JOBS GROWTH AND LONG-TERM PROSPERITY ECONOMIC ACTION PLAN 2012 pdf

ECONOMIC ACTION PLAN 2012 Tabled in the House of Commons By the Honourable James M. Flaherty, P.C., M.P. Minister of Finance March 29, 2012 JOBS GROWTH AND LONG-TERM PROSPERITY Budget2012_BW_TitlePage_EN.indd 1 12-03-26 2:50 PM  ©Her Majesty the Queen in Right of Canada (2012) All rights reserved All requests for permission to reproduce this document or any part thereof shall be addressed to Public Works and Government Services Canada. Available through your local bookseller or by mail from Publishing and Depository Services Public Works and Government Services Canada Ottawa, Ontario K1A 0S5 Telephone: 613-941-5995 Orders only: 1-800-635-7943 (Canada and U.S.A.) Fax: 613-954-5779 or 1-800-565-7757 (Canada and U.S.A.) Internet: http//publications.gc.ca Cat. No.: F1-23/3-2012E ISBN: 978-0-660-20189-4 This document is also available n the Internet at www.fin.gc.ca Cette publication est aussi disponible en français. 3 Chapter 1 – Introduction 11 Chapter 2 –Economic Developments and Prospects 23 Highlights 25 Introduction 26 Global Economic Developments and Outlook 26 Canada’s Recent Economic Performance 32 Financial Market Developments 38 Commodity Prices 40 Canadian Economic Outlook—Private Sector Forecasts 41 Risk Assessment and Planning Assumptions 43 Chapter 3 – Supporting Jobs and Growth 3.0 – Supporting Jobs and Growth 47 Introduction 49 3.1 – Supporting Entrepreneurs, Innovators and World-Class Research 51 Highlights 53 Creating Value-Added Jobs Through Innovation 53 Support for Research, Education and Training 54 Creating Value-Added Jobs Through Innovation 55 Helping High-Growth Firms Access Risk Capital 60 Increasing Direct Support for Business Innovation 61 Doubling the Industrial Research Assistance Program 61 Supporting Innovative Businesses in Western Canada 62 Supporting Private and Public Sector Research Collaboration 63 Integrating High-Quality Researchers Into the Labour Market 63 Strengthening Knowledge Transfer and Commercialization 65 Forestry Innovation and Market Development Support 66 Supporting Innovation Through Procurement 66 Re focusing the National Research Council 68 4 Scientific Research and Experimental Development Tax Incentive Program 68 Simplifying the Tax Credit Base 69 Increasing Cost-Effectiveness 69 Enhancing Predictability 70 Contingency Fees 71 Support for Research, Education and Training 72 Supporting Advanced Research 72 Promoting Post-Secondary and Private Sector Research Collaborations 73 Investing in Genomics Research 74 Investing in Mental Health Research 75 Promoting Cost-Effective Health Care 76 Advancing Knowledge and Treatment of Spinal Cord Injury 76 Diversifying Canada’s Medical Isotope Supply 76 Supporting Leading-Edge Researchers 77 Investing in Leading-Edge Research Infrastructure 77 Canada Foundation for Innovation 77 Supporting Canada’s Ultra-High Speed Research Network 79 The Canadian High Arctic Research Station 79 Extending Canada’s Participation in the International Space Station Mission 79 Revitalizing Natural Resources Canada’s Satellite Station Facilities 80 Supporting Atomic Energy of Canada Limited 80 International Education Strategy 81 3.2 – Improving Conditions for Business Investment 83 Highlights 85 Responsible Resource Development 85 Investing in Our Natural Resources 85 Ex panding Trade and Opening New Markets for Canadian Businesses 85 Keeping Taxes Low for Job-Creating Businesses 86 Improving Economic Conditions for Farmers and Fishermen 86 Strengthening Business Competitiveness 86 Further Developing Canada’s Financial Sector Advantage 86 Improving Conditions for Business Investment 87 Responsible Resource Development 88 Modernizing the Regulatory System for Project Reviews 89 Major Projects Management Office Initiative 94 Consultation Under the Canadian Environmental Assessment Act 97 Supporting Responsible Energy Development 97 5 Strengthening Pipeline Safety 99 The Northern Pipeline Agency 99 Amending Mining Regulations 99 Investing in Our Natural Resources 100 Supporting Junior Mineral Exploration 100 Supporting Offshore Oil & Gas Exploration 101 Assessing Diamonds in the North 101 Expanding Trade and Opening New Markets for Canadian Businesses 101 Canada’s Leadership on Trade 102 Canada’s Trade Plan for Jobs and Growth 102 Canada-U. S. Border and Regulatory Action Plans 103 