canada's economic action plan: a fourth report to canadians

8/8/2019 Canada's Economic Action Plan: A Fourth Report to Canadians

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Government

of Canada

Gouvernement

du Canada

A FOURTH REPORT TO CANADIANS


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Her Majesty the Queen in Right of Canada (2009)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.

www.actionplan.gc.ca

Cette publication est aussi disponible en franais.Cat. No.: F2-189/4-2009E-PDF

ISBN 978-1-100-14310-1


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Table of Contents

1 Overview 5

2 Progress Achieved to Date 27

Reducing the Tax Burden for Canadians 31

Helping the Unemployed 51

Building Infrastructure to Create Jobs 67

Creating the Economy of Tomorrow 115

Supporting Industries and Communities 129Improving Access to Financing and StrengtheningCanadas Financial System 153

1


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Chapter 1

Overview


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Canadas Economic Action PlanA Fourth Report to Canadians

Canadas Economic Action Plan is the Governments responseto the deepest global recession since the Second World War.

In January 2009, the Government introduced one o the mostcomprehensive stimulus packages in the industrialized world. At thattime, there was considerable concern about the potential eect o theglobal recession on the Canadian economy and on Canadian workers andamilies. In the roughly 250 days since Canadas Economic Action Plan

was launched, the Canadian economy has begun to show some signs ostabilization. The recovery, however, remains ragile, with both employmentand output in Canada improving only modestly in recent months.

Canadians and their amilies continue to be signicantly aected by thedownturn. As a result, the Governments priority continues to be rapidand eective implementation o Canadas Economic Action Plan to benetCanadian communities, businesses and workers. The Government will ollowthrough on its plan.

This approach was endorsed by the Group o Twenty (G20) FinanceMinisters and Central Bank Governors in St. Andrews, Scotland onNovember 7, 2009. It was also recently endorsed in a specically Canadian

context by the International Monetary Fund (IMF) on November 12, 2009.

To restore the global economy and fnancial system to health, we agreed

to maintain support or the recovery until it is assured.

Meeting of G20 Finance Ministers and Central Bank Governors,St. Andrews, United Kingdom,

November 7, 2009

Canadas economy is relatively well positioned to resume expansion.Nevertheless, it will be essential to maintain a highly accommodative

macroeconomic policy stance as intended until the economic recovery

is frmly established, in light o risks on the horizon.

IMF, November 12, 2009


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8

Chapter 1

Canadas Current Position

Canadas Economic Action Plan was part o a coordinated internationalresponse to eliminate the threat o nancial collapse in late 2008 and 2009and to protect jobs during the global recession. Governments around the

world moved decisively to prevent a downward spiral in economic growthand employment caused by a sharp decline in private sector economicactivity. Canada contributed to this international eort by moving quicklyand boldly with an economic stimulus package that ranks among the largestin the world (Chart 1.1).

Canada has one o the largest action plans o G7 countries

Chart 1.1

Fiscal Stimulus Flowing in 2009 and 2010, G7 Countries

per cent of GDP

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Canada Japan United States Germany United Kingdom France Italy

Notes: IMF estimates exclude loans, including those to the auto sector, for all countries. Figure for Canada

includes provincial-territorial stimulus in addition to that assumed in the Economic Action Plan as

estimated by the Department of Finance Canada.

Source: IMF, Update on Fiscal Stimulus and Financial Sector Measures, April 26, 2009, p. 5.


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The Government was able to put in place the Economic Action Plan withoutputting at risk the countrys scal position because Canada entered this

downturn rom a position o strength. Our housing markets have avoidedthe problems seen in other countries (Chart 1.2). Our nancial systemand our banks are among the strongest in the world, and we had by arthe lowest debt among all advanced industrialized countries prior to therecession and will maintain that position over the medium term (Chart 1.3).

Housing prices in Canada have been less volatile

than in the U.S. over most o the past two decades

Chart 1.2

Existing Home Prices

index = 100 in 1989Q1

Note: S&P/Case Shiller home price index for the U.S.; Teranet-National Bank index linked to The CanadianReal Estate Association MLS index in 1999Q1 for Canada.

Sources: The Canadian Real Estate Association; Teranet-National Bank; Standard & Poors; Fiserv;

MacroMarkets LLC; Department of Finance Canada internal adjustment for seasonality for Canada.

80

100

120

140

160

180

200

220

240

260

280

1989

Q1

1991

Q1

1993

Q1

1995

Q1

1997

Q1

1999

Q1

2001

Q1

2003

Q1

2005

Q1

2007

Q1

2009

Q1

U.S.

Canada


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Helping the Unemployed: Providing more investments or EmploymentInsurance (EI) benets to support those who have lost their jobs and

provide the training required to help Canadians get the additional skillsthey need or the jobs o tomorrow and to get back to work. This includesproviding additional benets to long-tenured workers. The Governmentis also pursuing measures that will provide additional support or 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 moving orwardand beneting workers and the economy across the country. In addition,the Home Renovation Tax Credit is providing an immediate incentiveor homeowners to invest in their homes and is supporting jobs in thehousing industry.

Creating the Economy of Tomorrow: Improving inrastructure atcolleges, universities, ederal laboratories and research acilities, creatingadditional support or graduate students and internships, and supporting

research and technology. Supporting Industries and Communities: Supporting local economies

and protecting jobs in regions, communities and sectors that have beenmost aected by the economic downturn.

Improving Access to Financing and Strengthening CanadasFinancial System: Ensuring the continued stability o the Canadiannancial system and improving access to nancing or Canadianhouseholds and businesses.

Table 1.1

Canadas Economic Action Plan

2009 2010 Total

(millions o dollarscash basis)

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

Helping the Unemployed 2,873 4,146 7,019

Building Inrastructure to Create Jobs 8,504 7,498 16,002

Creating the Economy o Tomorrow 1,736 2,299 4,035Supporting Industries and Communities 11,824 2,178 14,002

Total ederal stimulus measures 27,957 19,300 47,257

Assumed provincial and territorial actions 8,589 6,148 14,736

Total Economic Action Plan stimulus 36,546 25,448 61,993

Notes: This table reects adjustments to inrastructure unding and EI benefts as described later in this chapter.Totals may not add due to rounding.


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12

Chapter 1

Timely ImplementationThe Government is implementing Canadas Economic Action Plan asquickly as possible, balancing eective stewardship o taxpayer dollars

with speed o implementation.

In January 2009,theGovernmentpresentedtheearliestbudgetinCanadas history.

ByMarch,theGovernmenthadsecuredthenecessaryauthoritiesto proceed with 90 per cent o the 200910 unding in the Action Plan.

ByJune,theGovernmenthadcommitted80 percentof200910

unding in the Action Plan and by September, the proportion o 200910unding committed was 90 per cent.

Asofthisreport,97percentof200910fundingintheActionPlanis committed (Chart 1.4).

Unprecedented Action to Implement the Stimulus Plan

Chart 1.4

Unprecedented Action/Implementation

June: 80 per cent committed

September: 90 per cent committed

December:97 per centcommitted

March: 90 per cent of authorities


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With 97 per cent o 200910 unding committed, elements o the ActionPlan directly controlled by the Government (tax reductions, EI benets

and ederal inrastructure projects) are largely in place. For measures thatare a shared responsibility with other governments or other partners,the Government has almost all the necessary agreements in place toallow provinces, territories, municipalities and private sector partners toimplement the measures. As a result, signicant support is being providedto Canadians (Table 1.2).

