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2017 Federal Budget: Lots of Words, Few New Measures

Against a backdrop of a gradually strengthening Canadian economy, the Liberal government’s 2017 Budget focuses on "helping the middle class" and spurring innovation. There are few significant tax measures and most of the spending commitments highlighted by Finance Minister Morneau reiterate previous promises or provide additional details on items announced earlier. A principal theme of this Budget is the need to improve Canada’s lagging performance on private sector innovation, with the federal government directing funds to stimulate growth in six key innovation-based industry sectors and pledging to develop a handful of "super clusters" across Canada. Annual budget deficits continue for as far as the eye can see, as the Trudeau government seemingly backs away from any concern with returning to a balanced fiscal stance.

Report Highlights

  • Budget 2017 projects annual federal government deficits right through to 2022.
  • As a result, the federal debt grows, but the debt-to-GDP ratio remains stable in the 30-31% range.
  • There are few new tax measures and none that will have significant economic implications.
  • Instead this is largely a business as usual Budget that reiterates and follows through on the large number of commitments made in last year’s Budget.
  • There is a strong focus on innovation and investment in skills training. 
  • On balance, the Budget will provide a bit of additional fiscal stimulus, but not much beyond what was announced in Budget 2016 – and not enough to impact Canada’s near-term economic growth profile. 

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