stimulus spending update - sept. 27, 2010

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Table o Contents

1 Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2 Progress Achieved to Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Reducing the Tax Burden or Canadians . . . . . . . . . . . . . . . . . . . . . 35

Helping the Unemployed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Building Inrastructure to Create Jobs . . . . . . . . . . . . . . . . . . . . . . . 59

Creating the Economy o Tomorrow . . . . . . . . . . . . . . . . . . . . . . . 97

Supporting Industries and Communities . . . . . . . . . . . . . . . . . . . . . 109Improving Access to Financing and StrengtheningCanadas Financial System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

Annex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

3


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Overview

Chapter 1


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Canadas Economic Action PlanA Sixth Report to Canadians

Highlights

Canadas Economic Action Plan is a two-year $62-billion planto boost confdence and support the economy in response to thedeepest global recession since the 1930s.

Implementation o the Economic Action Plan is on track anddelivering results to Canadians.

In its frst year o implementation, the Economic Action Planhas delivered over $33 billion in stimulus to the economy.

All o the jobs lost during the recession in Canada have now

been recouped, with nearly 430,000 jobs created since July 2009. On average, the Economic Action Plan is estimated to have

boosted Canadas gross domestic product (GDP) growth by1.5 percentage points per quarter since the second quartero 2009.

In 201011, the Action Plan is on track to deliver a urther$22 billion in ederal stimulus spending, complemented by$7 billion in stimulus unding rom provinces, territories,

municipalities and other partners. Funding or the Action Plan in 201011 is 98 per cent committed.

Canadians are benefting rom permanent tax relie. As well,an estimated 4.6 million Canadian amilies benefted rom thetemporary Home Renovation Tax Credit.

The Government is providing exceptional support or theunemployed, with total Employment Insurance (EI) payments up

by over $5 billion rom 200809. Enhancements to EI continueto ow to unemployed Canadians. Economic Action Plan unds have been committed to over

23,000 projects across the country. O these, close to 22,500,or 97 per cent, have begun or have been completed. The Government has committed all o the unding available

under the $4-billion Inrastructure Stimulus Fund towardsapproximately 4,000 projects across the country. About

99 per cent o the projects are underway or completed.


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Chapter 1

Almost all o the $500 million made available under theRecreational Inrastructure Canada program has been

committed to almost 2,000 projects across the country, over1,900 o which are already underway or completed. Over 9,000 projects are underway or completed to improve

social housing and First Nations housing across the country. Under the Knowledge Inrastructure Program, 56 projects

have been completed and work has begun on more than420 additional projects.

The Government is actively managing the Economic Action Planto ensure eective delivery o stimulus. The Government is committed to winding down the stimulus as

the economy recovers and returning to budgetary balance over themedium term.


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IntroductionCanadas Economic Action Plan has helped Canadians through the worstglobal recession since the 1930s and is now contributing to a solid economicrecovery. However, global economic growth remains ragile and, at home,too many Canadians remain out o work. The continued implementationand completion o the Economic Action Plan will help ensure the strengtho the recovery in Canada.

We will stay on this course. Completion o the Economic Action Plan is thisGovernments ocus. Todays report indicates 98 per cent o all Economic

Action Plan spending or 201011 is committed. More than 23,000 projectshave been committed to, with close to 22,500 completed or underway.

Our priority remains creating jobs or Canadians and we are delivering.Nearly 430,000 jobs have been created in Canada since July 2009, morethan were lost as a result o the global recession.

We will continue with this ocus on jobs and growth as we completeimplementation o the Economic Action Plan. Once the Plan is ullyimplemented, we will continue to lower taxes and promote practical,

workable and aordable ideas as we ollow through on our plan to returnCanadas fnances back to balance over the medium term.

At their June meeting in Toronto, Group o Twenty (G-20) leaders werein broad agreement on the need to ollow through on delivering existingstimulus to strengthen the international recovery.

To sustain recovery, we need to ollow through on delivering existing

stimulus plans, while working to create the conditions or robustprivate demand.

G-20 Declaration, Toronto Summit, June 27, 2010


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Chapter 1

They also recognized, however, the need to wind down fscal stimulusgoing orward, and committed to fscal plans that will at least halve defcits

by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016.Budget 2010 laid out a plan that goes beyond this commitment, bringingCanadas fnances back to balance over the medium termwell beore anyother Group o Seven (G-7) country. As part o this plan, the Government

will ollow through on the exit strategy built into the Action Plan byallowing temporary stimulus measures to end as the economy recovers.

advanced economies have committed to f scal plans that will at least

halve def cits by 2013 and stabilize or reduce government debt-to-GDPratios by 2016.

G-20 Declaration, Toronto Summit, June 27, 2010

Canadas Economic Action PlanThe implementation o Canadas Economic Action Plan continues to be

timely and eective. The Action Plan protects Canadian jobs and incomes bydelivering a $62-billion shot in the arm to the economy (Table 1.1). Taxeshave been reduced, EI benefts have been extended or the unemployed,thousands o inrastructure projects are underway across the country,signifcant support has been provided or science and technology, industriesand communities, and extraordinary actions have been taken to improveaccess to fnancing. The Economic Action Plan is an investment in jobsnow and in our uture prosperity.

Canadas Economic Action Plan is large, timely, well diversif ed andstructured or maximum eectiveness.

International Monetary Fund (IMF),Canada: 2009 Article IV Consultation, May 2009


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The Action Plan is:

Reducing the Tax Burden for Canadians: Providing Canadians withsignifcant, permanent personal income tax relie and Canadian businesses

with the lowest overall tax rate on new business investment among themajor industrialized economies.

Helping the Unemployed: Providing more resources or EI beneftsto support those who have lost their jobs and providing the trainingrequired to help Canadians get the additional skills they need or the jobso tomorrow and to get back to work. This includes providing additionalbenefts to long-tenured workers. It also includes providing support to

Canadian workers participating in work-sharing arrangements and to thesel-employed.

Building Infrastructure to Create Jobs: Providing new inrastructureand housing unding to create jobs across Canada and ensure Canadaemerges rom the economic downturn with a more modern and greenerinrastructure, as well as an expanded capacity to provide aordablehousing to lower-income Canadians. These projects are benefting

workers and the economy across the country. The Economic Action Planhas also provided additional support to the housing sector through the

Home Renovation Tax Credit. Creating the Economy of Tomorrow: Improving inrastructure

at colleges, universities, ederal laboratories and research acilities,introducing additional support or graduate students and internships,and supporting research and technology leadership in Canada.


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Chapter 1

Supporting Industries and Communities: Supporting local economiesand protecting jobs in regions, communities and sectors that have been

most aected by the economic downturn. Improving Access to Financing and Strengthening Canadas

Financial System: Ensuring the continued stability o the Canadianfnancial system and improving access to fnancing or Canadianhouseholds and businesses.

To their credit, even during the crisis, Canadian governments carriedthrough with structural reorms.

Organisation or Economic Co-operation and Development (OECD),Economic Survey of Canada 2010, September 13, 2010

Table 1.1

Canadas Economic Action Plan

200910 201011

DollarsSpent1 StimulusValue Total

(millions o dollarscash basis)

Reducing the Tax Burden or Canadians 3,020 3,180 6,200

Helping the Unemployed 3,725 5,353 9,077

Building Inrastructure to Create Jobs 6,802 8,869 15,671

Creating the Economy o Tomorrow 1,550 2,323 3,873

Supporting Industries and Communities 10,979 2,271 13,250

Total federal stimulus measures 26,076 21,995 48,071

Assumed provincial and territorial actions 7,062 6,968 14,029

Total Economic Action Plan stimulus 33,138 28,963 62,100

Note: Totals may not add due to rounding.1 Includes estimated values or tax reduction measures.


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Canada had the strongest fscal position in the G-7 at the onset o the globalrecession, which allowed it to respond quickly and orceully to stimulate

the economy and support Canadians through the worst o the recession(Chart 1.1). Indeed, the policy response set out in Canadas EconomicAction Plan is one o the largest stimulus packages among G-7 countries.

Canadas Economic Action Plan is one o the

largest fscal stimulus plans in the G-7

Chart 1.1

Fiscal Stimulus Flowing in 2009 and 2010,G-7 Countries

per cent of GDP

0

1

2

3

4

5

Japan UnitedStates

Canada Germany UnitedKingdom

France Italy

Subsequentstimulus

Initial stimulus

Notes: IMF estimates exclude loans, including those to the auto sector, or all countries. Figure or Canadaincludes provincial/territorial stimulus in addition to that assumed in the Economic Action Plan as estimated

by the Department o Finance.