Tax reductions and enhanced EI benets are fowing and providingdirect support to Canadians. About 167,000 Canadians are enrolled

in work-sharing arrangements, preserving jobs that would otherwisebe lost. Inrastructure rom coast to coast to coast is being renovatedand upgradedincluding roads, bridges, border crossings, harbours,railways, ederal buildings, First Nations inrastructure and the homeso Canadians. Research acilities are being improved at colleges, universitiesand ederal laboratories. Economic adjustment is being supported incommunities and sectors most aected by the global downturn.

Table 1.2

Progress in Implementing the Economic Action Plan

200910Stimulus Funding

Share of 200910Stimulus Committed

(billions o dollars) (per cent)

Reducing the Tax Burden or Canadians 3.0 1001

Helping the Unemployed 2.9 100

Building Inrastructure to Create Jobs 8.5 96

Creating the Economy o Tomorrow 1.7 91

Supporting Industries and Communities 11.8 98

Total federal support 28.0 97

Notes: Figures are presented on a cash basis. Totals may not add due to rounding.

1 For the purposes o this table, the Government considers the changes to the Working Income Tax Beneftto be committed. Legislation implementing the enhanced Working Income Tax Beneft was adopted by theHouse o Commons on November 17, 2009 and is proceeding through the Senate. Because the WorkingIncome Tax Beneft is a reundable credit, Bill C-51 must receive Royal Assent beore payments may be made.


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14

Chapter 1

The Department o Finance Canada estimates that close to 70 per cento the 2009-10 stimulus is fowing in the economy. This represents an

estimate o economic activity as opposed to actual payments made bythe Government. For most measures, such as personal income tax andEI benets, the amount o stimulus fowing corresponds to amounts paidto Canadians. However, in some cases, particularly inrastructure projects,stimulus amounts will generally fow well in advance o payment. To estimatethe amount o stimulus fowing in these cases, the Department has usedavailable inormation on the status o inrastructure projects.

Funds have been committed to more than 12,000 projects across

the country, o which approximately 8,000 have begun. Projectscommitted include:

Over6,700provincial,territorialandmunicipalinfrastructureprojects,including over 1,500 Recreational Inrastructure Canada projects.

1,150projectstorenovateandrepairfederalbuildings.

536projectstoimproveinfrastructureatcollegesanduniversitiesacross the country.

Over1,800socialhousingprojects. 260projectstoimprovesmallcraftharbours.

About1,000projectstoassistcommunitieshardesthitbytherecessionthrough the Community Adjustment Fund.

Supportfor56majorCanadianfestivalsandevents.

80culturalinfrastructureprojects.

Morethan120projectstoupgradefacilitiesatNationalParks

and National Historic Sites.

Over300FirstNationsinfrastructureandhousingprojects.


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Economic Impact o the PlanThe main ocus o the Economic Action Plan has been to help protectand create jobs during the global economic downturn. The Plan attemptsto limit the number o Canadians and their amilies who will have to gothrough the experience o job loss. The deterioration o Canadas economyover the course o the global recession has been less severe than in all othermajor industrialized economies (Chart 1.5). Further, the loss o jobs inCanada has been considerably less pronounced than in the United Statesour largest trading partner (Chart 1.6). The unemployment rate in Canadais now 1.6 percentage points lower than it is in the United Statesthelargest gap in a generation.

Canada has ared much better than most G7 countries

during the global recession

Chart 1.5

Overall Contraction in Real GDP During the Recession1

per cent

-9

-8

-7

-6

-5

-4

-3

-2

-1

0

Canada France UnitedStates

UnitedKingdom

Italy Germany Japan

1 The overall contraction in GDP is measured by the peak-to-trough decline in real GDP: 2008Q2-2009Q3for United Kingdom; 2008Q2-2009Q2 for Italy; 2008Q2-2009Q1 for France, Germany and Japan;

2008Q3-2009Q2 for United States; and 2008Q4-2009Q2 for Canada.

Sources: Statistics Canada; Bureau of Economic Analysis; Cabinet Ofce; Ofce for National Statistics;

Deutsche Bundesbank; Institut national de la statistique et des tudes conomiques; Istituto

nazionale di statistica.


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Chapter 1

Canada entered recession later than the U.S.

and lost ewer jobs

Chart 1.6

Total Employment

index, January 2005 = 100

Sources: Statistics Canada; Bureau of Labor Statistics.

98

100

102

104

106

108

Jan

2005

Jul

2005

Jan

2006

Jul

2006

Jan

2007

Jul

2007

Jan

2008

Jul

2008

Jan

2009

Jul

2009

U.S. entersrecession

Canadaenters

recession

Canada

United States

In the Third Report to Canadians, the Department o Finance Canadaestimated that about 220,000 jobs would be created or maintained asa result o initiatives taken under the two-year Economic Action Plan.

This estimate is consistent with recent areas o strength in the economy.

One o the principal objectives o the Economic Action Plan was to restorecondence in the economy. In Canada, consumer condence began todecline at the onset o the U.S. recession in January 2008 and then ellsharply as the labour market weakened and equity markets declined sharply.Consumer condence was near a record low in December 2008. With theimplementation o the Action Plan, consumer and business condence haveimproved and are now close to historical averages (Chart 1.7). Similarly,spending on consumer goods has rebounded strongly in recent months(Chart 1.8). Residential investment increased by 7.4 per cent in the second

quarter and by 8.1 per cent in the third quarter (Chart 1.9). Renovationspending has been particularly strong, increasing by 12.5 per cent and11.5 per cent in the second and third quarters respectively, with supportrom the temporary Home Renovation Tax Credit. As a result, in thelast six months, Canada has experienced the largest increase in domesticexpenditures among G7 countries (Chart 1.10).


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Consumer and business confdence have rebounded

sharply since the beginning o the year

Source: The Conference Board of Canada. Source: The Conference Board of Canada.

Chart 1.7

Consumer Condence Business Condence

index, 2002 = 100 index, 2002 = 100

40

50

60

70

80

90

100

110

Jan2007

Jan2008

Jan2009

Historical averageHistorical average

60

70

80

90

100

110

2007Q1

2007Q3

2008Q1

2008Q3

2009Q1

2009Q3


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Chapter 1

Consumer spending started growing again in the second

quarter ollowing declines in the previous two quarters

Chart 1.8

Real Consumer Spending Growth

per cent, period to period at annual rates

Source: Statistics Canada.

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

Consumer spending

Consumer spending on autos

-20

-15

-10

-5

0

5

10

15

20


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Following large declines at the end o 2008 and in early 2009,

residential investment has rebounded since March, led by

increases in renovation activity

Chart 1.9

Real Residential Investment and Renovation Growth

per cent, period to period at annual rates

Source: Statistics Canada.

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

Residential investment

Renovation activity

-25

-20

-15

-10

-5

0

5

10

15


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Chapter 1

In the last six months, Canada has experienced the largest

increase in domestic expenditures among G7 countries

Chart 1.10

Change in Real Final Domestic Demand From 2009Q1 to 2009Q3

per cent

1 Data for 2009Q3 for Italy is based on Moodys Economy.com Outlook published on November 17, 2009.

Sources: Statistics Canada; Bureau of Economic Analysis; Cabinet Ofce; Ofce for National Statistics;

Deutsche Bundesbank; Institut national de la statistique et des tudes conomiques; Istituto nazionale

di statistica, Department of Finance Canada calculations.