Deeper Canada-China Ties 103 Canada-EU Trade Agreement 104 Canada-India Trade Agreement 104 Trans-Pacific Partnership 104 Active and Ongoing Engagement in the Asia-Pacific Region 104 Canada in the Americas 105 Deeper Canada-Africa Ties 105 Deepening Canada’s Trade and Investment Ties in Priority Markets: A Refreshed Global Commerce Strategy 106 Trade Measures to Support the Energy Industry 107 Export Development Canada 107 Streamlining Canada’s Trade Remedy System 108 Foreign Trade Zone Programming 108 Incr easing Travellers’ Exemptions 108 Tax Relief for Foreign-Based Rental Vehicles 109 International Taxation 110 Tax Treaties and Tax Information Exchange Agreements 111 Fostering Sustainable Global Growth 112 Providing Stewardship in the G-20 112 Strengthening the Legitimacy and Effectiveness of the International Monetary Fund 112 Increasing the Impact of Canadian Development Assistance 113 Refocusing Canada’s Tariff Regime for Developing Countries 114 Keeping Taxes Low for Job-Creating Businesses 114 A Competitive Business Tax System 114 Enhancing the Neutrality of the Tax System 118 Phasing Out the Atlantic Investment Tax Credit—Oil & Gas and Mining 118 Phasing Out the Corporate Mineral Exploration and Development Tax Credit 119 6 Improving Economic Conditions for Farmers and Fishermen 119 Strengthening Agricultural Institutions 119 Supporting Canada’s Fisheries 120 Strengthening Business Competitiveness 120 Fostering Foreign Investment 120 Reducing Red Tape 121 Reducing the Tax Compliance Burden for Businesses 123 A Doubling of the Goods and Services Tax/Harmonized Sales Tax (GST/HST) Streamlined Accounting Thresholds 124 Simplified Administration for Partnerships 124 Improvements to the Rules for Paying Eligible Dividends 124 Administrative Improvements That Enhance the Predictability of the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program 124 Written Responses to Business Enquiries 125 Expansion of Web Forms for Information Returns 125 Enhancements to the CRA’s Secure My Business Account Portal 125 An Improved Business Section on the CRA’s Website 125 Graduated Penalties for Late Filing 126 Continued CRA Progress on Tax Fairness 126 Taxation of Corporate Groups 126 Further Developing Canada’s Financial Sector Advantage 127 Fostering Stable, Competitive, Fair and Efficient Capital Markets 127 Preserving the Stability and Strength of Canada’s Financial Sector 128 Enhancing the Governance and Oversight Framework for Canada Mortgage and Housing Corporation 128 Improving Access to Capital for Canadian Financial Institutions 129 Cl arifying Federal Jurisdiction Over Banking 130 Clarifying the Separation of Insurance and Banking 130 Continuing to Fight Counterfeit Bank Notes 131 3.3 – Investing in Training, Infrastructure and Opportunity 133 Highlights 135 Supporting Job Creation, Small Business and Skills Training 135 Improving the Employment Insurance Program 135 Expanding Opportunities for Aboriginal Peoples to Fully Participate in the Economy 136 Building a Fast and Flexible Economic Immigration System 136 Strengthening Canada’s Public Infrastructure 137 7 Supporting Job Creation 138 Supporting Job Creation, Small Business and Skills Training 139 Extending the Hiring Credit for Small Business 139 Enhancing the Youth Employment Strategy 140 ThirdQuarter Project 141 Improving Labour Market Opportunities for Canadians With Disabilities 142 Women on Corporate Boards 143 Promoting Widespread Opportunities From Federal Shipbuilding 144 Improving the Employment Insurance Program 145 Stable and Predictable EI Premium Rates 145 Connecting Canadians With Available Jobs 146 Removing Disincentives to Work 147 Expanding Opportunities for Aboriginal Peoples to Fully Participate in the Economy 148 Investments to Improve First Nations Education 149 Helping First Nations on Reserve Access the Labour Force 150 Supporting First Nations Fishing Enterprises 150 Urban Aboriginal Strategy 151 Building a Fast and Flexible Economic Immigration System 151 Strengthening Canada’s Immigration System 151 Temporary Foreign Worker Program 152 Pan-Canadian Framework for the Assessment and Recognition of Foreign Qualifications 153 Federal Skilled Worker Fee Refund 154 Strengthening Canada’s Public Infrastructure 155 Sup porting Provincial, Territorial and Municipal Infrastructure 156 Territorial Borrowing Limit 157 Making Important