Chapter 2 - Results for Middle Class Canadians

Table of Contents

Introduction

Canadians across the country are seeing the results of investments in people and communities in real and tangible ways. From the over 450,000 jobs created since 2015, to a more secure retirement for millions of seniors and workers, to a reduction in the small business tax rate to 9 per cent, to the nine out of 10 families who have more money in their pockets as a result of the Canada Child Benefit, this chapter highlights important accomplishments made over the last two years—and the progress made on an ambitious plan for the middle class and those working hard to join it.

What Success Looks Like in 2017: Some Highlights
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A stronger economy that benefits all Canadians
  • Canada now the fastest growing economy in the G7
  • Over 450,000 jobs created since 2015, and unemployment rate at lowest level since 2008
  • Lowest youth unemployment rate on record at 10.3 per cent
  • Labour market participation of working-age women
    at an all-time high
Opportunities for the Middle Class
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A better future for children, and more opportunity and security for middle class women and men 
  • Nine out of 10 Canadian families are receiving more money with the new Canada Child Benefit
  • Employment Insurance benefits have improved to support unemployed and underemployed Canadians and families
  • Canada Pension Plan maximum retirement benefit will increase by about 50 per cent for workers today and for the next generation
  • Restored the eligibility age for Old Age Security and Guaranteed Income Supplement benefits to 65, putting thousands of dollars back in the pockets of Canadians as they become seniors
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Stronger support for those who need it most
  • Increased Guaranteed Income Supplement payments of up to $947 per year are helping nearly 900,000 low-income seniors, of which 70 per cent are women
  • Eligible veterans are now receiving 90 per cent of their pre-release salary and will soon qualify for up to $80,000 in financial support to pursue education and training after release
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A renewed relationship with Indigenous Peoples
  • Over $11 billion in new investments, working towards a new fiscal relationship
  • Over 50 new Self Determination Tables have been established to date to advance Indigenous rights, needs and interests
  • Since November 2015, 26 long-term drinking water advisories have been lifted
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A fairer tax system for middle class Canadians
  • Lower taxes for middle class Canadians and small business
  • A tax system better targeted to promote fairness, investment and growth
  • Investments in the Canada Revenue Agency to better enforce the rules so that everyone pays their fair share
An Innovative, Inclusive and Sustainable Economy
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A Canada with the skills to thrive in the global economy of tomorrow
  • Up to $1,000 more per year for low- and middle-income post-secondary students through Canada Student Grants
  • A bold and inclusive Innovation and Skills Plan that builds on Canada's strengths
  • Historically high levels of immigration and a Global Skills Strategy will ensure that Canada attracts top talent and investment from around the world
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Communities built for change
  • Long-term infrastructure investments will strengthen communities and support sustainable economic growth by helping move goods and people more easily, and by creating jobs for today and tomorrow
  • Pan-Canadian Framework on Clean Growth and Climate Change adopted on December 9, 2016

Opportunities for the Middle Class

The Government's plan for the middle class is creating jobs, improving lives, strengthening communities and growing the economy.

Supporting Children and Families

In the first year of its mandate, the Government acted on two of its cornerstone commitments:

The net result of these two measures has been more money in the pockets of middle class people and their families, contributing significantly to economic growth, creating jobs and bringing renewed confidence for the future for millions of Canadians.

To further help families, in June 2017, federal-provincial-territorial Ministers Responsible for Early Learning and Child Care announced a new agreement on a Multilateral Early Learning and Child Care Framework to make enhancements to provincial and territorial early learning and child care systems. Governments have committed to increase the quality, accessibility, affordability, flexibility and inclusivity in early learning and child care, with consideration for families that need it most. To implement this initiative, the Government of Canada is providing $7.5 billion over 11 years to support and create more high-quality, affordable child care across the country, and is working with provinces and territories to enter into three-year bilateral agreements that will outline their unique early learning and child care needs and the funding allocation for each jurisdiction.