Canada GermanyUnitedStates

Japan FranceItaly1 UnitedKingdom

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

The impact o the Plan will continue to build through 2010 and supportgrowth during the recovery. The IMF expects Canadas recovery to bethe strongest in the G7.

Canadas large fscal stimulus package and unprecedented monetary

easing are supporting domestic demand. In this context, and with

household and fnancial institution balance sheets stronger than in

many countries, Canadas economy is relatively well positioned

to resume expansion.

IMF, November 12, 2009


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The Action Plan also takes important steps to ensure that Canada emergesrom the recession in a solid position to succeed over the longer term in an

even more globalized economy. Enhanced training programs will lead toa more skilled workorce; better inrastructure will set the oundation oreconomic prosperity; and tax reductions will ensure that Canada has thelowest overall tax rate on new business investment in the G7.

Canada is a trading nation. Our export sector is vital to our current anduture prosperity. The Government is ully committed to promoting an openand air global economy. At home, taris have recently been eliminated on abroad range o machinery and equipment in order to lower costs or Canadian

manuacturers and encourage innovation. Canada continues to supportmultilateral trade liberalization.

Canada is also pursuing other avenues to enhance trade and investment. Thisincludes the successul conclusion o ree trade agreements with the EuropeanFree Trade Association, Colombia, Peru, Panama and Jordan. Combined,these agreements will give our exporters preerred access to markets o about100 million people. Canada has also launched historic negotiations with theEuropean Union and is engaged in economic cooperation discussions with

India. The Prime Ministers recent visits to both India and China highlightCanadas intentions to deepen its economic relations with these largeemerging markets. Other reorms to Canadas competition and investmentlaws and policies contained in the Economic Action Plan include amendmentsto the Investment Canada Act, which will help modernize our laws and attractinvestment to Canada.

Taken together, these market-opening eorts demonstrate Canadianleadership in resisting trade protectionism and encouraging oreign

investment. As the host o the G8 and one o the co-hosts o theG20 Leaders Summit in June 2010, Canada can state that it hasdelivered on its G20 commitments with the objective o promotingboth global and domestic recovery.


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Chapter 1

Timely Wind-Down o Stimulus Is Critical

or Returning to Balanced BudgetsGovernments around the world are working to stimulate local economiesthrough signicant short-term public spending programs. These actionshave been endorsed internationally, but with an emphasis on the needor sustainable medium-term scal plans. At the Pittsburgh Summit inSeptember, G20 Leaders committed to ollow through on their stimulusplans in the near term, while preparing strategies to wind down stimulusand improve their scal positions as the recovery is established.

We pledge today to sustain our strong policy response until a durable

recovery is secured. We will act to ensure that when growth returns,

jobs do too. We will avoid any premature withdrawal o stimulus. At the

same time, we will prepare our exit strategies and, when the time is right,

withdraw our extraordinary policy support in a cooperative and coordinated

way, maintaining our commitment to fscal responsibility.

Leaders Statement: The Pittsburgh Summit,September 24-25, 2009

Canadians expect ederal, provincial and municipal governments to worktogether to stimulate the economy. But they also expect governments toreturn to balanced budgets as quickly as possible once the recovery takeshold. That is why many elements o the Economic Action Plan aretime-limited. For the most part, unds are only available this year and next.

Allowing the temporary elements o the Action Plan to wind down, as

scheduled, is the rst step in the Governments strategy or returning toscal balance. This alone will cut the budget decit in hal rom $55.9 billionin 200910 to $27.4 billion in 201112 (Chart 1.11). As the economyimproves, the Government is committed to returning to balanced budgets.Bringing the budget into balance will provide condence to consumers andbusiness that programs and taxes are sustainable or the long term.


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Canadas Medium-Term Budget Defcit Projections

Chart 1.11

Federal Budgetary Decit

billions of dollars

Source: Department of Finance Canada, Update of Economic and Fiscal Projections, September 2009.

0

10

20

30

40

50

60

20082009

20092010

20102011

20112012

20122013

20132014

20142015

Updating the PlanThe Government is actively managing the implementation o the Economic

Action Plan to maximize the benets or Canadians. In order or the Planto be eective, it must provide important economic stimulus and job-creatingmeasures when Canada needs it most. The Government is working withprovincial, territorial and municipal partners to ensure that stimulus undsare spent within the two-year time rame set out in the Action Plan so thatcommunities will benet rom these measures as they attempt to come outo the recession.

The Government is also working to ensure that stimulus unds are spentby March 2011 to ensure these extraordinary stimulus measures end aseconomic recovery takes hold. The Economic Action Plan will help ensurethat private economic activity returns as public stimulus comes to an end.This will help ensure the Government will be able to return to balancedbudgets as economic recovery takes hold.


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Chapter 1

In order to meet these goals, a deadline o January 29, 2010 has been setor partner authorities to secure rm commitments to implement projects.

Committing unding by this date would allow or projects to be completedby March 31, 2011.

Further to this use it or lose it approach, governments throughoutCanada are working together cooperatively to secure as many rm projectcommitments as possible within this time rame. I all unding or theseinitiatives has not been allocated by this date, the Government will reallocateunding to other initiatives or allow unds to lapse.

To ensure the greatest possible benets to Canadians, the Governmentis making the ollowing adjustments to the Plan:

About90percentoffundingundertheInfrastructureStimulusFundis committed. As a result, $2.4 billion o the total amounts committedto date are expected to fow in 201011. The Government is diligently

working with all partners to secure commitments or the $400 millionthat remains to be committed. Any unding available in 201011 or

which there are no rm commitments by January 29, 2010 will bereallocated to other initiatives or allowed to lapse.

Take-upforRecreationalInfrastructureCanadafundingandthetop-up to the Communities Component o the Building Canada Fundhas been strong to date. The remaining uncommitted unding or thesetwo programs will also be subject to the condition that unds becommitted by January 29, 2010 to projects that can be completedby March 31, 2011.

TheGovernmentisalsoworkingtoensurethatfundingundertheGreen Inrastructure Fund is spent eectively. The Government expects

that the bulk o the rst two years o unding under the program wouldbe spent in 201011.

DuetounprecedenteddemandundertheecoENERGYRetrotHomesprogram, the Government is proposing to allocate $205 million underthe Clean Energy Fund to nance up to 120,000 additional retrotsor Canadian homeowners$45 million is expected to be spent in200910 and $160 million in 201011.


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TheGovernmenthasrecentlytakenstepstotemporarilyincreasesupport to long-tenured workers with the passage o legislation to

extend benets or eligible individuals by between 5 and 20 weeks,at a projected cost o $935 million. Cheques are now being sent toeligible long-tenured workers.

InadditiontoactionstakenundertheEconomicActionPlan,theGovernment has introduced the Fairness for the Self-Employed Act,

which would extend EI special benets, including maternity, parental,sickness and compassionate care benets, to the sel-employed. Withthese changes, sel-employed Canadians would be able to opt into theEI program and receive special benets, providing them with access tosupport at a critical point in their lives.


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Chapter 1

Conclusion and Next StepsThe Government has taken unprecedented steps to expedite implementationand to make sure that Canadas Economic Action Plan is having an impactnowwhen it is most needed.

97 per cent o rst-year unding or the Plan has been committed. In everyregion o the country, Canadian communities, businesses, workers andamilies are receiving the support they need.

In the weeks and months ahead, the Governments ocus will remainon eectively implementing the Plan. Specically, this means:

EnsuringthattheunemployedreceivetimelyEIbenets.