Investments in Strategic Public Infrastructure 157 Maintaining Safe and Reliable Passenger Rail Services 157 Strengthening Canada’s Port System 158 Renewing the Canadian Coast Guard Fleet 158 Maintaining and Improving Federal Infrastructure 159 Investing in Border Infrastructure 159 Building a New Bridge over the St. Lawrence 159 8 3.4 – Supporting Families and Communities 163 Highlights 165 Protecting the Health and Safety of Canadians 165 Investing in Communities 165 Supporting Families 166 Protecting Canada’s Natural Environment and Wildlife 166 Supporting Families and Communities 167 Protecting the Health and Safety of Canadians 167 Health-Related Tax Measures 167 Strengthening Food Safety 168 Fair Compensation for Employers of Canada’s Reservists 169 Enhancing the Victims Fund 169 Canadian Nuclear Safety Commission 170 Investing in Communities 171 Improving Economic Potential on First Nations Lands 171 Investments to Improve First Nations Water Infrastructure 172 Addressing Family Violence on Reserve 172 Aboriginal Mental Health Programs 173 Supporting Effective Government-Community Partnerships 173 Investments in Arts and Culture 174 Canada Council for the Arts 174 Commemorations for the Bicentennial of the War of 1812 175 Official Languages 175 Encouraging Participation and Healthy Communities 175 Str engthening Health Care in Rural and Remote Communities 176 Strengthening Access to Broadband in Rural Areas 177 Support to Provinces and Territories for the Floods of 2011 177 Supporting Families 178 Keeping Taxes Low for Families and Individuals 178 Wage Earner Protection Program 179 Protecting Long-Term Disability Plans 180 Review of the Registered Disability Savings Plan 180 Establishing Plans and Legal Representation 182 Protecting Canada’s Natural Environment and Wildlife 183 Protecting Species at Risk 183 Protecting Water and Wildlife Resources 183 Port Hope Area Initiative 184 Rouge Valley National Near-Urban Park 185 Expanding Tax Support for Clean Energy Generation 185 9 Chapter 4 – Sustainable Social Programs and a Secure Retirement 187 Highlights 189 Sustainable Management of Public Finances 190 Putting Transfers on a Long-Term, Sustainable Growth Track 190 A Strong Retirement Income System for Canadians 192 Old Age Security Age of Eligibility 197 Option to Defer the OAS Pension 198 Proactive Enrolment for OAS and GIS Benefits 199 Canada Pension Plan 199 Federally Regulated Pension Plans 202 Improving Tax Fairness and Integrity 203 Enhancing Transparency and Accountability for Charities 204 Chapter 5 – Responsible Management to Return to Balanced Budgets 207 Highlights 209 Responsible Management of Public Finances 210 The Plan to Return to Balance 210 Reductions in Departmental Spending 211 Refocusing Government and Programs 217 Making It Easier for Canadians and Businesses to Deal With Their Government 219 Modernizing and Reducing the Back Office 220 Workforce Impact 221 Responsible Expenditure Management 222 Updating Defence Capital Funding 223 Modernizing the Government’s Information Technology: Shared Services Canada 223 Administrative Services Review—Moving Forward 224 Parliamentary Expenses 224 Public Sector Compensation 224 Pensions of Public Servants and Parliamentarians 225 Corporate Asset Management Review 226 Greater Use of Telepresence Technology 226 Next Steps 226 10 Chapter 6 – Fiscal Outlook 227 Highlights 229 Introduction 230 Fiscal Planning Framework 233 Approach to Budget Planning 233 Fiscal Outlook Before the Measures Announced in Budget 2012 233 Fiscal Impact of Measures Announced in Budget 2012 236 Summary of Statement of Transactions 238 Outlook for Budgetary Revenues 239 Outlook for Program Expenses 243 Financial Source/Requirement 247 Risks to the Fiscal Projections 250 Sensitivity of the Budgetary Balance to Economic Shocks 250 Annex 1 –Responsible Spending 255 Annex 2 – The Stimulus Phase of Canada’s Economic Action Plan: A Final Report to Canadians 285 Highlights 287 The Stimulus Phase of Canada’s Economic Action Plan 288 Results Achieved 296 Job Impact of the Stimulus Phase of the Economic Action Plan 350 Conclusion 356 Annex 3 – Debt Management Strategy for 2012–13 357 Annex 4 – Tax Measures: Supplementary Information, Notices of Ways and Means Motions and Draft Amendments to Various GST/HST Regulations 373 [...]