Meaningful Investments in our Children's Future
Chart 2.1
Nearly 300,000 Children Lifted Out of Poverty
Chart 2.1 - Nearly 300,000 Children Lifted Out of Poverty - For details, refer to the preceding paragraph.
Note: It was estimated that a further 8,000 children living on-reserve and in the territories will be lifted out of low income, for a total of nearly 300,000 children lifted out of poverty by 2017. The actual impact of the CCB will be known when the low-income data for 2017 is released, in 2019.
Source: 2013 data from Statistics Canada’s Canadian Income Survey, 2013 edition, based on after-tax low-income cut-offs. 2017 data is an Employment and Social Development Canada projection.
Estimated Impact of Federal Investment on Subsidized Child Care Spaces (Outside Quebec)
Chart 2.1 Estimated Impact of Federal Investment on Subsidized Child Care Spaces (Outside Quebec) - For details, refer to the preceding paragraph.
Source: Provincial/territorial data; Statistics Canada CANSIM data; Early Childhood Education and Care in Canada, M. Friendly, B. Grady, L. Macdonald, B. Forer; internal calculations.

A distinction-based Indigenous Early Learning and Child Care Framework will be developed between partners that will reflect the unique cultural needs of First Nations, Inuit and Métis children across Canada.

A Stronger, More Inclusive Canada

The Government is taking steps to ensure that all Canadians have a real and fair chance at success, and can benefit from a growing economy. This includes making sure all Canadians can look forward to a secure and dignified retirement, fulfilling Canada's solemn promise to our veterans and ensuring that the most vulnerable in our society have a safe place to call home.

 

How Low- Income Single Seniors Benefit

Lynn is a 74-year-old resident of Montréal, Quebec, who lives alone. With no income apart from Old Age Security and Guaranteed Income Supplement benefits, she struggles to make ends meet. The increase in the Guaranteed Income Supplement top-up benefit for single seniors introduced in Budget 2016 provides Lynn with an additional $947 per year.

Charles is a 68-year-old widower residing in Edmonton, Alberta. Charles receives annual Canada Pension Plan benefits of $5,000 along with Old Age Security and Guaranteed Income Supplement benefits. The increase in the Guaranteed Income Supplement top-up benefit for single seniors introduced in Budget 2016 provides Charles with an additional annual benefit of $848 per year.

Enhancements to the Canada Pension Plan (CPP) will mean added peace of mind for Canadians nearing retirement
Chart 2.2
Share of Families Near Retirement at Risk of Not Saving Adequately for Retirement
Chart 2.2 - Share of Families Near Retirement at Risk of Not Saving Adequately for Retirement - For details, refer to the preceding paragraph.

Note: Figures represent the share of families near retirement at risk of not saving adequately (when considering income from the three pillars of the retirement income system and savings from other financial assets) if the CPP enhancement had been in place throughout their working lives. The number of families under-saving is calculated by applying the share of families under-saving to the number of economic families in 2016 with a major income earner age 45-59. The number of families represents families from all provinces.

Source: Department of Finance Canada.

A New Education Benefit for Veterans

David is a 32-year-old Canadian Armed Forces member who will be released in the summer of 2018 after 12 years of service in the Regular Force as an ammunition technician. He is planning on going back to school full-time for a three-year college course to become a civil engineering technician. He will receive an education benefit of $20,000 per year for each of those three years. Depending on his family income, David could also be eligible to receive student grants and loans through the Canada Student Loans Program. In addition, David can access employment services such as career counselling and job-search training under the Career Transition Services Program to assist him in re-entering the labour force following the completion of his studies.

Low-income Canadians will have improved access to adequate and affordable housing—a cornerstone of sustainable, inclusive communities and a Canadian economy where we can prosper and thrive. The Government is renewing federal leadership in housing with significant new long-term investments. The launch of the National Housing Strategy—a long-term investment of more than $11.2 billion over 11 years—will take place later this fall. One-third of social housing tenants in Canada are seniors. It is expected that the Strategy will have a more pronounced impact on senior women living alone, female-headed lone-parent families, and women with disabilities who currently experience high levels of housing need.