ModernizingfederalinfrastructuretobetterserveCanadians.

LoweringtaxesforCanadiansandCanadianbusinesses.

Investinginhighereducation,scienceandtechnologytocreatethe economy o tomorrow.

Providingassistancetosectorsandcommunitiesaffected

by the economic downturn. ImprovinginfrastructureinFirstNationscommunities.

MakingiteasierforCanadiansandCanadianbusinessestoaccesscredit.

The Government will also continue to work with provinces, territoriesand municipalities to ensure that:

Workershaveaccesstotrainingwhentheyneedit.

Infrastructureprojectsarelaunchedinatimelymanner.

Moresocialhousingunitsarebuiltandexistingsocialhousingis modernized.

The ollowing chapter provides a detailed review o progress achievedin each 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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Chapter

Progress

Achievedto dAte

2

Progress

Achievedto dAte


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Progress Achieved to Date

29

Introduction

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

ReducingtheTaxBurdenforCanadians

HelpingtheUnemployed

BuildingInfrastructuretoCreateJobs

CreatingtheEconomyofTomorrow

SupportingIndustriesandCommunities

ImprovingAccesstoFinancingandStrengtheningCanadasFinancial System

CanadianscanfollowprogressontheGovernmentswebsite,www.actionplan.gc.ca.


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Reducingthe

tax BuRdenfoR canadians


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Progress Achieved to DateReducing the Tax Burden or Canadians

33

Highlights

3 Tax relie provided by the Working Income Tax Benet (WITB),rst introduced in Budget 2007, will be eectively doubled tourther reduce the welare wall and help ensure that more low-income Canadians are nancially better o as a result o gettinga job. The enhanced WITB will provide up to $925 per yearto single individuals and up to $1,680 per year to couples andsingle parents. Legislation implementing the enhanced WITB wasadopted by the House o Commons on November 17, 2009 andis proceeding through the Senate.

3 Tax assistance o up to $1,350 per amily in support o homerenovations and improvements is helping stimulate the economyand encouraging investment by Canadians in their homes.The Canada Revenue Agency has received about 3.5 millionenquiries about the Home Renovation Tax Credit through its

website and by telephone.

3 Canadians have been seeing the benets o income tax reductionsannounced in Canadas Economic Action Plan on their pay stubssince April 2009.

3 Tax relie or low- and middle-income seniors has been put inplace, providing up to an additional $150 in annual tax savings,to help our seniors thrive in retirement.

3 Increased child benets started to fow in July, providing upto $436 per year or a amily with two children, making raisingchildren more aordable.

3 To help small businesses retain more o their earnings orreinvestment, expansion and job creation, Canadas Economic

Action Plan increased the amount o small business incomeeligible or the reduced ederal income tax rate o 11 per centrom $400,000 to $500,000. This enhanced support took eecton January 1, 2009 and can save small businesses up to $8,000each in 2009 taxes.


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Chapter 2

34

3 Canadas manuacturers and processors are beneting rom anextension o the temporary 50-per-cent straight-line accelerated

capital cost allowance (CCA) rate on machinery and equipmentpurchases, and the permanent elimination o taris on a widerange o machinery and equipment eective January 28, 2009.These measures are helping businesses in the manuacturing andprocessing industries make the necessary equipment purchasesand position themselves or long-term success.

3 To help businesses adopt new technology at a aster pace,a two-year 100-per-cent CCA rate or investments in computers

has been in eect since January 28, 2009.3 Mineral exploration activity across Canada is being supported

by the one-year extension o the temporary 15-per-cent MineralExploration Tax Credit, which took eect April 1, 2009.

3 Tax reductions are an essential part o Canadas Economic ActionPlan. They support Canadians and Canadian businesses in theshort term by providing stimulus, putting money in the handso Canadians to spend as they see t, thus encouraging job

creation and helping create a long-term advantage or sustainedeconomic growth.

3 Canadas Economic Action Plan includes measures that willreduce the tax burden or Canadian amilies and businesses bymore than $20 billion over 200809 and the ollowing ve scal

years. This builds on early action taken by the Government inthe October 2007 Economic Statement to oset the economicdownturn with substantial and permanent tax reductions.

3 In total, actions taken by this Government since 2006 will reducetaxes by $220 billion over 200809 and the ollowing ve scal

years, allowing Canadian individuals, amilies and businesses tokeep more o their money.


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IntroductionIn Budget 2009, the Government provided $6.9 billion over three yearsto stimulate the economy and support job creation by providing personaltax relie to Canadians, allowing Canadians to decide how best to spendtheir money. This is in addition to tax measures to support housing andbusiness contained in the Economic Action Plan (Table 2.2).

Table 2.1

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 BenetSupplement and Canada Child Tax Benet 230 310 540

Enhancing the Working Income Tax Benet 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

Notes: Totals may not add due to rounding. This table represents the scal cost o measures taken in theEconomic Action Plan. For some measures, a scal cost accrues in 200809. The Canada Child Tax Benetand the National Child Benet Supplement are considered expenditures or budgetary purposes and thusshould not be included in calculations o total tax relie.


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Chapter 2

Table 2.2

Tax Measures to Support Housing and Business

200809 200910 201011 Total

(millions o dollars)

Home Renovation Tax Credit 500 2,500 3,000

Increase in Home Buyers Plan withdrawal limit 15 15 30

First-Time Home Buyers Tax Credit 30 175 180 385

Tari relie on machinery and equipment 12 76 81 169

Mineral Exploration Tax Credit or fow-throughshare investors 70 -15 55

Increase the income limit or the small business

tax rate 45 80 125Temporary 100-per-cent capital cost allowance

rate or computers 340 355 695

Temporary accelerated capital cost allowancerate or manuacturing or processing machineryand equipment1

TotalTax Measures to SupportHousing and Business 542 3,221 696 4,459

Timing o Home Renovation Tax Credit -500 500

Total stimulus value 42 3,721 696 4,459

Notes: Totals may not add due to rounding. This table represents the scal cost o measures taken in theEconomic Action Plan. For some measures, a scal cost accrues in 200809.

1 Businesses will benet rom the extension o this measure, rst introduced in Budget 2007 and extendedin Budget 2008, starting in 201112.


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and Canadian BusinessThe tax reductions in Canadas Economic Action Plan are an essentialpart o the Governments eort to stimulate the economy and to createor maintain jobs. Lower taxes help ease the nancial 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 Plan reinorcethe Governments ambitious agenda o tax relie aimed at creating a taxsystem that uels job creation and investment in Canada, improving the

standard o living o Canadians.

Canada took early signicant action in the October 2007 EconomicStatement, anticipating the prospect o a weaker global economy. ThisGovernment put in place broad-based permanent tax reductions that aresustainable or the uture. As a result o these actions, Canada is betterpositioned than most countries to withstand the eects o todays globaleconomic challenges.

Tax reductions support Canadians, Canadian businesses and jobs in the shortterm by providing immediate economic stimulus, which helps individualsand businesses to weather the global recession, and also create a long-termadvantage or sustained economic and employment growth.

Actions taken by the Government since 2006, including those proposedin the Economic Action Plan, will reduce taxes on individuals, amilies andbusinesses by an estimated $220 billion over 200809 and the ollowingve scal years. O this amount, the tax relie proposed in the Economic

Action Plan totals more than $20 billion.