Source: IMF, Fiscal Monitor, May 2010.


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Chapter 1

The Plan Is Working

All o the jobs lost during the recession in Canada have now been recouped,with nearly 430,000 jobs created since July 2009.

Canadas Economic Action Plan Is Supporting

the Economic Recovery in CanadaCanadas Economic Action Plan provided a large, timely and targetedresponse to the global crisis, with stimulus totalling more than $62 billionover two years. The Action Plan has had a strong positive impact on theCanadian economy both during the recession and over the recovery to date.

The Action Plan, combined with Canadas strong undamentals, includinga sound fnancial sector and strong corporate, household and governmentbalance sheets, allowed Canada to weather the global recession better thanmost other industrialized countries. Indeed, the recession in Canada was lesspronounced than in any other G-7 economy (Chart 1.2).

Canada is benef ting rom its past good policies, in spite o the act thatCanada was severely hit through trade...rom south o the border.

Pier Carlo Padoan, OECD Chie EconomistApril 8, 2010


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Canada ared better than all other G-7 countries

during the global recession

Chart 1.2

Overall Contraction in Real GDP During the Recession

per cent

Note: The overall contraction in GDP is measured by the peak-to-trough decline in real GDP: 2008Q22009Q3or U.K.; 2008Q22009Q2 or Italy; 2008Q22009Q1 or France, Germany and Japan; 2008Q32009Q2 or U.S.;2008Q12009Q2 or Canada.

Sources: Statistics Canada; U.S. Bureau o Economic Analysis; Japan Cabinet Ofce; U.K. Ofceor National Statistics; Deutsche Bundesbank; National Institute or Statistics and Economic Studies o France;National Institute or Statistics o Italy.

-9

-8

-7

-6

-5

-4

-3

-2

-1

0

Canada UnitedStates

France UnitedKingdom

Germany Italy Japan

The Economic Action Plan is supporting a solid economic recovery inCanada, which began in the third quarter o 2009. Following strong growth

o 4.9 per cent in the ourth quarter o 2009 and 5.8 per cent in the frstquarter o 2010, real GDP increased by 2.0 per cent in the second quartero 2010 (Chart 1.3).


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Chapter 1

The Economic Action Plan is supporting

an economic recovery

Chart 1.3

Real GDP Growth

per cent, period to period at annual rates

Source: Statistics Canada.

-8

-7

-6

-5

-4

-3

-2

-1

01

2

3

4

5

6

7

2008T4

2009T1

2009T2

2009T3

2009T4

2010T1

2010T2

The recovery in output has led to a recovery in jobs in Canada. All o thejobs lost during the recession in Canada have now been recouped, withnearly 430,000 jobs created since July 2009, which represents the trough inemployment (Chart 1.4). The Economic Action Plan has strongly supportedthis jobs recovery.

Canada is increasingly on the lips and minds o international investors.Those weve talked to are getting religion on Canadas potentialoutperormance versus a growing list o advanced economies. Indeed,its hard to recall a time when the country possessed such relative, i notabsolute, strength.

Warren Lovely, Macro Strategy Group,CIBC World Markets Inc., July 14, 2010


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Canadas solid economic recovery has

also supported a recovery in the labour marketChart 1.4

Total Employment

index, January 2005 =100

Unemployment Rate

per cent

Sources: Statistics Canada; U.S. Bureau of Labor Statistics.

9.6%

8.1%

96

98

100

102

104

106

108

Jan2005

Jan2006

Jan2007

Jan2008

Jan2009

Jan2010

Jan2005

Jan2006

Jan2007

Jan2008

Jan2009

Jan2010

4

5

6

7

8

9

10

11Canada

U.S.

Canada

U.S.All o the jobs lost duringthe recession in Canadahave been recouped

As a result o strong job creation, the unemployment rate in Canada ellrom a peak o 8.7 per cent in August 2009 to 8.1 per cent in August 2010.This is signifcantly better than what private sector economists wereexpecting early in the recession. In early 2009, some private sectoreconomists were orecasting the unemployment rate to peak at as highas 10 per cent.

The labour market recovery in Canada contrasts sharply with labour marketdevelopments in the United States, where employment remains well belowpre-recession levels. The U.S. unemployment rate is also near a 27-year highand remains above the Canadian unemployment ratea phenomenon notseen in nearly three decades.


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Chapter 1

Canadas labour market has also perormed better than its G-7 peers, withCanada being the only G-7 country to have posted signifcant positive

employment growth since June 2009 (Chart 1.5).

The Canadian labour market has been much

stronger than in any other G-7 country

Chart 1.5

Change in Total Employment, June 2009 to June 2010

per cent

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

Canada GermanyUnitedKingdom1

France ItalyUnitedStates

Japan

1 Data for the U.K. is on a quarterly average basis.

Sources: Statistics Canada; U.S. Bureau of Labor Statistics; Japanese Ministry of Health, Labour andWelfare; U.K. Office for National Statistics; Deutsche Bundesbank; National Institute or Statistics andEconomic Studies o France; National Institute or Statistics o Italy.


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The Governments Policies Are Supporting

a Strong Job MarketThe Governments strong policies have contributed to signif cant jobgrowth in Canada. Since January 2006, employment in Canada has increasedby close to 950,000, the strongest perormance o any G-7 country by ar overthis period.

Nearly 430,000 jobs have been created in Canada since July 2009, withthe result that all o the jobs lost during the recession have now beenully recouped.

The economic recovery in Canada has been supported by signifcantincreases in government investment in inrastructure, largely reective oinvestments provided in the Economic Action Plan. As o the second quartero 2010, government capital investment was over $6 billion higher than it

would have been had it ollowed the trend prior to the implementation othe Action Plan (Chart 1.6). This is in sharp contrast to the U.S., wheregovernment investment in inrastructure has remained broadly stable overthe past two years.

According to the IMF and OECD, Canada is expected to be the astest-growing economy in the G-7 over 2010 and 2011.

IMF, World Economic Outlook Update, July 2010 andOECD, Economic Outlook No. 87, May 2010


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Chapter 1

Government investment in inrastructure

is supporting the recovery in Canada

Chart 1.6

Real Government Fixed Capital Formation1

index, 2008Q1 = 100

100

105

110

115

120

125

130

135

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

1 Government fxed capital ormation includes government expenditures on construction, engineering, andmachinery and equipment.

2 The trend extrapolates the level in 2008Q1 to the present using the average growth rate between 2000Q1and 2008Q4.

Sources: Statistics Canada; U.S. Bureau o Economic Analysis; Department o Finance calculations.

Canada: trend2

U.S.: trend2

U.S.: actual

Canada: actual

$6 billion

higher than

trend


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The Economic Action Plan also helped individuals through the worst o therecession by providing tax relie and support or the unemployed. These

measures also had a positive impact on consumer and business confdenceand contributed to the rebound in private domestic demandthe sum oconsumer and business expenditureswhich has underpinned the economicrecovery (Chart 1.7).

A rebound in private domestic demand has

underpinned the economic recovery

-14

-12

-10

-8

-6-4

-2

0

2

4

6

8

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

Chart 1.7

Real Private Domestic Demand Growth

per cent, period to period at annual rates

Sources: Statistics Canada; Department of Finance calculations.

As a result o Canadas solid economic perormance over the recovery todate, economic output has now virtually returned to pre-recession levels.Canada is the only G-7 country to have virtually recouped the output lostsince the start o the recession (Chart 1.8). Canada is also the only G-7country to have nearly recouped private domestic activity lost since the starto the recession.


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Chapter 1

Canada has virtually recovered the output lost

during the recessionthe best perormance

in the G-7

-6

-5

-4

-3

-2

-1

0

Canada

Chart 1.8

Change in Real GDP Since Pre-Recession Peak

per cent

UnitedStates France JapanGermany UnitedKingdom Italy

Sources: Statistics Canada; U.S. Bureau o Economic Analysis; Japan Cabinet Ofce; U.K. Ofceor National Statistics; Deutsche Bundesbank; National Institute or Statistics and Economic Studieso France; National Institute or Statistics o Italy.

Canadas Strong Fiscal PositionCanada was able to respond quickly and orceully to the recession with a

large and comprehensive package o stimulus measures, without puttingat risk the countrys long-term fscal position. Canadas fscal positioncontinues to be recognized as one o the strongest in the world.

Canada entered the global crisis in good shape, and thus the exit strategyappears less challenging than elsewhere.