A New Rental Construction Financing Initiative

In April, the Government announced the launch of the Rental Construction Financing Initiative to help increase the supply of rental housing. Over the next four years, this initiative will offer more than $2.5 billion in low-cost loans to support the construction of new rental housing. These funds will be provided to municipalities, non-profit organizations and housing developers. Low-cost loans will help with the earliest, and most challenging, phases of development, including construction, lease-up and the early stages of property operations. These loans are expected to spur the construction of more than 10,000 new rental housing units across Canada.

In exchange for these favourable loans, borrowers will be required to build housing projects that:

  • are more energy-efficient;
  • are accessible to Canadians with disabilities; and
  • have 20 per cent of their units set aside as affordable housing for moderate-income families.
A Continued Focus on Gender Equality and Inclusiveness

Since Budget 2017, the Government has continued to pursue policies and investments that support gender equality and inclusiveness.

  • The new Multilateral Early Learning and Child Care Framework will support access to child care for children of all backgrounds, and allow greater participation in work, education or training, particularly by mothers.
  • Canada's new defence policy will promote diversity and inclusion as core institutional values across the Defence team. Gender-based Analysis Plus will be integrated in all Defence activities across the Canadian Armed Forces and the Department of National Defence. A new focus will be placed on recruiting and retaining under-represented populations within the Canadian Armed Forces, including, but not limited to, women, Indigenous Peoples and members of visible minorities, with a target to increase the representation of women to 25 per cent of the overall force.  
  • The new Feminist International Assistance Policy will aim to reduce extreme poverty and build a more peaceful, inclusive and prosperous world—recognizing that promoting gender equality and empowering women and girls is the most effective approach to achieving this goal.
  • Stronger capacity at Status of Women Canada will support national and international engagement to help advance the Government's gender equality objectives.

The Government continues to work with civil society and international partners to improve how it includes Gender-based Analysis Plusas part of policy development and budget decision-making—and will build on Budget 2017's Gender Statement to promote greater gender equality and inclusiveness as part of Budget 2018.

A Renewed Relationship With Indigenous Peoples

The Government is taking concrete steps to achieve reconciliation with First Nations, Inuit and the Métis Nation. To support the renewal of the relationship, the Government announced the creation of two new departments: a Department of Crown-Indigenous Relations and Northern Affairs, and a Department of Indigenous Services. These changes mark an important shift away from historic colonial structures. The Government is also working with First Nations, Inuit and Métis to co-develop policy proposals that respond to their priorities. While significant work remains, progress is being made:

Combatting International Tax Evasion and Avoidance

To keep taxes low and ensure everyone pays their fair share, the Government of Canada is actively engaged with international partners to ensure that Canada's tax system is functioning as intended and contributing to the objective of an economy that works for the middle class. 

Canada has worked together with the other members of the Group of 20 (G20) and the Organisation for Economic Co-operation and Development (OECD) to develop recommendations that will address base erosion and profit shifting (BEPS). BEPS refers to international tax planning arrangements used by multinational enterprises to unfairly minimize their taxes. For example, some enterprises will shift their taxable profits away from the jurisdiction where the underlying economic activity has taken place in order to avoid paying their fair share. 

Canada's Progress—Base Erosion and Profit Shifting (BEPS) Initiative

The Government remains firmly committed to protecting Canada's tax system, and has implemented—or is in the process of implementing—the measures agreed to as minimum standards under the BEPS project:

  • Legislation was enacted in December 2016 that requires large multinational enterprises to file country-by-country reports. This information will give tax authorities in each country a clearer picture of where the operations of the group in their particular jurisdiction fit into the group's global operations and assist in high-level risk assessments.
  • Canada participated in the development of a multilateral instrument to streamline the implementation of tax treaty-related BEPS recommendations. On June 7, 2017, Canada, along with 67 other countries, signed the multilateral instrument. The Government is now undertaking the necessary domestic processes for ratification.
  • Canada has committed to the effective and timely resolution of tax treaty-related disputes by improving the mutual agreement procedure in Canada's tax treaties.
  • The Canada Revenue Agency (CRA) has begun the spontaneous exchange with other tax administrations of tax rulings.