... Economic Action Plan 2012 Measures Source: Department of Finance CONCLUSION Economic Action Plan 2012 is a plan for jobs, growth and long-term prosperity By making choices now, the Government is taking the necessary steps to reinforce the fundamental strength and promise of the Canadian economy in order to sustain economic growth, create the high-quality jobs of tomorrow, preserve social programs and. .. emerging fast -growth countries Our aging population will put pressure on public finances and social programs Economic Action Plan 2012 takes important steps to address these structural challenges and ensure the sustainability of public finances and social programs for future generations International experience shows the importance of taking action now, rather than delaying Economic Action Plan 2012 focuses... competition from emerging market countries and a global economy that remains fragile and uncertain For this reason, the Government remains focused on an agenda that will deliver high-quality jobs, economic growth and sound public finances Economic Action Plan 2012 will help further unleash the potential of Canadian businesses and entrepreneurs to innovate and thrive in the modern economy to the benefit... competing and succeeding in the global economy Too often, barriers or disincentives discourage workforce participation Better utilizing Canada’s workforce and making Canada’s labour market more adaptable will help ensure Canada’s long-term economic growth Economic Action Plan 2012 will: • Make investments to assist more young people in gaining tangible skills and experience • Extend and expand the ThirdQuarter... security and prosperity of Canadians and promoted business and investment to create jobs When the global financial and economic crisis struck, these underlying strengths helped Canada to avoid a deep and long-lasting recession The Government’s sound fiscal position prior to the crisis provided the flexibility to launch the stimulus phase of Canada’s Economic Action Plan, which was timely, targeted and temporary... our immigration system truly fast and flexible in a way that will sustain Canada’s economic growth Economic Action Plan 2012 will: • Realign the Temporary Foreign Worker Program to better meet labour market demands • Support further improvements to foreign credential recognition and identify the next set of target occupations beyond 2012 • Move to an increasingly fast and flexible immigration system... pickup in both manufacturing and non-manufacturing output growth since Fall 2011 U.S economic growth has picked up recently Chart 2.2 U.S Real GDP Growth Source: U.S Bureau of Economic Analysis 28 Economic Developments and Prospects U.S labour market conditions have improved, with employment gains averaging almost 250,000 jobs per month from December 2011 through February 2012 and the unemployment rate... paying down debt, and investing in knowledge and infrastructure These actions put the Canadian economy on a solid foundation for sustainable, long-term economic growth They also placed Canada in a stronger position than most other countries and allowed the Government to respond quickly and effectively to support the economy and protect Canadian jobs This has been reflected in a strong economic performance... Implement the Action Plan on Perimeter Security and Economic Competitiveness and the Action Plan on Regulatory Cooperation, which will facilitate trade and investment flows with the United States • Provide support to Canadian exporters by extending the provision of domestic financing by Export Development Canada INVESTING IN TRAINING, INFRASTRUCTURE AND OPPORTUNITY Canada’s well-trained and highly educated... China, economic growth has eased somewhat but remains solid Looking ahead, slowing demand from advanced economies is expected to result in a gradual moderation toward a more sustainable, albeit still robust, pace of economic growth 30 Economic Developments and Prospects Reflecting the intensification of the euro-area sovereign debt and banking crisis in Fall 2011 and its impact on global trade and financial . high-quality jobs, economic growth and sound public finances. Economic Action Plan 2012 will help further unleash the potential of Canadian businesses and entrepreneurs. Implement the Action Plan on Perimeter Security and Economic Competitiveness and the Action Plan on Regulatory Cooperation, which will facilitate trade and investment