IMF, World Economic Outlook, April 2010


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The IMF expects Canadas total government defcit this year to be abouthal o the average or G-7 countries. Going orward, the IMF expects

Canada to be the only G-7 country to return to fscal balance by 2015. Bycomparison, it projects that other G-7 countries will record defcits in thatyear averaging 5.4 per cent o GDP, with defcits ranging rom 1.7 per cento GDP in Germany to 7.3 per cent o GDP in Japan (Chart 1.9).

The IMF expects Canada to be the frst G-7 country

to return to budget balance

Chart 1.9

Total Government1 Fiscal Balance, G-7 Countries

per cent o GDP

-12

-10

-8

-6

-4

-2

0

2

Canada Germany Italy Japan UnitedStates

UnitedKingdom

France G-7Average

1 Total government comprises the central, state and local levels o government, as well as social securityunds. In Canada, total government includes the ederal, provincial/territorial and local government sectors,

as well as the Canada Pension Plan and Qubec Pension Plan.Source: IMF, Fiscal Monitor, May 2010.

2010

2015

Responsible fscal management in the years prior to the recession resultedin signifcant reductions in Canadas net debt levels in the years leading upto the crisis. Canadas total government net debt-to-GDP ratio ell rom70.3 per cent in 1995 to a low o 22.6 per cent in 2008, the year o theonset o the economic crisis.


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Chapter 1

The IMF expects Canada to put its net debt burden back on a downwardpath by 2013sooner than any other G-7 country. Indeed, Canadas total

government net debt-to-GDP ratio is projected by the IMF to decline to30.4 per cent by 2015, by ar the lowest among G-7 countries (Chart 1.10).

By comparison, the IMF projects that Germany will have the second lowestnet debt-to-GDP ratio in the G-7, at around 75 per cent in 2015, more thandouble that o Canadas, while that o France, the United Kingdom and theUnites States are projected to hover around 85 per cent. Japan and Italy areexpected to have net debt-to-GDP ratios well above 100 per cent by 2015.

On average, the IMF projects G-7 countries net debt-to GDP ratio to reach93.7 per cent by 2015, twice its 2000 level and nearly three times Canadasprojected level that year.

Going orward, Canadas relative fscal positionremains the strongest among G-7 countries

Chart 1.10

Total Government Net Debt1-to-GDP Ratios

per cent

0

20

40

60

80

100

120

140

160

2000 2002 2004 2006 2008 2010 2012 2014

Italy

Canada

France

U.S.

Germany

U.K.

Japan

1 Total government net debt is total liabilities net o fnancial assets o the central, state and local levels ogovernment, as well as those in social security unds. In Canada, total government includes the ederal,provincial/territorial and local government sectors, as well as the Canada Pension Plan and Qubec PensionPlan. For international comparability, adjustments are made to ununded public pension liabilities.

Source: IMF, World Economic Outlook, April 2010.

Actual Projections


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Timely ImplementationCanadas Economic Action Plan provides $62 billion over two years to helpprotect and create jobs and invest in uture prosperity.

In its frst year o implementation, over $26 billion o Action Plan supporthas been released into the economy in the orm o ederal stimulus spendingor tax reductions. When combined with a urther $7 billion in stimulusrom provinces, territories, municipalities and other partners, a total oover $33 billion has been provided to Canadians as a result o the Economic

Action Plan.

Stimulus Provided Is Larger Than Dollars SpentThe Sixth Report to Canadians on Canadas Economic Action Planimplementation includes inormation on stimulus provided in 200910based on actual dollars spent. However, this approach generallyunderestimates stimulus ows or inrastructure-related projects, as undspaid out to provinces, territories, municipalities and third parties generallydo not reect the ull stimulus achieved.

In particular, amounts paid tend to lag the economic impact o fscalstimulus since payments are typically made when claims are received. Federalpayments ow to recipients (such as provinces, territories and municipalities)only once defned portions o projects are completed and claims aresubmitted. Upon receiving complete claims, the Government o Canadapays within 30 days. In many cases, entire projects may be fnished beorea claim is submitted. This results in the amount o unding provided at anygiven time signifcantly lagging actual work done and stimulus provided.

In the estimate o the job impact o the Economic Action Plan to date(see annex), this issue has been addressed by using an alternative measure ostimulus owing into the economy, where available: individual inrastructureproject start and end dates have been used to estimate unds owing, underthe assumption o a linear ow o economic stimulus rom project startto end. This inormation is available or approximately three-quarters oproject-based inrastructure spending.

In addition, provincial/territorial/municipal leverage assumed in the

Economic Action Plan is generally lower than the leverage reported byour partners.


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Chapter 1

Incorporating both o these adjustments increases the estimated global valueo the 200910 stimulus by $2.1 billion, rom $33.1 billion to $35.2 billion,

inclusive o provincial/territorial leverage.

Projects Underway or Completed

or Which No Claims Have Been Received

Provinces, territories and municipalities typically receive invoices romthe contractor(s) carrying out the work at periodic intervals or, in somecases, only when the project is complete. These governments then submitclaims or costs incurred to the Government o Canada. As a result, there isa natural lag between the time when the work is being undertaken, to whena province/territory/municipality is billed or the work, to when they conducttheir due diligence review o costs, to when a claim is actually submitted tothe Government o Canada or reimbursement. This is a normal situation orinrastructure projects involving multiple partners.

Based on reports rom recipients, there are more than 1,600 projects underthe $4-billion Inrastructure Stimulus Fund and over 130 projects under the$500-million top-up to the Communities Component o the Building Canada

Fund that are underway or completed, but or which no claims have yetbeen submitted.

The implementation o the Economic Action Plan is on track. 98 per cento the 201011 unding or the Action Plan is committed and will be spentin this fscal yearan estimated $22 billion in ederal stimulus or theCanadian economy.

The support to the economy has been timely and has helped to protect jobs

during the global economic recession. The Government will continue tomonitor the roll-out o the Action Plan to ensure that remaining stimulus issupporting the recovery as planned.


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Chapter 1

The Government has also secured agreements over the past 17 monthsto enable provinces, territories, municipalities and private sector partners

to implement measures or 200910 and 201011 that are a sharedresponsibility. Provincial and territorial governments are delivering:

Enhanced training programs.

Signifcant inrastructure and social housing spending.

Economic Action Plan unds have been committed to over 23,000projects across the country, o which 97 per cent have begun or have beencompleted. Projects underway or completed include:

Over 7,700 provincial, territorial and municipal inrastructure projects,including about 4,000 Inrastructure Stimulus Fund projects, over1,900 Recreational Inrastructure Canada projects and about 1,200accelerated Building Canada projects.

Almost 1,900 projects to renovate and repair ederal buildings.

Over 300 projects to enhance the accessibility o Crown-owned buildingsor persons with disabilities.

More than 475 projects to improve inrastructure at colleges anduniversities across the country.

Over 215 projects to modernize ederal laboratories.

Over 9,000 social housing and First Nations housing projects.

270 projects to improve small crat harbours.

Close to 1,600 projects to assist communities hardest hit by the recessionthrough the Community Adjustment Fund.

119 cultural inrastructure projects. Over 200 projects to upgrade acilities at National Parks and National

Historic Sites.

88 First Nations inrastructure projects.

Managing the PlanImplementation is on track. The Government is actively managing the

Economic Action Plan to maximize benefts or Canadians and to ensurethat the Plan is having an impact now and in areas where it is needed most.

The Government will continue to work with provincial, territorial andmunicipal partners to ensure that stimulus unds are eectively delivered.


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Chapter 1

The Governments three-point plan will lead

to a sharp decline in defcits and a return

to balanced budgets over the medium term

Chart 1.11

Projected Federal Budgetary Defcit

billions o dollars

Source: Department of Finance, Budget 2010, Leading the Way on Jobs and Growth.

5.8

53.8

49.2

27.6

17.5

8.5

1.8

0

10

20

30

40

50

60

20082009

Actual

20092010

20102011

20112012

20122013

20132014

20142015

This approach underscores the Governments undamental belie that theprivate sector is the engine o growth and wealth creation. The role ogovernment is to provide the inrastructure, programs and services or aprosperous economy and society at levels o taxation that are competitive

and sustainable or the long term.The ollowing chapter provides a detailed review o progress achieved ineach o the six areas o the Economic Action Plan.

Canadians are invited to monitor the progress o the Economic Action Planon the Governments website, www.actionplan.gc.ca.


