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2016 Canadian Federal Fall Economic Statement Update

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Edelman Canada shares a perspective on the 2016 Federal Fall Economic Statement Update. To learn more about Edelman Canada, please visit www.edelman.ca.

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2016 Canadian Federal Fall Economic Statement Update

  1. 1. Edelman Ottawa | 155 Queen St. Suite 1302 | Ottawa, ON K1P 6L1 | 1.613.569.9000 As the Trudeau Liberals mark their first year in government, expectations continue to rise on their campaign promises while Canada’s economic growth has stalled throughout much of 2016. More mini- budget than standard fiscal update, this year’s Fall Economic Update seeks to both meet at least some of those expectations while highlighting results already achieved since Budget 2016 and in broad terms lay out a plan for economic growth. Infrastructure spending and investing to attract foreign investment remain the priorities to create jobs and stimulate the economy for the government. New spending on new initiatives like a separate Infrastructure Development Bank and the Invest in Canada Hub are the key takeaways. Minister Morneau’s Advisory Committee on Economic Growth previewed these, especially the Infrastructure Development Bank to leverage private sector investment in public infrastructure projects. A significant part of the Fall Economic Statement focuses on investments from Budget 2016 and signs of their success in impacting middle class Canadians along with non-monetary announcements related to government transparency, such as more independence for the Parliamentary Budget Officer, Chief Statistician, and more transparency for the Board of Internal Economy which governs the affairs and spending of the House of Commons itself. With the release of this year’s fiscal update, work has already begun on the next budget. Predictions of an end to the so- called honeymoon for the Trudeau Liberals continue to be premature according to polls, however a sustained period of low economic growth will create an increasing challenge for Minister Morneau leading into Budget 2017. 2016 FEDERAL FALL ECONOMIC STATEMENT UPDATE OUR PERSPECTIVE PROJECTED FEDERAL BUDGETARY BALANCE $ BILLIONS -5.4 N/A -1.0 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 SOURCE: DEPARTMENT OF FINANCE Bob Richardson Executive Vice-President & National Practice Lead 416.849.1913 | bob.richardson@edelman.com Darcy Walsh Senior Vice President & General Manager 613.569.9000 | darcy.walsh@edelman.com Christopher Vivone Senior Vice President 613.569.9000 | chris.vivone@edelman.com PROJECTED FEDERAL BUDGET (MARCH 2016) FALL ECONOMIC UPDATE (NOV 2016) ACTUAL $6-BILLION ADJUSTMENT SET ASIDE FOR RISK -29.4 -29.0 -22.8 -17.7 -14.3 -25.1 -27.8 -25.9 -19.3 -16.8 -14.6
  2. 2. Edelman Ottawa | 155 Queen St. Suite 1302 | Ottawa, ON K1P 6L1 | 1.613.569.9000 CHALLENGES 2016 FEDERAL FALL ECONOMIC STATEMENT UPDATE STAKEHOLDER RESPONSE HIGHLIGHTS Infrastructure ›› The creation of The Canada Infrastructure Bank - An arm’s length organization responsible for investing $35 billion in large infrastructure projects. $15 billion from previously announced money and $20 billion through either equity, debt, or a combination of the two. ›› This Bank could offer more flexibility for financing large projects, reducing the cost to finance them and leverage private sector investment in public infrastructure projects through reducing the risk. ›› An additional $81 billion over the next eleven years, much of it back ended, for public transit, green and social infrastructure, transportation infrastructure that supports trade, and rural and northern communities. Attracting Investment and Talent ›› $218 million dollars to create the Invest in Canada Hub over five years to create an organization responsible for selling Canada abroad as a destination for large private sector investment. ›› By 2017, the threshold for review under the Investment Canada Act will be $1 billion, two years sooner than the earlier date of 2019. ›› A Global Skill Strategy to fast track approvals for low risk, high skill talent for high growth Canadian companies and companies making large investments in locating to Canada. Deficits and Debt ›› The deficit for 2016-17 is expected to be $25.1 billion without a contingency fund. In last spring’s budget, the government projected a deficit of $29.4 billion, but that number included a $6-billion reserve. ›› Over five years, the government will add a total of $31.8 billion more in debt than was expected in the last budget due to sluggish economic performance and new spending. ›› While there is no commitment to get back to balance, the deficit is expected to shrink to 14.6 billion by 2021-22. ECONOMIC GROWTH Economic growth will continue to be unpredictable and uneven across the country. Some regions may see some opportunity for growth through increased exports through trade deals like CETA, while others continue to feel the impact of low commodity prices. RESOURCE DEVELOPMENT In regions hard hit by those low commodity prices, the government will continue to face difficult litmus tests by stakeholders and Provincial governments on issues of resource development versus fighting climate change. “The Prime Minister promised that if he borrowed billions of dollars, he could create jobs and grow the economy. Today, Justin Trudeau confirmed that his plan has failed.” Hon. Rona Ambrose, PC, MP, Interim Leader of the Conservative Party of Canada “We are very hopeful that the new Infrastructure Bank will focus on a range of projects with varied size and scope so that all provinces and municipalities across the country can benefit. Canada’s life and health insurance industry stands ready to play a major role in building our infrastructure.” Frank Swedlove, President and CEO, Canadian Life and Health Insurance Association (CLHIA) “These unprecedented infrastructure investments will mean more growth, more jobs and stronger communities. Municipalities are read to partner with this government to deliver truly transformative returns on this investment for all Canadians” Clark Somerville, President, Federation of Canadian Municipalities (FCM)