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Chapter 2

Tax Relief for Individuals and FamiliesThe Economic Action Plan introduced signicant new personal income taxreductions that are providing immediate relie, particularly or low- andmiddle-income Canadians, as well as measures to help Canadians purchaseand improve their homes. For example:

TheenhancedWITB,rstintroducedinBudget2007,willbeeffectivelydoubled to urther strengthen work incentives or low-income Canadiansalready in the workorce and encourage low-income Canadians to enterthe workorce.

ThetemporaryHomeRenovationTaxCreditwillprovideanestimated

4.6 million Canadian amilies with up to $1,350 in tax relie on eligiblerenovation projects, thereby providing needed stimulus to the economy.In addition, the First-Time Home Buyers Tax Credit will provide relieo up to $750 to help with the purchase o a rst home.

TheamountofincomethatCanadianscanearnbeforepayingfederalincome 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.

TheAgeCreditamountwasincreasedby$1,000toprovidetaxrelieftolow- and middle-income seniors. This means additional annual tax savingso up to $150.

Inaddition,theEconomicActionPlanhasraisedthelevelatwhichtheNational Child Benet Supplement or low-income amilies and theCanada Child Tax Benet are phased out, providing a benet o up to$436 per year or a amily with two children. Additional monthly benetsunder these programs began to be paid to amilies with children in

July 2009.

Tax relie or individuals and amilies announced in Canadas EconomicAction Plan is now largely committed, and Canadians are realizing itsbenets through higher take-home pay.

Legislation implementing the enhanced WITB is proceeding throughParliament. The enhanced WITB will provide up to $925 per year tosingle individuals and up to $1,680 per year to couples and single parents.

In addition, a supplement o up to $463 per year will be available orlow-income working Canadians with disabilities who are eligible or theDisability Tax Credit. Once the enhanced WITB receives Royal Assent,eligible low-income working Canadians will receive benets when they letheir 2009 tax returns.


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The enhanced WITB builds on past actions to lower the welare wall,so that low-income individuals may keep more o their earnings, as shown

in Chart 2.1. In 2009, i the WITB had not been introduced, a typical low-income single parent would have only kept 25 cents o each dollar earnedbetween $3,000 and $10,000, due to reduced benets rom ederal andprovincial income-tested programs and taxes. As a result o the enhanced

WITB, the same amily will keep about 45 cents o each dollar earned.

Canadas Economic Action Plan:

Tax Relief for Canadians

Chart 2.1

Average Effective Marginal Tax Rates(per $10,000 in Additional Income2009)

per cent

Notes: This chart shows the combined effect of the reduction in benets and increases in taxes on$10,000 of additional earned income. Effective marginal tax rates vary across provinces and territories;this gure is based on a weighted average of all provinces and territories, except Ontario. It takes intoaccount agreements reached in 2007 with Quebec, British Columbia and Nunavut on their respectiveWITB designs.

0

10

20

30

40

50

60

70

80

$3,000 $10,000 $10,000 $20,000

Earned income/net family income

$20,000 $30,000 $30,000 $40,000

Rates without measuresintroduced by this Government

Existing rates with measuresannounced in Budget 2009

The WITB signicantly reduces average eective marginal tax rates onearned income between $3,000 and $10,000. The WITB increases these

rates on earned income between $10,000 and $20,000, as it is being phasedout. However, this increase occurs over an income range where averageeective marginal tax rates are relatively low. Despite this increase, the WITBstrengthens incentives to nd and keep a job by increasing the net returnsrom work.


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Chapter 2



Personal Tax Relief for Canadians

Colin and Mary have two children. Colin earns $40,000 and Maryearns $60,000. In total, their personal income taxes have been cut by13 per cent, providing $1,738 in tax relie. They also receive an additional$76 in child benets, making them $1,814 better o.

total relief (dollars)

Chart 2.2

Personal Tax Relief

$356

$1,458

$1,814

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Economic Action Plan Previous actions Total


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Anthony earns $40,000 and is a single parent o one child. In total, his netpersonal income taxes have been cut by 36 per cent, providing $1,020 intax relie. He receives an additional $112 in child benets, making him$1,132 better o.


Chart 2.3

Personal Tax Relief

$260

$872

$1,132


0

200

400

600

800

1,000

1,200

1,400


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Chapter 2




Jack and Annie are a senior couple, and Jack receives $60,000 in pensionincome. In total, their personal income taxes have been cut by 38 per cent,providing $3,386 in tax relie.


Chart 2.4

Personal Tax Relief

$366

$3,020

$3,386


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


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A Strong Record of Tax Relief for Individualsand FamiliesSince coming to oce in 2006, the Government has taken actions that willreduce taxes on individuals and amilies by an estimated $160 billion over200809 and the ollowing ve scal years. This includes $20 billion o taxrelie announced under Canadas Economic Action Plan, and earlier actionsto oset the economic downturn announced in the 2007 EconomicStatement, which provided substantial, permanent tax reductions.

Table 2.3

More Money in the Pockets of Canadians

Proportionately More for Low- and Middle-Incomes

Tax Relie1 or Individuals by Family Income Group, 2009

Average Tax Relief in 2009

Tax Reliefas a Share ofNet Tax Paid2GST

Personal Income Tax

TotalTotal Family Income To DateBudget

2009

(dollars) (dollars) (per cent)

Less than 15,000 130 95 147 372 100

15,000 30,000 280 201 168 649 53

30,000 45,000 400 444 247 1,092 31

45,000 60,000 510 629 356 1,494 23

60,000 80,000 630 787 473 1,890 20

80,000 100,000 770 903 614 2,287 17

100,000 150,000 960 1,036 717 2,714 14

Over 150,000 1,640 1,241 887 3,768 71 In Budgets 2006, 2007, 2008 and 2009, the 2006 Tax Fairness Plan, the 2007 Economic Statement,

and the 2008 Economic and Fiscal Statement.

2 Net tax paid equals ederal personal income tax plus GST minus ederal reundable tax credits(mainly the GST credit) prior to Budget 2006. The maximum percentage presented or tax relie

as a share o net tax paid is 100 per cent.


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Chapter 2

A Strong Record of Tax Relief for Individuals

and Families (contd)Canadians at all income levels are beneting rom this tax relie withproportionately greater savings or those with lower incomes. TheGovernments commitment to tax relie is also paying o in the ormo greater opportunity and choice or people. For example:

AllCanadianseventhosewhodonotearnenoughtopaypersonalincometaxarebenetingfromthe2-percentage-pointreductioninthe Goods and Services Tax (GST) rate. Maintaining the GST creditlevel while reducing the GST rate by 2 percentage points translates

into more than $1.1 billion in benets annually or low- andmodest-income Canadians.

Alltaxpayersarebenetingfrompersonalincometaxrelief,whichincludes reducing the lowest personal income tax rate to 15 per centrom 16 per cent and increasing the basic amount that all Canadianscan earn without paying ederal income tax.

Low-incomeworkingCanadiansarebenetingfromthe$580-millionWITB introduced in Budget 2007. The WITB, in combination withother tax relie introduced by this Government, has substantially

improved work incentives and the nancial circumstances o manylow-income Canadians.

ThenewTax-FreeSavingsAccountisimprovingincentivestosavethrough a fexible, registered general-purpose account that allowsCanadians to earn tax-ree investment income while saving or theirindividual needs such as or a car, a home or retirement.

The Government has also introduced measures targeted to help amilies,students, seniors and pensioners, workers, persons with disabilities, andcommunities. Examples o such measures include:

AChildTax Creditinrecognitionoftheexpensesassociatedwithraising children.

Exemptingscholarshipandbursaryincomefromtax.