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ProgressAchieved to Date

2Chapter


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Progress Achieved to Date

IntroductionThis chapter reports in detail on progress achieved since the Fith Reportto Canadians in implementing individual measures contained in CanadasEconomic Action Plan. It is divided into six sections that reect actionstaken in the Plan:

Reducing the Tax Burden or Canadians

Helping the Unemployed

Building Inrastructure to Create Jobs

Creating the Economy o Tomorrow

Supporting Industries and Communities

Improving Access to Financing and Strengthening CanadasFinancial System

Canadians can ollow progress on the implementation o the EconomicAction Plan on the Governments website, www.actionplan.gc.ca.


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Reducing the Tax

Burden for Canadians


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Progress Achieved to DateReducing the Tax Burden or Canadians

Reducing the Tax Burden or CanadiansThe tax reductions in Canadas Economic Action Plan are an essentialpart o the Governments eort to stimulate the economy and to create ormaintain jobs. Lower taxes help ease the inancial pressure on individuals,amilies and businesses and help build a solid oundation or utureeconomic growth. Lower taxes also stimulate individual spending, whichhelps to protect and create jobs. The tax reductions in the Action Plan buildon previous reductions and reinorce the Governments ambitious agenda otax relie aimed at creating a tax system that improves standards o living anduels job creation and investment in Canada.

The Government took early signiicant action in the October 2007Economic Statement, anticipating the prospect o a weaker global economy.It put in place broad-based permanent tax reductions that are sustainableor the uture. These reductions have positioned Canada better than mostcountries to withstand the eects o todays global economic challenges.

Actions taken by the Government since 2006, including those in theEconomic Action Plan, will reduce taxes on individuals, amilies andbusinesses by an estimated $220 billion over 200809 and the ollowing

ive iscal years. Tax relie or Canadian amilies and individuals (notincluding housing-related tax relie) provided under the Economic ActionPlan rom 200809 to 201011 totals $6.9 billion (Table 2.1.1).

Table 2.1.1

Reducing the Tax Burden for Canadians

200809 200910 201011 Total

(millions o dollars)

Personal income tax relie or all taxpayers 470 1,885 1,950 4,305

Increases to the National Child Beneftsupplement and Canada Child Tax Beneft 230 310 540

Enhancing the Working Income Tax Beneft 145 580 580 1,305

Targeted relie or seniors 80 325 340 745

TotalReducing the Tax Burdenfor Canadians 695 3,020 3,180 6,895

Note: Totals may not add due to rounding. The Canada Child Tax Beneft and the National Child Beneftsupplement are considered expenditures or budgetary purposes and thus should not be included in

calculations o total tax relie.


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Chapter 2

As a result o tax reductions and strong economic

growth, Canadian incomes have grown aster thanin any other G-7 country

Chart 2.1.1

Growth in Real Per Capita Personal Disposable Income

rom 2006 to 2009

per cent

Note: This chart shows gross personal disposable income.1 Data or Japan is rom 2006 to 2008.

Sources: Statistics Canada; National Institute or Statistics and Economic Studies o France; Japan CabinetOfce; Japan Ministry o Internal Aairs and Communications; Deutsche Bundesbank; Federal StatisticalOfce o Germany; U.S. Bureau o Economic Analysis; U.S. Bureau o Labor Statistics; U.S. Census Bureau;U.K. Ofce or National Statistics; Eurostat; National Institute or Statistics o Italy; Department oFinance calculations.

-6

-4

-2

0

2

4

6

Canada France UnitedStates

UnitedKingdom

Germany Japan1 Italy

Tax Relief for Individuals and FamiliesThe Economic Action Plan introduced signiicant new personal income taxreductions that have provided relie, particularly or low- and middle-incomeCanadians, as well as measures to help Canadians purchase and improve theirhomes. For example:

The amount o income that Canadians can earn beore paying ederalincome tax was urther increased, and the top o the two lowest incometax brackets was increased so that Canadians can earn more income beorebeing subject to higher tax rates.


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The Working Income Tax Beneit, introduced in Budget 2007, has beeneectively doubled. This enhancement lowers the welare wall by

urther strengthening work incentives or low-income Canadians alreadyin the workorce and encouraging other low-income Canadians to enterthe workorce. Canadians have been able to receive enhanced beneitssince iling their 2009 income tax returns.

The level at which the National Child Beneit supplement or low-incomeamilies is ully phased out and the level at which the Canada Child TaxBeneit begins to be phased out have been raised, providing a beneit oup to $438 in 2010 or a amily with two children. Additional monthlybeneits under these programs began to be paid to amilies with childrenin July 2009.

The Age Credit amount was increased by $1,000 in 2009 to provide taxrelie to low- and middle-income seniors. With indexation, this meansadditional tax savings o up to $151 or low-income seniors in 2010.

To assist frst-time home buyers, Canadas Economic Action Planprovided a tax credit o up to $750 as well as additional access to theirRegistered Retirement Savings Plan savings to purchase or build a home.

An estimated 4.6 million Canadian amilies benefted rom up to $1,350in tax relie rom the temporary Home Renovation Tax Credit on eligiblerenovation projects. Canadians were able to claim the credit when theyfled their 2009 income tax returns.

Tax relie or individuals and amilies announced in Canadas EconomicAction Plan is now ully implemented, and Canadians are realizingits beneits.

Actions the Government has taken since 2006 are providing importantstimulus to the economy and creating jobs, with almost $160 billion in taxrelie or individuals and amilies over 200809 and the ollowing ive iscal

years. Key actions include:

All Canadianseven those who do not earn enough to pay personalincome taxare beneiting rom the 2-percentage-point reduction inthe Goods and Services Tax (GST) rate. Maintaining the GST Creditlevel while reducing the GST rate by 2 percentage points translatesinto more than $1.1 billion in GST Credit beneits annually or low-

and modest-income Canadians, making purchases more aordable orthese Canadians.

All taxpayers are beneiting rom the reduction in the lowest personalincome tax rate to 15 per cent rom 16 per cent.


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Chapter 2

The Tax-Free Savings Account, introduced in Budget 2008, is improvingincentives to save through a lexible, registered general-purpose account

that allows Canadians to earn tax-ree investment income. The Government has also introduced relie measures targeted to

help amilies, students, seniors and pensioners, workers, persons withdisabilities, and communities.

Canadas Economic Action Plan

Tax Relie or Canadians

Measures introduced since 2006, including the Working Income TaxBenef t (WITB), have lowered the welare wall, so that low-income individualsmay keep more o their earnings. In 2010, i the WITB had not been introduced,a typical low-income single parent would have only kept 25 cents o each dollarearned between $3,000 and $10,000, due to reduced benef ts rom ederaland provincial income-tested programs and taxes. As a result o the enhancedWITB, the same amily will keep about 45 cents o each dollar earned.

Chart 2.1.2

Average Eective Marginal Tax Rates

(per $10,000 in additional income2010)

per cent

0

10

20

30

40

50

60

70

80

3,000 10,000 10,000 20,000 20,000 30,000 30,000 40,000

Earned income/net amily income ($)

Rates without measures

introduced by this Government

Existing rates with measures

announced in Budget 2009


39/14641


Tax Relief for Canadian BusinessesA competitive business tax system is essential or creating an environmentthat encourages new investment, growth and job creation in Canada. TheEconomic Action Plan builds on corporate income tax reductions to helpposition Canadian businesses to weather the eects o the current globaleconomic challenges, maintain and create jobs, and emerge rom theeconomic downturn even stronger. Economic Action Plan measures include:

To help businesses adopt newer technology at a aster pace, a temporary100-per-cent capital cost allowance (CCA) rate was introduced orcomputers acquired ater January 27, 2009 and beore February 1, 2011.

To help businesses in manuacturing and processing industries restructureand retool to position themselves or long-term success, the temporary50-per-cent straight-line accelerated CCA rate or investments inmanuacturing or processing machinery and equipment was extended toinclude investments undertaken in 2010 and 2011. Manuacturers andprocessors were already beneiting rom this measure, which was irstintroduced in Budget 2007 and extended in Budget 2008.

To support small businesses, the amount o small business income eligible

or the reduced ederal income tax rate was urther increased to $500,000eective January 1, 2009, ollowing a previous increase to $400,000 rom$300,000 as o January 1, 2007.

To support mineral exploration activity across Canada, the temporaryMineral Exploration Tax Credit was extended to March 31, 2010.

All o the business tax measures in the Economic Action Plan have beenully implemented.