With respect to other BEPS recommendations:

  • Canada has robust "controlled foreign corporation" rules in the form of our foreign accrual property income regime, which helps prevent taxpayers from avoiding Canadian income tax by shifting income into foreign subsidiaries.
  • Canada has implemented requirements for the disclosure of specified tax avoidance transactions to the CRA.
  • The CRA is applying revised international guidance on transfer pricing by multinational enterprises.

The Government will continue to work with its international partners to ensure a coherent and consistent response to fight tax avoidance through BEPS. 

The Government is also strengthening its efforts to combat international tax evasion through enhanced sharing of information between tax authorities. The automatic exchange of information with respect to financial accounts held by non-residents—under the framework of the Common Reporting Standard developed by the OECD—is an important tool to promote compliance, combat international tax evasion, and ensure that taxpayers are reporting their income from all sources. To date, more than 100 jurisdictions have committed to implement the new standard.

Strengthening Corporate and Beneficial Ownership Transparency

The Government of Canada is committed to implementing strong standards for corporate and beneficial ownership transparency that provide safeguards against money laundering, terrorist financing, tax evasion and tax avoidance, while continuing to facilitate the ease of doing business in Canada. Understanding the ownership and control of corporations is vital for good corporate governance and to protect the integrity of the tax and financial systems.

As announced in Budget 2017, the Government is working with the provinces and territories to strengthen the transparency of legal persons and arrangements in order to address blind spots in the availability of beneficial ownership information. 

The Government also announced in Budget 2017 that it will examine ways to enhance the tax reporting requirements for trusts in order to improve the collection of beneficial ownership information.

These actions will ensure that law enforcement and other authorities have timely access to the information needed to crack down on money laundering, terrorist financing and tax evasion and to combat aggressive tax avoidance.

An Innovative, Inclusive and Sustainable Economy

Recognizing the unique opportunities and challenges that a rapidly changing economy presents, the Government took definitive steps to foster innovation, equip Canadians with the skills they need to succeed, and introduce transformational investments in infrastructure.

Skills for the New Economy

The Government is making targeted investments to expand access to the education, work experiences and employment supports that Canadians need to get high-quality, well-paying jobs. Combining work experience with education ensures that recent graduates have the skills and knowledge employers need. Youth will be better-prepared as they enter the workforce and all workers will have the skills and supports to advance their career throughout their working lives.

Today, these investments are already translating into greater opportunities for students and workers.

Table 2.1 - Measurable Impacts to Date
Post-Secondary Students
Expanded student financial assistance for those from low-and middle-income families

More work-ready students supported through work-integrated learning
  • 347,000 more students from low- and middle-income families and 16,000 more part-time students receive financial assistance each year
  • More students will be eligible for grants from expanded income thresholds starting in September 2017
  • 10,000 new placements over four years for post-secondary students in business and in science, technology, engineering and mathematics through the Student Work-Integrated Learning Program
  • Increasing the annual number of research internships offered by Mitacs from 3,750 to10,000 over the next five years, providing more job-relevant experiences for students and helping businesses become more innovative
Youth
Created more jobs to support youth entering the labour force, through the Youth Employment Strategy
  • 65,800 Canada Summer Jobs, effectively doubling the program in 2016
  • New green jobs are helping young Canadians learn about our natural environment and contribute to economic growth
  • Additional heritage sector jobs supported the lead-up to Canada's 150th anniversary
  • Lowest youth unemployment rate on record, at 10.3 per cent
Unemployed or Underemployed Canadians
Improved labour market attachment for new entrants and re-entrants to the labour force
  • More than 50,000 additional new entrants and re-entrants now have access to Employment Insurance regular benefits


In addition, Labour Market Transfer Agreements are being reformed and consolidated in partnership with provincial and territorial governments. Employment and training programs currently supported by nearly $3 billion in annual federal investments will become more flexible, more client-focused and driven by results and innovation.