Theintroductionofpensionincomesplitting,thedoublingofthePensionIncome Credit and two $1,000 increases to the Age Credit amount toprovide substantial tax savings to seniors and pensioners.

TheCanadaEmploymentCredit,whichrecognizeswork-relatedexpenditures such as home computers, uniorms and supplies.

TheRegisteredDisabilitySavingsPlan,whichwillcontributetothenancial security and well-being o children with severe disabilities.

Ataxcreditforpublictransitpasses.


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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:

Tohelpbusinessesadoptnewertechnologyatafasterpace,atemporarytwo-year 100-per-cent capital cost allowance (CCA) rate or computersacquired ater January 27, 2009 and beore February 1, 2011

was introduced. Tohelpbusinessesinmanufacturingandprocessingindustriesto

restructure and retool to position themselves or long-term success,the 50-per-cent straight-line accelerated CCA rate or investments inmanuacturing or processing machinery and equipment was extendedto include investments undertaken in 2010 and 2011. Manuacturersand processors are already beneting rom this measure, which was rstintroduced in Budget 2007 and extended in Budget 2008.

Tohelpsmallbusinessesretainmoreoftheirearningsforreinvestment,expansion and job creation, the amount o small business income eligibleor 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.

TosupportmineralexplorationactivityacrossCanadaandhelpourmining industry grow, the temporary Mineral Exploration Tax Credit

was extended or an additional year.

ConsultationsonthepossibleextensionofacceleratedCCAtoassetsusedin carbon capture and storage were held in the spring and submissions arenow being analyzed.

Afterreviewingtheresultsoftheconsultationsonthefeasibilityanddesirability o introducing an Arrivals Duty-Free Program in Canada,there does not appear to be sucient consensus, among those who madesubmissions or the provinces, to warrant urther consideration o this issueat this time.


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Chapter 2

The Economic Action Plan builds on the Governments strong recordo tax relie. Since 2006, the Government has introduced signicant tax

relie or Canadian businesses, including measures in the Economic ActionPlan, that total more than $60 billion over 200809 and the ollowingve scal years.

Key actions include:

Substantial,broad-basedtaxreductionsthatareloweringthefederalgeneral 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

all corporations and a reduction in the ederal general corporate incometax rate to 19 per cent as o January 1, 2009, and to 18 per cent aso January 1, 2010.

Areductionofthefederalincometaxrateapplyingtoqualifyingsmallbusiness income to 11 per cent in 2008.

AlignmentofCCAratesforanumberofassetstobetterreecttheiruseul liethis both reduces the tax burden on investment and ensuresneutral tax treatment o dierent capital assets, encouraging investment

to fow to its most productive uses.

Eliminationin2006ofthefederalcapitaltaxandtheintroductionin 2007 o a temporary nancial incentive to encourage provinces toeliminate their general capital taxes and to eliminate or replace theircapital taxes on nancial institutions with a minimum tax. All provincialgeneral capital taxes will be eliminated by 2012.

Early actions taken by this Government as well as the measures included

in Canadas Economic Action Plan are positioning Canadian businesses toemerge stronger and better equipped to compete globally as the economyrecovers. Broad-based corporate income tax reductions and other tax reliemeasures are building a solid oundation or uture economic growth, jobcreation and higher living standards or Canadians.


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As a result o ederal and provincial business tax changes and bold taxreductions, Canada will have the lowest overall tax rate on new business

investment1

in the Group o Seven (G7) by 2010 and the lowest statutorycorporate income tax rate in the G7 by 2012. By 2012, Canada willalso have an overall tax rate on new business investment that is lowerthan the Organisation or Economic Co-operation and Development(OECD) average (Chart 2.5). The competitiveness o our business taxsystem encourages new investment in Canada, including direct investmentrom abroad.

Canada will soon have an overall tax rate on new business

investment that is the lowest in the G7 and below the

OECD average

Chart 2.5

Attracting New InvestmentTax Rate on New Business Investment

in Canada, 2012

per cent

1 Excludes resource and nancial sectors and tax provisions related to research and development.2 Includes federal and provincial measures announced as of July 31, 2009.3 Excludes Canada.

Source: Department of Finance Canada.

United States OECD average3 CanadaLowest in the G7

33.9

20.8

32.5

16.9

0

5

10

15

20

25

30

35

Impact of federaland provincial

commitments sinceJanuary 20062

1 The marginal eective tax rate (METR) on new business investment takes into accountederal and provincial statutory corporate income tax rates, deductions and creditsavailable in the corporate tax system and other taxes paid by corporations, includingprovincial capital taxes and retail sales taxes on business inputs. The methodology orcalculating METRs is described in the 2005 edition oTax Expenditures and Evaluations(DepartmentofFinanceCanada).


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Chapter 2

Improving the competitiveness o the Canadian tax system requirescollaboration among all governments to help Canadian businesses compete

globally as the economy recovers. Provinces and territories have taken actionto enhance Canadas business tax advantage, building on actions taken at theederal level.

Several provinces are reducing their corporate income tax rates. Over thenext ew years, Ontario, British Columbia and New Brunswick will bereducing their corporate income tax rates to 10 per cent or below. Albertais currently at 10 per cent. Together with the scheduled reductions in theederal general corporate income tax rate to 15 per cent in 2012, these

provincial actions will help Canada move closer to the Governmentsgoal o a 25-per-cent combined ederal-provincial statutory corporateincome tax rate.

Further reductions in provincial corporate income tax rates would do evenmore to improve the competitiveness o Canadian businesses across thecountry and urther encourage investment and job creation.


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Table 2.4


200910StimulusValue

Authoritiesin Place

StimulusCommitted

(millionso dollars)

(millionso dollars)

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

Increases to the National Child BenetSupplement and Canada Child Tax Benet 230 Yes 230

Enhancing the Working Income Tax Benet 580 Bill C-511 5802

Targeted relie or seniors 325 Yes 325

Total 3,020 3,020

Reerence:

Tax Measures to Support Housingand Business

Home Renovation Tax Credit 3,000 Bill C-511 3,000

Increasing withdrawal limits under the HomeBuyers Plan 15 Yes 15

First-Time Home Buyers Tax Credit 175 Bill C-511 175

Mineral Exploration Tax Credit or fow-throughshare investors 70 Yes 70

Increase the income limit or the small businesstax rate 45 Yes 45

Temporary 100-per-cent capital cost allowancerate or computers 340 Yes 340

Temporary accelerated capital cost allowancerate or manuacturing or processing machineryand equipment Yes

1

Bill C-51 was adopted by the House o Commons on November 17, 2009 and is proceeding throughthe Senate.

2 For the purposes o this table, the Government considers the changes to the Working Income Tax Benetto be committed. Legislation implementing the enhanced Working Income Tax Benet was adoptedby the House o Commons on November 17, 2009 and is proceeding through the Senate. Becausethe Working Income Tax Benet is a reundable credit, Bill C-51 must receive Royal Assent beorepayments may be made.


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HelpingtHeUnemployed


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53

Progress Achieved to DateHelping the Unemployed

53

Highlights

The Government has taken extraordinary and unprecedented actionto help Canadian workers acing layos or job losses weather theeconomic conditions. Through Canadas Economic Action Plan,the Government has provided more Employment Insurance (EI)benets, greater training opportunities and better supports oremployees and employers. This year, an additional $5.8 billion

will be paid out in EI benets, while the provinces and territorieswill receive $750 million to implement additional training programs.