The Government has introduced signiicant tax relie or Canadianbusinesses since 2006, including measures in the Economic Action Plan, thattotal more than $60 billion over 200809 and the ollowing ive iscal years.Key actions include:

Substantial, broad-based tax reductions that are lowering the ederalgeneral corporate income tax rate rom 22.12 per cent (includingthe corporate surtax) in 2007 to 15 per cent in 2012. These taxreductions include the elimination o the corporate surtax in 2008 or allcorporations and the reduction in the ederal general corporate incometax rate to 18 per cent as o January 1, 2010 and 16.5 per cent as oJanuary 1, 2011.


40/14642

Chapter 2

The economic cost o giving up the three-point reduction in the

ederal corporate income tax rate planned by 2013 would be along-run loss o $47 billion in capital investment and 233,000 jobs.

Duanjie Chen and Jack Mintz reportCanadas Tax Competitiveness Ater a Decade o Reorms: Still an

Unfnished Plan, May 2010

A reduction o the ederal income tax rate applying to qualiying small

business income to 11 per cent in 2008. Alignment o CCA rates or a number o assets to better relect their

useul liethis both reduces the tax burden on investment and ensuresneutral tax treatment o dierent capital assets, encouraging investment tolow to its most productive uses.

Elimination in 2006 o the ederal capital tax, a particularly damagingtax or business investment, and the introduction in 2007 o a temporaryinancial incentive to encourage provinces to eliminate their general

capital taxes and to eliminate or replace their capital taxes on inancialinstitutions with a minimum tax. All provincial general capital taxes willbe eliminated by 2012.

Early actions taken by the Government as well as measures included inCanadas Economic Action Plan are positioning Canadian businesses toemerge stronger and better equipped to compete globally as the economyrecovers. An innovative and growth-oriented small business sector can playan important role in this recovery. Recognizing this, the ederal government

is helping small businesses introduce and invest in their innovations.


41/14643


Supporting Small Businesses

The tax system provides considerable support to small businessesthrough lower corporate income tax rates, incentives or investors, enrichedf nancial support or research and development (R&D), and simplif edcompliance.

Since 2006, the Government has introduced a large number o tax measuresto support investment, innovation and growth by small businesses, including:

To help small businesses retain more o their earnings or investment,expansion and job creation, the lower small business tax rate was reduced

to 11 per cent rom 12 per cent in 2008. The amount o income eligible orthis lower rate was increased rom $300,000 to $400,000 in 2007,and then to $500,000 in 2009.

To spur investment in small businesses, Budget 2007 increased theLietime Capital Gains Exemption on qualif ed small business shares to$750,000 rom $500,000, the f rst increase in the exemption since 1988.

Support or R&D through the Scientif c Research and ExperimentalDevelopment Tax Incentive Program was enhanced in Budget 2008.

The amount o expenditures eligible or the higher, reundable tax credit

was increased to $3 million and eligibility was extended to medium-sizedcompanies by increasing the taxable capital and income limits.

To allow small business owners more time to devote to growing theirf rms, the Government ulf lled its Budget 2007 commitment to reducethe paperwork burden on Canadian businesses by 20 per cent.

Budget 2010 included several measures that help Canadian small andmedium-sized companies grow their businesses, including:

Elimination o tax reporting under section 116 o the Income Tax Act or

investments such as those by non-resident venture capital unds in atypical Canadian high-technology f rm.

A new Red Tape Reduction Commission to review ederal regulationsand reduce the cost o compliance or small businesses.

A new private sector Advisory Committee on Small Business andEntrepreneurship to provide advice on how to urther improve businessaccess to ederal programs and inormation.

A new Small and Medium-sized Enterprise Innovation CommercializationProgram, which will provide $40 million to help ederal departments

demonstrate new products developed by small and medium-sizedcompanies.


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Chapter 2

As a result o ederal and provincial business tax changes, Canada has anoverall tax rate on new business investment1 that is substantially lower than

any other Group o Seven (G-7) country (Chart 2.1.3).

Canadas Economic Action Plan:

Canada leads the G-7 with the lowest tax rate

on new business investment

Chart 2.1.3

Tax Rate1 on New Business Investment

per cent, 2012

0

5

10

15

20

25

30

35

40

45

Japan UnitedKingdom

UnitedStates

France Italy Germany Canada

42.3

35.934.9

28.0 28.026.5

16.8

33.0

1 The marginal effective tax rate includes measures announced as of September 1, 2010.It excludes resource and financial sectors and tax provisions related to research and development.

Source: Department of Finance.

Impact o ederal and provincialcommitments since Budget 2006

These tax changes have reduced the cost o capital and increased theexpected rate o return on investment, and will thereore encourageirms to invest more. For example, a recent Department o Finance studyexamined the impact o ederal corporate income tax rate reductions andound a strong relationship between taxation and investment.2 This inding

1 The marginal eective tax rate (METR) on new business investment takes into accountederal, provincial and territorial statutory corporate income tax rates, deductions and

credits available in the corporate tax system and other taxes paid by corporations,including provincial capital taxes and retail sales taxes on business inputs. Themethodology or calculating METRs is described in the 2005 edition oTax Expendituresand Evaluations (Department o Finance).

2 Department o Finance, Corporate Income Taxes and Investment: Evidence From the20012004 Rate Reductions. Tax Expenditures and Evaluations (2007), pp. 41-56.


43/14645


is consistent with a number o other studies that have examined the impacto taxes on investment.

Based on the study, the reduction in the cost o capital rom ederaland provincial business tax changes between 2006 and 2012 wouldbe expected to signiicantly increase the capital stock in the long run byalmost 4 per cent. The capital stock represents the productive physicalassets available to businesses and is a key driver o economic growth and

job creation.

Improving the competitiveness o the Canadian tax system requires

collaboration among all governments to help Canadian businesses competeglobally as the economy recovers. Provinces and territories have also takenaction to enhance Canadas business tax advantage. These actions arehelping Canada build a strong oundation or uture economic growth,

job creation and higher living standards or Canadians.

Provinces are collaborating to improve

Canadas tax competitiveness

Chart 2.1.4

Impact o Federal and Provincial Commitments Since

Budget 2006 on the Tax Rate1 on New Business Investment

per cent, 2012

1 The marginal effective tax rate includes measures announced as of September 1, 2010.It excludes resource and financial sectors and tax provisions related to research and development.

Source: Department of Finance.

34.0

30.0

39.337.8

30.3

14.7

21.317.6

16.2

24.226.3

17.9

13.811.9

27.8

9.0

35.1

-0.3

-5

0

5

10

15

20

25

30

35

40

B.C. Alta. Sask. Man. Ont. Que. N.B. N.S. P.E.I. N.L.

16.8

23.4


44/14646

Chapter 2

Table 2.1.2

Reducing the Tax Burden for Canadians

200910 201011

DollarsSpent1

StimulusValue

StimulusCommitted


Personal income tax relie or all taxpayers 1,885 1,950 1,950

Increases to the National Child Beneft supplementand Canada Child Tax Beneft 230 310 310

Enhancing the Working Income Tax Beneft 580 580 580

Targeted relie or seniors 325 340 340Total: Reducing the Tax Burden for Canadians 3,020 3,180 3,180

Reerence:

Tax Measures to Support Housingand Business

Home Renovation Tax Credit 3,000

Increasing withdrawal limits under the HomeBuyers Plan 15 15 15

First-Time Home Buyers Tax Credit 175 180 180Extending the Mineral Exploration Tax Credit 70 -15 -15

Increase in the income limit or the small businesstax rate 45 80 80

Temporary 100-per-cent capital cost allowance rateor computers 340 355 355

Temporary accelerated capital cost allowancerate or manuacturing or processing machineryand equipment

1

Includes estimated values or tax reduction measures.


45/146

Helping the

Unemployed


46/146


47/14649

Progress Achieved to DateHelping the Unemployed

Helping the UnemployedWhile there are now signs o recovery in the labour marketCanada hasregained all o the jobs lost during the downturnCanadians have elt theimpacts o the global economic recession. Canadas Economic Action Planincludes $9.1 billion over two years to support those workers most aectedand help them access opportunities through skills development and training.The Government delivered additional support under the Economic ActionPlan o over $3.7 billion or the unemployed in 200910 and is providinga urther $5.4 billion in 201011.

Table 2.2.1Helping the Unemployed

200910 201011 Total


Strengthening benefts or Canadian workers 1,258 1,550 2,808

Enhancing the availability o training 896 996 1,892

Maintaining low Employment Insurancepremium rates 1,570 2,807 4,377

TotalHelping the Unemployed 3,725 5,353 9,077

Note: Totals may not add due to rounding.

