Federal Budget 2018: More Spending with Little to Address Competitiveness Challenges

In an environment of heightened uncertainty about NAFTA and steep tax cuts south of the border that have made the United States a more attractive place to invest capital, Finance Minister Bill Morneau’s 2018 Budget focuses on expanding social supports, addressing gender issues, improving life for Indigenous Peoples, and dialing up innovation.

In an environment of heightened uncertainty about NAFTA and steep tax cuts south of the border that have made the United States a more attractive place to invest capital, Finance Minister Bill Morneau’s 2018 Budget focuses on expanding social supports, addressing gender issues, improving life for Indigenous Peoples, and dialing up innovation. At a high level, these priorities make sense. But the Budget is lacking in significant measures to strengthen Canada’s competitiveness or stimulate business investment.

From our perspective, Tuesday’s Budget 2018 – titled Equality and Growth: A Strong Middle Class – is heavy on the equality part and alarmingly thin on ideas to accelerate growth. Apart from some additional funding to support international trade and spur both basic research and innovation, we are hard-pressed to find much in Budget 2018 that will cause companies or investors to choose Canada. As Business Council of Canada President and Chief Executive Officer, the Honourable John Manley, stated: "[n]owhere in the Budget’s 367 pages is there even a passing acknowledgement of the fact that Canada faces an intense fight internationally for investment, jobs and talent."

SUMMARY: BCBC's #Budget2018 Analysis

• Budget 2018 outlines additional support for Canada’s "middle class".
• New spending is sprinkled across many different areas, but the government focused on improving gender equality and providing additional support for Indigenous People.
• Enriched parental EI claims and more generous income top ups for low income workers should encourage increased labour market participation.
• Research and innovation feature prominently in Budget 2018.
• There is some additional funding to support developing new international markets for Canada’s exporters.
• Unfortunately, the Budget is largely silent on any measures to bolster Canada’s eroding competitive position.