The Government is also leaving more money in the hands oCanadians by reezing EI premium rates or 2010 at $1.73, the samerate as 2009 and the lowest rate since 1982.

The Economic Action Plan is providing additional benets now whenCanadians need them the most. Since September, close to 100,000more individuals are receiving up to an extra ve weeks o EI benets.This means that so ar this year, more than 395,000 people arereceiving up to an additional $2,235 in benets, at a cost o$574 million. In addition:

3 Enhanced EI work-sharing agreements have supported more than225,000 individuals since the initiative was launched in February,o which approximately 167,000 are currently participating in

work-sharing agreements.

3 Long-tenured workers are receiving extended EI benets to enableaccess to longer-term training through the Career Transition

Assistance initiative. The Government is implementing recentlegislation to temporarily extend EI benets or long-tenuredworkers by up to 20 weeks.

3 Under the Wage Earner Protection Program, Canadians havereceived more than $24 million in payments including severancepayments and termination pay.


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Chapter 2

54

Enhanced training and work experience measures in 200910 are inplace to support Canadian workers and help them transition into new

jobs and opportunities:3 More than 90,000 Canadians are beneting rom unds currently

fowing to provinces and territories to support training.

3 An additional $10 million in 200910 or the Canada SummerJobs Program allowed employers to hire approximately3,500 students this summer.

3 Investments are fowing or 58 projects through the Targeted

Initiative or Older Workers, supporting over 2,000 older workers.3 Since July, over 10,000 Apprenticeship Completion Grants,

worth $2,000 per individual, have been awarded.

3 To support skills development and create employmentopportunities, Aboriginal Canadians will participate inapproximately 90 projects across the country, o whichover 55 have begun since September.

3 In addition to actions taken under the Economic Action Plan,

the Government has introduced the Fairness for the Self-EmployedAct, which would extend EI special benets, including maternity,parental, sickness and compassionate care benets, to thesel-employed.


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IntroductionAll across the country, Canadians have elt the impacts o the globaleconomic slowdownwhether it be the loss o a job, the downsizingo a plant or a shit to part-time work. Including the support provided tolong-tenured workers through Bill C-50, Canadas Economic Action Planincludes $7.0 billion over two years to support those workers most aectedand help them access opportunities through skills development and training.

Table 2.5

Helping the Unemployed

200910 201011 Total

(millions o dollars)

Strengthening benefts or Canadian workers 1,115 1,550 2,665

Enhancing the availability o training 940 965 1,905

Maintaining low Employment Insurance premium rates 818 1,631 2,449

TotalHelping the Unemployed 2,873 4,146 7,019

Note: Totals may not add due to rounding. Amounts dier rom the Third Report to Canadians due to theinclusion o additional support provided to long-tenured workers.

EI benefts are up sharply

10

12

14

16

18

20

22

24

19992000

20002001

20012002

20022003

20032004

20042005

20052006

20062007

20072008

20082009

20092010

Chart 2.6

Employment Insurance Benets

billions of dollars

Sources: Statistics Canada; Department of Finance Canada. Projection

$5.8 billion


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Chapter 2

The EI program is continuing to meet the needs o Canadians in a changinglabour market, providing more benets when they are needed most. This

year, the Government will spend approximately $5.8 billion more onEI benets than last year, providing support to more Canadians. In addition,the Government has recognized the challenges aced by Canadians in thesetough economic times, and is making substantial investments under theEconomic Action Plan to provide workers with the training they needto transition into new jobs.

Canadians continue to need timely access to EI benets that refect theirlocal labour market conditions. In areas where unemployment has risen,

the program is automatically adjusting, lowering the entrance requirementand extending the duration o EI benets. Between October 2008 andNovember 2009, 83 per cent o Canadian workers had easier access toEI or longer benet durations.

The Employment Insurance program is responding

especially or those regions most in need

In southern Alberta, where the unemployment rate rose to 8.2 per cent inNovember 2009 rom 5.1 per cent in January 2009, the number o working

hours required to receive EI ell by 105rom 700 to 595 hours.

The minimum beneft duration rose to 23 weeks rom 14, which includes

the extra 5 weeks o benefts provided by the Economic Action Plan.

At the same time, the maximum beneft duration increased to 47 weeks

rom 36, including the extra 5 weeks provided by the Economic Action Plan.

As o November 2009, 39 o 58 regions have a lower eligibility requirementand longer duration o benets than in October 2008.


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Access to EI has been made easier and benefts

enhanced in regions o the country most aected

by the global recession


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Chapter 2

Canadians Are Getting the Support

They NeedThe Government is making the necessary investments to ensure thatCanadians continue to receive the services and benets they need,

when they need them. Canadians count on the Government to deliverEI benets in an ecient and timely manner, to answer questions andconcerns, and to resolve problems quickly and proessionally.

Strengthenedservicesareensuringfasterprocessingofclaims,whilealso handling a nearly 30-per-cent year-over-year increase in claims.

Extendedservicehoursareensuringtimelyresponsestoalargernumbero inquiries.

Despite the growth in claims, more than 80 per cent o Canadianssubmitting new claims had a cheque in hand within 28 days. TheGovernment is monitoring service standards and will ensure thatEI benets continue to fow in a timely manner.

The Government is also taking extra steps to ensure that Canadian workers

who are eligible or EI are aware o all the services and benets availableto them. The new Client Inormation Sessions are targeted specically tolong-tenured workers who have recently lost their jobs, providing them withinormation about options to help them return to work or pursue trainingor a new job, such as the Career Transition Assistance initiative. The MobileOutreach Services are intended or employers and workers acing imminentlayos. Unemployed workers across the country are already benetingrom the Client Inormation Sessions, which were launched in September.Participants in these sessions have ound them to be inormative and timely.

Helping the UnemployedThe Economic Action Plan is providing the necessary support or workersand amilies hardest hit by the global recession. Signicantly enhancedEI benets and increased training opportunities are providing Canadians

with needed support at a critical time, helping them prepare or aprosperous uture.


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Working or Canadians

Strengthening Benefts

UptoanextraveweeksofEmploymentInsurancebenets($1.15billion)

Enhancedwork-sharing($200million)

Extendedbenetsforlong-tenuredworkers($1.44billion)

Wageearnerprotection($50million)

Enhancing Availability o Training

EnhancedEmploymentInsurancetrainingprograms($1billion)

StrategicTrainingandTransitionFund($500million)

Youthemployment($55million)

TargetedInitiativeforOlderWorkers($60million)

ApprenticeshipCompletion Grant($80million)

Foreigncredentialrecognition($50million)

AboriginalSkillsandEmploymentPartnerships($100million)

AboriginalSkillsandTrainingStrategicInvestmentFund($75million)

Employment Insurance Rates

FreezingEmploymentInsurancepremiumratesat$1.73for2010

Strengthening Benefts or CanadiansExtra Five Weeks o EI Regular Benefts: Additional benets provided

under the Economic Action Plan are fowing to Canadian workers at anunprecedented rate. As o November, more than 395,000 claimants hadbeneted rom this increase in benets at a cost o $574 million. Five extra

weeks o benets adds up to as much as an additional $2,235 in EI benetsor an unemployed worker.


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Chapter 2

Enhanced Work-Sharing Flexibility: The work-sharing program hasprotected a record number o jobs that otherwise might have been lost

by allowing employees to continue working a reduced work week whilethey receive EI benets or the days they do not work. This has in turnallowed businesses to keep their skilled workers employed until thebusiness recovers. Since the Economic Action Plan augmented thisinitiative in February, over 225,000 Canadians have beneted rom theprogram, o which approximately 167,000 are currently participatingin work-sharing agreements.