Over the course o the recession, this additional assistance, combined withthe natural increase in EI benefts that occurs during economic downturns,led to a signifcant increase in the temporary support provided by theEmployment Insurance (EI) program to Canadians. Total EI benefts andsupport measures were $5.3 billion higher in 200910 than in 200809(Chart 2.2.1).

In areas where unemployment has risen, the program has automaticallyadjusted to lower eligibility criteria to qualiy and extended the durationo EI benefts. As o August 2010, 36 out o the 58 EI regions had a lowereligibility requirement and higher duration o benefts than they did inOctober 2008. As such, 83.1 per cent o the labour orce population hadeasier access and longer beneft durations. All regions in B.C. and Albertahave seen a decrease in their eligibility requirements. In addition, 15 regionsin Ontario and 5 regions in Quebec have also experienced a decrease in theireligibility requirements.


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Chapter 2

Access to EI has been made easier and benefts

enhanced in regions o the country most aectedby the global recession


49/14651


The EI premium rate is remaining at $1.73 per $100 in insurable earningsin 2010, the lowest level since 1982. Based on current projections, this

represents projected relie o $9.2 billion over 2009 and 2010 or Canadianworkers and their employers relative to what would have been the case hadrates been set at the break-even level over these two years. This fscal costexcludes the additional $2.9 billion or enhanced EI benefts and trainingannounced in Budget 2009.

EI benefts are up sharply

Chart 2.2.1

Employment Insurance Benefts

billions o dollars

10

12

14

16

18

20

22

24

19992000

20002001

20012002

20022003

20032004

20042005

20052006

20062007

20072008

20082009

20092010

Sources: Public Accounts of Canada; Department o Finance.

$5.3 billion

Canadas Economic Action Plan took immediate and decisive action toprotect jobs and help Canadians directly aected by the global recession.

At the same time, the Government has maintained a ocus on the economyo the uture by contributing to the development o a skilled, exible andknowledgeable workorce. Through these initiatives, the Government iscontinuing to help Canadians and support jobs and training in 201011.


50/14652

Chapter 2

An extra fve weeks o EI benefts has already been provided to more than890,000 EI claimants. This extension o benefts remained available to

workers who made EI claims up to September 11, 2010. Recent claimantswill receive these extra weeks o benefts into 2011, with claimants inregions o high unemployment receiving benefts well into the summero 2011.

More than 12,000 long-tenured unemployed workers are receivingadditional benefts through the Career Transition Assistance program inorder to participate in long-term training.

In addition, the Government has estimated that more than 500,000 long-

tenured unemployed workers, those who have paid into EI or years, areeligible to receive between 5 to 20 weeks o additional benefts. To date,over 120,000 long-tenured workers have received additional weeks o EIbenefts. In high unemployment regions, recent long-tenured claimantscould receive these extra weeks o benefts into the all o 2011.

In August 2010, over 67,000 Canadians were participating in over 3,300work-sharing agreements (Chart 2.2.2). Since February 2009, more than260,000 Canadians have participated in more than 9,500 work-sharingagreements. The number o participants in work-sharing has decreased

as the recovery takes hold. Since January 27, 2009, payments have been made to more than 23,000

claimants under the Wage Earner Protection Program.

The Government has responded to the needs o Canadas sel-employedworkers by providing EI special benefts, including maternity, parental,sickness and compassionate care benefts, on a voluntary basis.The sel-employed have been able to opt into EI special benefts sinceJanuary 31, 2010, and will be able to apply or benefts as early as

January 2011. O the $1.9 billion committed to enhancing the availability o training,

$900 million or 47 per cent had been spent by March 31, 2010.

The Government provided $750 million to the provinces and territoriesin 200910 in support o training and skills development programs,benefting more than 200,000 Canadians, and will provide a urther$750 million in 201011.

It is expected that current projects under the enhanced Targeted Initiativeor Older Workers will provide additional support to over 9,300older workers.

Approximately 3,500 summer jobs were created as a result o additionalsupport provided to the Canada Summer Jobs Program in 200910. Asimilar number o additional jobs are expected to be created in 201011.


51/14653


Training and skills development support will be provided to morethan 14,700 Aboriginal Canadians through the Aboriginal Skills and

Employment Partnership program and the Aboriginal Skills and TrainingStrategic Investment Fund.

Apprenticeship Completion Grants have already been provided to morethan 31,000 apprentices who completed their apprenticeship training andobtained their certifcation in any o the designated Red Seal trades.

Support is being provided to implement the Pan-Canadian Framework orthe Assessment and Recognition o Foreign Qualifcations. As o August2010, 59 new agreements are in place to support implementation o

the ramework. Funding is currently supporting 825 youth internships in not-or-proft

and community service organizations through the YMCA and YWCA,767 (93 per cent) o which have an environmental ocus.

The number o Canadian workers benefting

rom work-sharing has allen as the recoverytakes hold

Chart 2.2.2

Canadian Workers Participating in

Active Work-Sharing Agreements

thousands o workers

Source: Human Resources and Skills Development Canada.

0

20

40

60

80

100

120

140

160

180

Feb2009

Mar2009

Apr2009

May2009

Jun2009

Jul2009

Aug2009

Sep2009

Oct2009

Nov2009

Dec2009

Jan2010

Feb2010

Mar2010

Apr2010

May2010

Jun2010

Jul2010

Aug2010


52/14654

Chapter 2


Working or Canadians

Enhanced Work-Sharing

The Brick Canada (Ontario)The Brick Canada, one o the countrys largestvolume home urnishing retailers, experienced signif cantly weaker sales atthe onset o the recession. Like many companies across the country acinga similar situation, The Brick wanted to avoid reducing their work orce.Seeking an alternative, Dana Dryden, the Director o the Distribution OntarioCentre, heard about work-sharing through Service Canada. The Bricks work-sharing agreement started on June 28, 2009, and ended on June 26, 2010,

and provided 300 employees with secure employment. Since the end o theprogram, the employees have gone back to working ull-time hours and areconf dent o a promising uture with the company.

Trecan Combustion (Halifax, N.S.)Trecan Combustion, a Canadiancompany that has been designing and manuacturing snowmelters or over35 years, experienced dif cult times in 2009 as sales slowed. Faced with thisdramatic change in the business environment, the company contemplatedlaying o workers. However, rather than letting people go, Trecan turned to the

work-sharing program, which provided EI benef ts to qualiying workers willingto accept reduced hours. David Regan, the Production Manager at Trecan,said that the program allowed the company to maintain a strong core group oworkers. This will help the company as soon as work picks up by enabling itto keep and support some o its most experienced, hard-working employees,which they might otherwise have lost.

YMCA-YWCA Internships

Kingston, Ont. During her internship with the Kingston Sustainability

Centre, Katie McKenzie had the opportunity to gain more than experience.With support rom the Youth Eco Internship Program, she is getting closerto her dream o being a primary school teacher. She hopes to teach at thelocal school board, and her internship allowed her to put her teaching skillsto excellent use in developing and implementing curriculum-based educationprograms ocusing on sustainability. Visitors to the Kingston SustainabilityCentre can learn how to become more sustainable in their daily activities andchoices. With the knowledge she gained and the connections she made in thecommunity, Katie will have a promising uture when she f nishes her internship.


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54/14656

Chapter 2



Aboriginal Skills and EmploymentPartnership Program

Saskatoon, Sask.Dylan Ratt was rustrated with being unemployed, andhis uture brightened as a result o the Bridges and Foundations CareerDevelopment Corporation. Canadas Economic Action Plan invested$2.9 million in the corporation through the ederal governments AboriginalSkills and Employment Partnership (ASEP) program. The corporation supports

major economic opportunities identif ed in the residential construction industryin and around Saskatoon. With training provided or up to 600 Aboriginalpeople in the region, it is expected that at least 400 participants will securelong-term jobs in construction. Dylan, now an exterior f nisher with GlobalExteriors in Saskatoon, believes the project gave him the opportunity to f ndemployment and made a huge dierence to him and his amily.

Sydney, N.S.The Prosperity Project is a partnership-based initiativesupported by the ASEP program. As part o Budget 2007, the UnamakiPartnership or Prosperity project received $2.1 million in unding. CanadasEconomic Action Plan included an additional investment o $1.2 million orphase two o the project. Serving as a role model or uture graduates and orhis children, Jason Johnson eels that employment and training opportunitieswith the ASEP program will allow Aboriginal people to obtain skills andemployment in the environmental f eld and other trades.

