canada will continue to see the benefits of infrastructure investments under Canada's Economic Action Plan. The Action Plan will provide $7.7 billion in stimulus in 2010–11 to modernize infrastructure, support home ownership, stimulate the housing sector and improve social housing across Canada. This builds on the $8.3 billion in infrastructure and housing stimulus delivered in 2009–10.
In 2010–11, the Economic Action Plan will invest more than $4 billion in provincial, territorial and municipal infrastructure, $285 million in First Nations community infrastructure and $780 million in priority federal projects. These investments will create jobs and ensure that Canada emerges from the economic downturn with a more modern and greener infrastructure.
In addition, the Economic Action Plan will provide over $2 billion in 2010–11 to renew Canada's social housing stock. This funding provides significant support for provinces, territories and municipalities to renovate their social housing, including housing for low-income seniors and persons with disabilities. The Action Plan also invests in First Nations and northern housing.
In 2009–10 and 2010–11, the Government will deliver the following infrastructure programs as part of the Economic Action Plan:
These Action Plan initiatives and their progress are described in Chapter 5.
In designing Canada's Economic Action Plan, the Government incorporated measures to help create the economy of tomorrow. In 2010–11, the Action Plan will invest almost $1.9 billion in post-secondary education, infrastructure, research, technology innovation, and environmental protection. This builds on 2009–10 investments of over $2.1 billion to support these strategic investments.
In 2010–11, the Government will provide $1 billion to support deferred maintenance, repair and construction at Canada's colleges and universities. This investment will help keep Canadian research and educational facilities at the forefront of scientific advancement and will help to ensure that high-paid jobs are maintained and created in Canada.
Funding to create the economy of tomorrow will also extend access to broadband Internet in remote communities, develop carbon capture and storage technology, and fund other strategic investments in science, technology and research.
Canada's Economic Action Plan is providing $2.2 billion in stimulus spending in 2010–11 to support adjustment and secure job opportunities in regions, communities and industries that have been hard hit by the economic downturn.
In 2010–11, the Government will provide $1.3 billion in support to affected sectors, including forestry, agriculture, small business, tourism, shipbuilding and culture. These investments will help to maintain and create jobs across the country.
Building on tariff measures implemented in the Economic Action Plan, in this budget the Government is eliminating all remaining tariffs on manufacturing inputs and machinery and equipment. This historic step will position Canada as the first among its G20 partners to establish itself as a tariff-free zone for manufacturers. Full details regarding tariff reductions can be found in Chapter 3.3.
In addition, over $900 million will be invested in communities that have been particularly hard hit by the economic downturn. This includes $500 million through the Community Adjustment Fund, which is designed to help communities with fewer than 250,000 people deal with industrial restructuring by investing in new economic opportunities.
The Extraordinary Financing Framework (EFF) introduced as part of Canada's Economic Action Plan helped to ensure that credit continued to be available in Canada throughout the financial crisis, allowing businesses to continue to grow and create jobs. Financing conditions in Canada have improved markedly since the EFF was introduced. Accordingly, certain initiatives under the EFF, including the Insured Mortgage Purchase Program and the Canadian Secured Credit Facility, will end as planned as of March 31, 2010. Others, such as the Business Credit Availability Program, will remain in place to support the growth in business credit that will be needed during the economic recovery.
Budget 2010 builds on the strengths of Canada's financial sector, further bolstering Canada's advantage in global capital markets. New measures will support Canada's strong and competitive financial sector, help businesses access the financing they need to support the recovery, and protect Canadian financial consumers.
|Year 1||Year 2|
|(millions of dollars—cash basis)|
|Reducing the Tax Burden for Canadians|
|Personal income tax relief for all taxpayers||1,885||1,950||3,835|
| Increases to the National Child Benefit
supplement and the Canada Child
|Enhancing the Working Income Tax Benefit||580||580||1,160|
|Targeted relief for seniors||325||340||665|
|Total—Reducing the Tax Burden
|Actions to Create and Protect Jobs
and Help the Unemployed
|Strengthening benefits for Canadian workers||1,115||1,550||2,665|
|Enhancing the availability of training||919||986||1,905|
|Maintaining low EI premium rates||818||1,631||2,449|
|Total—Actions to Create and Protect Jobs
and Help the Unemployed
|Building Infrastructure to Create Jobs|
| Investments in provincial, territorial
and municipal infrastructure
|Investments in First Nations infrastructure||230||285||515|
|Investments in federal infrastructure projects||1,007||780||1,786|
| Support for home ownership and the
| Investments in social housing
to Create Jobs
|Creating the Economy of Tomorrow|
| Action to invest in post-secondary
education and research
|Investing in science and technology||1,049||725||1,774|
|Total—Creating the Economy of Tomorrow||2,139||1,880||4,018|
|Supporting Industries and Communities|
|Support for industries||1,171||1,296||2,467|
|Support for communities||879||935||1,813|
| International partnerships to support
the auto sector
|Economic Action Plan stimulus||28,090||47,242|
|Assumed provincial and territorial actions||8,441||5,978||14,419|
|Total Economic Action Plan stimulus
|Note: Totals may not add due to rounding.|