The Government is also boosting student financial assistance for low- and middle-income adult learners by providing additional funding through Canada Student Grants, and is currently working with provinces and territories to make Canada Students Grants more accessible to adult learners.

Additional investments of $2.7 billion over six years were announced in Budget 2017 and the Employment Insurance Acthas been amended to expand eligibility for the Agreements funded through the Employment Insurance program as of April 1, 2018.

Table 2.2
Eligibility for Programs Under Part II of the Employment Insurance Act
  Current Labour Market Development Agreements Expanded Labour Market Development Agreements
Employment benefits (e.g., skills development, wage subsidies) Individuals currently receiving or having received Employment Insurance benefits in the past five years Expanded to include unemployed individuals who have made minimum Employment Insurance premium contributions above the premium refund threshold (i.e. $2,000) in at least five of the last 10 years
Employment assistance services under support measures (e.g., employment counselling, job search assistance) Unemployed Canadians Expanded to include employed Canadians
Employer-sponsored training under support measures (Labour Market Partnerships) Assistance to employers to support approved training activities for employees facing a loss of employment Expanded to include assistance to employers to support approved training activities for employees in order to maintain their employment. This may include employees impacted by technological or structural changes in the economy
Note: Amendments to the Employment Insurance Act included in Budget Implementation Act, 2017, No. 1.

A More Skilled And Innovative Canada

The Government's Innovation and Skills Plan is helping Canada realize its potential as a global leader in innovation. Since Budget 2017, the Government has taken steps to advance the Plan's key measures:

Clean Growth and Climate Change

The Pan-Canadian Framework on Clean Growth and Climate Change was adopted by First Ministers on December 9, 2016 to grow Canada's economy while reducing emissions and building resilience to adapt to a changing climate. The Government has made significant progress in implementing the Framework:

Infrastructure Investments for Communities

Investing in Canada, the Government's plan to renew Canada's infrastructure for a generation (over $180 billion over 12 years), has already achieved important results—investing in projects that matter to communities, and that will create jobs and keep Canada's economy growing now and in the future. The results speak for themselves:

The Government is working with its partners to deploy the initiatives announced in Budget 2017, including the launch of the Canada Infrastructure Bank, the Smart Cities Challenge, and bilateral agreements with provinces and territories. Budget 2017 investments include $25.3 billion for public transit, $21.9 billion for green infrastructure, $21.9 billion for social infrastructure, $10.1 billion for trade and transportation, and $2 billion dedicated to rural and northern communities.

Launch of the Canada Infrastructure Bank

The Government is establishing the Canada Infrastructure Bank (CIB), an arm's-length organization that will work with provincial, territorial, municipal, Indigenous and private sector investment partners to transform the way infrastructure is planned, funded and delivered in Canada. The CIB will be responsible for investing at least $35 billion in revenue-generating infrastructure projects that are in the public interest, and attracting private sector capital to those projects so that more infrastructure can be built across Canada.

The implementation of the CIB is advancing on track. The Canada Infrastructure Bank Act is now in place. Earlier this year, the Government announced the appointment of the inaugural Chairperson, Janice Fukakusa, a highly qualified leader with extensive experience in finance and banking. The search process for the CIB's board directors and its Chief Executive Officer is also well-advanced. The CIB's headquarters are being established in Toronto, to take advantage of its status as a global financial hub with a vast network and critical mass of financial, legal and construction firms.

By the end of this year, the CIB will begin work with its partners to bring new investment and transformative new ideas to Canada's infrastructure landscape.

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