Labour Market Development Agreements

Corner Brook, N.L.Having had dif culty securing work in her f eld ostudy, Tracey Pells researched programs that would help her establish herown business. She came across Human Resources and Skills DevelopmentCanadas Sel-Employment Program and has moved orward on hercareer goals by leasing a year-round practice acility or golers. The Sel-Employment Program is one o a broad range o EI training programs thatprovide f nancial assistance to help unemployed Canadians f nd jobs andemployers f nd workers.


55/14657


Table 2.2.2

Helping the Unemployed

200910 201011

DollarsSpent

StimulusValue

StimulusCommitted


Strengthening Benefts

An extra 5 weeks o EI benefts 796 575 575

EIlong tenured workers(Career Transition Assistance program) 15 250 250

EIlong-tenured workers(extension o regular benefts) 215 600 600

EIwork-sharing 211 100 100

Wage Earner Protection Program 22 25 25

SubtotalStrengthening Benefts 1,258 1,550 1,550

Enhancing the Availability o Training

EI training programs 500 500 500

Strategic Training and Transition Fund 250 250 250

Canada Summer Jobs Program 10 10 10Federal public service student

employment program 10 10 10

YMCA/YWCA 15

Targeted Initiative or Older Workers 5 34 34

Apprenticeship Completion Grant 39 40 40

Foreign Credential Recognition program 12 30 30

Aboriginal Skills and EmploymentPartnership program 7 72 72

Aboriginal Skills and Training StrategicInvestment Fund 24 50 50

Aboriginal Human ResourcesDevelopment Strategy 23

SubtotalEnhancing the Availability o Training 896 996 996

Keeping EI premium rates rozen or 2010 1,570 2,807 2,807

TotalHelping the Unemployed 3,725 5,353 5,353

Note: Totals may not add due to rounding.


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57/146

BuildingInfrastructure to

Create Jobs


58/146


59/14661

Progress Achieved to DateBuilding Inrastructure to Create Jobs

Building Inrastructure to Create JobsCanadas Economic Action Plan provides close to $16 billion over two

years to modernize a broad range o inrastructure including our roads,bridges, public transit, parks and water treatment acilities, and to supporthome ownership, help stimulate the housing sector and improve housingacross Canada. These investments are helping to create and maintain

jobs across Canada or the beneft o all Canadians, and will ensure thecountry emerges rom the economic downturn with a more modern andgreener inrastructure.

Table 2.3.1Building Infrastructure to Create Jobs

200910 201011 Total


Building Infrastructure

Investments in provincial, territorial and municipalinrastructure 852 4,676 5,528

Investments in First Nations inrastructure 229 285 515

Investments in ederal inrastructure projects 943 809 1,752

SubtotalBuilding Inrastructure 2,025 5,770 7,795

Stimulating Housing Construction

Support or home ownership and thehousing sector 3,376 425 3,801

Investments in social housing or Canadians 1,401 2,674 4,075

SubtotalStimulating Housing Construction 4,777 3,099 7,876

TotalBuilding Infrastructure

to Create Jobs 6,802 8,869 15,671TotalWith provincial contributions 8,296 14,673 22,969

Note: Totals may not add due to rounding. The stimulus value reects projected cash expenditures. Thebudgetary impact may be somewhat smaller because some o these expenditures relate to construction andrenovation costs o ederal assets (or which only depreciation is recorded on a budgetary basis) and loans tothird parties (where there is a budgetary impact only in the event that there is a risk o loss).

Inrastructure and housing projects are underway across the country.Virtually all unds earmarked or these investments have been committed.Thousands o inrastructure and housing projects are underway and will

be completed over the course o 201011, creating signifcant new directemployment in the construction and manuacturing industries.


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Chapter 2

Building Inrastructure

Investments in Provincial, Territorialand Municipal Infrastructure

As part o Canadas Economic Action Plan, the Government launched anumber o new initiatives to stimulate additional investment in provincial,territorial and municipal inrastructure during the 2009 and 2010construction seasons. These new stimulus initiatives consisted o theInrastructure Stimulus Fund, top-up unding or community projects,the Green Inrastructure Fund, unding or recreational trails, and theRecreational Inrastructure Canada program.

By working closely with each province and territory to approve projectsquickly, the Government has committed, through these new initiatives, closeto $5.6 billion in stimulus unding towards about 7,000 projects. Provinces,territories, municipalities and other partners are also contributing towardsthese projects, thereby generating a total investment in public inrastructureo some $15 billion at a critical time.

In addition to launching new stimulus initiatives, the Government has takensteps to accelerate unding under Building Canada initiatives that wereannounced in Budget 2007. These steps were designed to urther increaseinvestment during the 2009 and 2010 construction seasons.

Taking into account both the new stimulus initiatives and acceleratedBuilding Canada initiatives, the Government has committed close to$11 billion towards approximately 8,000 provincial, territorial and municipalinrastructure projects since the launch o Canadas Economic Action Plan.Combined with contributions rom other partners, these projects represent

a total investment o over $33 billion in inrastructure. Some o theseprojects, particularly the larger-scale ones being unded under the MajorInrastructure Component o the Building Canada Fund, will extend beyond201011.

Every region o the country is benefting rom investments in varioustypes o provincial, territorial and municipal inrastructure that are beinggenerated thanks to Canadas Economic Action Plan.


61/14663


New inrastructure investments build

on a solid oundation o support

Chart 2.3.1

Federal Support for Provincial, Territorial and

Municipal Infrastructure

billions o dollars

0

2

4

6

8

10

12

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

In Budget 2007, the Government announced the unprecedented seven-year$33-billion Building Canada Plan. Under Canadas Economic Action Plan,the Government is accelerating and expanding this historic investmentin inrastructure.

As a result o these investments, the amount o ederal unding available to

provinces, territories and municipalities or inrastructure projects will riseto more than $11 billion in 201011, almost three times what was availablein 200809. Funding in 201011 has been revised upwards or a numbero inrastructure initiatives, as unspent unds rom 200910 have beenreallocated to projects where work will be made up in 201011.


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Chapter 2

Accelerating Existing Provincial, Territorial and MunicipalInfrastructure Initiatives Under Building Canada

Specifc actions taken since January 27, 2009 to expedite existing undingunder Building Canada initiatives include:

Streamlining the process required or securing ederal approvalo inrastructure projects.

Announcing more than $3.5 billion in ederal unding towards106 large strategic inrastructure projects that are worth over$12.7 billion. Funded under the Major Inrastructure Componento the Building Canada Fund, this includes projects that improvetransit, and make water cleaner and highways saer. Work is nowunderway or completed on 90 o these projects.

Fully committing the initial unding that was made available under theCommunities Component o the Building Canada Fund. This representsclose to $1 billion in ederal unding to support over 800 inrastructureprojects in smaller communities (i.e., those with populations o lessthan 100,000 people). When combined with unding rom provincesand municipalities, these projects represent a total investment in excess

o $3 billion. More than 98 per cent o projects are either underwayor completed.

Transerring more than $1 billion to provinces and territories throughthe Provincial/Territorial Base Funding Initiative. Most provinces andterritories agreed to take advantage o the ederal oer to accelerateunding under the initiative during the two years o the Economic ActionPlan. This unding was originally scheduled to ow over seven years(rom 2007 to 2014).

Through these actions, hundreds o smaller-scale and major inrastructureprojects are underway. Work will continue on these projects in the comingyears, thereby helping sustain construction activity over the long term.


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Examples of Building Canada FundMajor Infrastructure Projects

New Sheppard Light Rail Transit (Toronto, Ontario)

Work is underway to provide Torontonians with a new light rail line, thanks to$333 million in ederal inrastructure unding. The 15-kilometre line is beingbuilt on Sheppard Avenue East running rom the Don Mills Subway Station toMeadowvale Road. It will replace the Scarborough East bus line and connect

to the Sheppard subway line, the York Region Transit/VIVA bus service anduture transit expansions. This major investment is helping create jobs inthe short term, and will also help increase ridership, reduce travel times andimprove air quality.

Safer Highway 97 (Kelowna, British Columbia)

The Government o Canada is investing over $10 million to ensure saer,more ef cient travel along Highway 97 in the Kelowna/Okanagan area. Thismajor road project involves replacing the current intersection o Westside

Road and Highway 97 with a grade-separated interchange. Once complete,these changes will go a long way in improving road network connections,reducing traf c congestion and travel times, and improving road saety ordrivers. Business, travellers and local citizens alike will enjoy the benef ts othe renewed highway.

New Provincial, Territorial and MunicipalInfrastructure Initiatives

Infrastructure Stimulus Fund:Working in partnership with provinces,territories and municipalities, all o the unding or projects under theInrastructure Stimulus Fund was committed by January 29, 2010.

This unding was allocated toward approximately 4,000 projects acrossCanada, representing a total investment o about $10 billion. FollowingJanuary 2010, many jurisdictions reported that the amount required orapproved projects had been less than expected. In most cases, this has been theby-product o very competitive tender prices rom contractors. In a ew other

cases, projects were withdrawn by proponents. Overall, since the deadline, thishas generated savings. Working with our partners, the Government has movedquickly to reallocate and reinvest the bulk o these savings into new projects,providing additional benefts.


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Virtually all projects are underway or completed and over 23 per centare scheduled to end earlier than planned. Current monitoring o projects

shows that approximately two-thirds o projects will be fnished by the endo December 2010.

As a result, inrastructure is being renewed and improved in communitiesthroughout Canada in the ollowing sectors:



Chart 2.3.2

Dollar Value o Projects Under the Inrastructure

Stimulus Fund by Sector

$9.97 billion (200910 and 201011)

Other infrastructure(e.g., municipal

buildings, port andlocal airport

facilities, etc.)17%

Highway, roadand bridge

infrastructure37%

Greeninfrastructure

(mainly water andwastewater

infrastructure)27%

Cultural/recreational/sport

infrastructure12%

Public transitinfrastructure

7%


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Examples of Infrastructure Stimulus Fund Projects

Christina Lake, British Columbia

The new Christina Living Arts Centre eatures green design rom its roo to itsgeothermal oundation. Construction is 95 per cent complete on an organicwaste processing acility next door thanks to about $133,000 rom theInrastructure Stimulus Fund. This Solar Aquatics System will use biologicalmethods to break down waste generated by the Centre, by visiting recreational

vehicles and by the surrounding community. Plans also include the sale o theresulting by-product as a natural ertilizer. The acility is expected to draw evenmore visitors to this popular recreational area as researchers and studentscome to learn rom the unique system.

Rural Municipality of Porcupine, Saskatchewan

The local population is seeing real benef ts rom $467,000 in ederal investmentin our area bridge projects. With the communitys projects now complete,heavier truckloads and agricultural equipment can make their way around

the area more saely and easily. The better movement o goods and servicessupports the local economy and amilies alike.

Lady Slipper, Prince Edward Island

Route 2 is an essential road linking the ar ends o Prince Edward Island andpassing through a multitude o communities. Near Lady Slipper, however, parto this route had been showing its age. The province used $1.25 million romthe Inrastructure Stimulus Fund to widen six kilometres o the road, apply newasphalt and rebuild the road shoulders. Now that the work is f nished, citizensand businesses will benef t rom the improved saety and the ow o goods andservices throughout the area or years to come.

Princeville, Quebec

In Princeville, the Pierre-Prince Community Centre plays an essential role intown lie, but until recently, had gone 35 years without major repairs. Now,thanks to more than $126,000 rom the Inrastructure Stimulus Fund, theCentre has upgraded its interior, including building a new stage, upgrading itselectrical equipment and improving accessibility. The acade and entrancewayhave also been renovated.


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As o March 31, 2010, more than $525 million in unding has beenpaid out to recipients (such as provinces, territories and municipalities)

under the Inrastructure Stimulus Fund. Unspent unds rom 200910have been reallocated to 201011. This is a result o a number o actors,including lower-than-anticipated project costs, as well as lags in thesubmission o claims rom provinces and territories and other recipients.

Although 99 per cent o projects have begun or are completed, the ederalgovernment has not always been invoiced or payment o eligible costs asthey are incurred. In many cases, entire projects are fnished beore a claimis submitted. There are more than 1,600 projects that are underway orcompleted or which recipients have not submitted any claims

(see box below).Inrastructure Stimulus Fund total expenditures more than doubled to$1.1 billion as o July 31, 2010 and will continue to grow as claims aresubmitted or work done during the 2010 summer construction season.

Bonus for Community Projects: Canadas Economic Action Plan included$500 million to top up the more than $1 billion in initial unding that wasmade available under the Communities Component o the Building Canada

Fund. To access this top-up, provinces had to meet two conditions: frst,they had to exhaust their share o the initial unding under the CommunitiesComponent, and second, they had to direct the top-up unding towardprojects that would be built by March 31, 2011. All 10 provinces met thesetwo conditions. As a result, the top-up has been ully committed towardmore than 530 projects, representing a total investment o over $1.5 billionin community inrastructure. 99 per cent o projects are underway orcompleted.


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As o March 31, 2010, approximately $30 million in unding hadowed under the Bonus or Community Projects. As is the case or

the Inrastructure Stimulus Fund, amounts paid are based on claimsreceived and, as such, do not reect actual economic activity. There areover 130 projects that are underway or completed or which recipientshave not submitted any claims (see box below).

Projects Underway or Completed

or Which No Claims Have Been Received

Provinces, territories and municipalities typically receive invoices rom

the contractor(s) carrying out the work at periodic intervals or, in somecases, only when the project is complete. These governments then submitclaims or costs incurred to the Government o Canada. As a result, there isa natural lag between the time when the work is being undertaken, to whena province/territory/municipality is billed or the work, to when they conducttheir due diligence review o costs, to when a claim is actually submittedto the Government o Canada or reimbursement. This is a normal situationor inrastructure projects involving multiple partners.

Based on reports rom recipients, there are more than 1,600 projects under

the $4-billion Inrastructure Stimulus Fund and over 130 projects under the$500-million top-up to the Communities Component o the Building CanadaFund that are underway or completed, but or which no claims have yetbeen submitted.


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Examples of Community Projects

Stormwater Flood Hazard Protection (Langford, British Columbia)

In Langord, on the southern tip o Vancouver Island, torrential rains can raisethe water levels o nearby Firehall Creek. The resulting oods requently exceedthe capacity o the stormwater system. When this happens, the city andhomeowners end up with extensive damage to property and inrastructure,mounds o garbage and debris, and costly repair bills.

Through $614,075 in ederal unding, matched by provincial and municipalcontributions, work began in the all o 2009 to widen and deepen an existing ood control ditch to protect houses on the southwest side o Langord.

The unding will also support a 2,500 m3 stormwater detention pond. Thedeeper ditch and added pond will dramatically increase Langords capacity tomanage major rain events, and protect its 22,000 citizens and their properties.

Material Recovery Facility (Saint John, New Brunswick)

The Fundy Region Solid Waste Commission is benef ting rom a $220,477ederal contribution to build a sorting conveyor that simplif es the separation orecyclable materials rom garbage headed to the landf ll. New baling equipmentwill mean that sorted materials can be packaged on site or direct shipmentto buyers.

With ewer recyclables ending up in landf lls, and improved sales o recyclablematerials, the City o Saint John will be in a better position to take on additionalenvironmental initiatives.


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Inrastructure: Project Commitments Across Canada

Canada

LEGEND

Singleproject

Groupofprojects

Note

:AcrossCanada,atotalofover7,000projectcommitmentshavebeenmadeundertheInfrastructureStimulusFund,theBonusfor

Com

munityProjects,RecreationalInfrast

ructureCanadaandtheKnowledge

InfrastructureProgram.Thetotalfed

eralcontributiontothese

proje

ctsisapproximately$7billion.


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Green Infrastructure Fund: The Government has committed $779 millionunder the Green Inrastructure Fund toward 21 projects. Provinces,

territories, municipalities and the private sector are also contributing undingtowards these projects, which will be built over the coming year, therebybringing the total investment to more than $2 billion.

Federal investments in green inrastructure include:

$130 million to build a transmission line that will tap into the renewableenergy potential o northern British Columbia (e.g., hydro, geothermal,

wind and biomass).

$11 million or wastewater improvements in the City o Winnipeg thatwill improve water quality in the Red River and Lake Winnipeg.

$234 million or eight wastewater projects in Ontario that will improvewater quality, particularly in the Great Lakes Basin.

$171 million or six projects in Quebec that will reduce the amount osolid waste going to landflls and generate green energy.

Close to $10 million or the City o Saint Johns Green Thermal Utility(a non-emitting and sustainable heating and cooling system).

$71 million or a hydro generation and transmission project in the Yukonthat will boost the availability o green power in the territory.

The Government is actively considering additional projects or undingunder the fve-year Green Inrastructure Fund.

Nation

stimulus spending update - sept. 27, 2010

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