The number o Canadian workers benefting rom

work-sharing has increased more than sixold

since the beginning o the year

number of workers

Chart 2.7

Canadian Workers Participating

in Work-Sharing Agreements

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Jan2009

Feb2009

Mar2009

Apr2009

May2009

Jun2009

Jul2009

Aug2009

Sep2009

Oct2009

Source: Human Resources and Skills Development Canada.


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Working or Canadians

Enhanced Work-Sharing

GlobalUpholsteryCo.Inc.,amajorofcefurnituremanufacturerinTorontothatsupplies products to Canada and the United States, was seriously aected by

the economic downturn. To deal with the recession, the company tried various

cost-cutting measures such as eliminating overtime and temporary stafng.

Whenthesemeasuresprovedtobeinsufcient,thecompanyturnedtothework-sharingprogram.WewerealwaysconcernedaboutkeepingtheGlobalfamilyouremployeesandassociatestogether.ThroughtheWork-Sharingprogram, we could avoid having to undertake lay-os and keep our skilled

employees,saysTonyDavis,DirectorofCorporateHumanResources.GlobalUpholstery signed its work-sharing agreement on June 5, 2009, covering about

1,000 employees or a 52-week period, and a number o its associate frms

have also entered into work-sharing agreements.

There are now some signs o improvement in our industry. We hope to

see an improved economy, and it is good to know that the Work-Sharing

program was here to assist us when we needed it.

Tony Davis, Director of Corporate Human Resources,Global Upholstery Co. Inc.

Doepker Industries Ltd. in Annaheim, Saskatchewan, is a leading manuacturer

o highway semi-trailers in western Canada. About 300 employees work at the

companys two locations. The company currently manuactures products or

a number o sectors, including the agriculture, orestry, gravel, commercial, oil

and gas markets. However, with the recent downturn in the economy, some o

these industries have seen a reduction in demand. In order to lower costs and

retain its employees, the company signed a work-sharing agreement. Thanks

to the work-sharing program, the company is able to keep its employeesand avoid expensive rehiring and retraining costs, and employees are able to

continue working and keep their skills up-to-date.

Due to current market realities, we needed to temporarily reduce

production levels by approximately 20 to 25 percent. With the fexibility

o Work-Sharing, we have the ability to retain a skilled employee base.

Mara Doepker, Corporate Administration Manager,Doepker Industries Ltd.


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Chapter 2

Support or Long-Tenured Workers: The Career Transition Assistanceinitiative is providing Canadians who have worked or years and paid into EI,

while claiming very little, with substantially increased support to retrain ora new job, potentially in a completely dierent line o work. This initiativeis extending the duration o EI benets or these workers up to a maximumo two years while they are receiving longer-term training. In addition,

workers who use their severance package to pay or training are able toaccess EI benets sooner.

Participation in the Career Transition Assistance initiative is dependent uponreerral by provinces and territories. To date, more than 6,000 long-tenured

workers are participating in the initiative. It is estimated that the initiative willhave 15,000 to 20,000 clients by the time client intake ends in May 2010.

The Government has recently taken steps to temporarily increase supportto long-tenured workers who have paid premiums or years but havemade little or no use o EI and need extra help while they transition intonew employment. Recently passed legislation extends benets or eligibleindividuals by between 5 and 20 weeks, at a projected cost o $935 million.This measure is expected to benet approximately 190,000 long-tenured

workers. Cheques are now being sent to eligible long-tenured workers.

Providing EI benefts to the sel-employed

In addition to actions taken under the Economic Action Plan, the

Government hasintroducedtheFairness or the Sel-Employed Act, whichwould extend EI special benefts, including maternity, parental, sickness

and compassionatecarebenets,totheself-employed.Withthesechanges,sel-employed Canadians would be able to opt into the EI program and receive

special benefts, providing them with access to support at a critical point

in their lives.

Wage Earner Protection Program (WEPP): Since January 2009, when theextended benets under the WEPP took eect, over 11,000 claimants havereceived $24 million in payments, including termination and severance pay.The WEPP continues to respond quickly and eciently to Canadian workers

who are owed wages, severance and termination and vacation pay when their

employer becomes bankrupt and does not pay.


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Enhancing the Availability o TrainingThe Government already has a strong record o support or training andlabour market programs. Prior to the Economic Action Plan, provinces andterritories were already receiving more than $2.8 billion annually to undtraining programs and other labour market supports to help Canadiansprepare or and nd new employment. The Economic Action Planstrengthened these benets by providing an additional $1.9 billion overtwo years or targeted investments aimed at developing a more highly skilled,fexible and knowledgeable workorce.

Canadas Economic Action Plan:Enhancing the Availability o Training

Strong Record o Support or Training

BeforetheEconomicActionPlan,theGovernmenthadalreadyinjectedmorethan$3.4billioninnewfundingfortrainingmeasures.Thishas provided employees and employers with access to the skills and training

theyneedtondajob,includingincreasinginvestmentsinapprentices,olderworkers, Aboriginal skills and employment, and training or those individuals

who do not qualiy or EI. This investment includes:

$3billionoversixyearsfornewLabourMarketAgreementstoaddressthe gap in labour market programming or those who do not currently

qualiy or training under the EI program.

$105millionoverveyearsfortheAboriginalSkillsandEmploymentPartnership initiative to ensure that Aboriginal Canadians receive skills

and training that will lead to their increased participation in opportunity-

driveneconomicdevelopmentprojectsacrossCanada.

$160millionoverveyearsfortheTargetedInitiativeforOlderWorkersto assist unemployed older workers in communities experiencing ongoing

high unemployment.

$100millionperyearfortheApprenticeshipIncentiveGranttoencouragemoreyoungCanadianstopursueapprenticeships,and$75millionperyearforataxcredittoamaximumof$2,000perapprenticeperyear through the Apprenticeship Job Creation Tax Credit to encourage

employers to hire apprentices.


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Enhanced Training: The Economic Action Plan is providingunprecedented levels o support to provinces and territories to address

their particular labour market priorities. Agreements to deliver thisadditional unding have now been signed with all jurisdictions. Theseinvestments are already supporting programs that are helping approximately90,000 Canadians, 46,000 more than at the time o the Third Reportto Canadians in September. These programs are providing: literacy andbasic skills upgrading; wage subsidies and earnings supplements; skillsenhancement and training; on-the-job training and workplace-based skillsupgrading; and employment counselling.

Supporting Youth Employment: The Economic Action Plan has providedan additional $10 million in 200910 to the Canada Summer Jobs Program,bringing total available unding or 200910 to over $100 million. Thishas allowed employers, particularly in the not-or-prot sector, to hire over37,000 students or the summer, o which approximately 10 per cent areattributable to the Action Plan investment.

Under the Economic Action Plan, an additional $10 million was providedin 200910 in support o the ederal public service student employment

program. As o December, 947 more students have been hired throughexisting ederal work programs.

The YMCA and YWCA are receiving $15 million in 200910 to implementGrants or Youth Internships, in order to create up to 1,000 internships orCanadian youth in not-or-prot and community services organizations, witha ocus on environmental projects. Funding is now fowing and participantsare developing valuable skills and knowledge that will help them integrateinto the labour market and/or urther their education.

Targeted Initiative or Older Workers (TIOW): The Economic ActionPlan is providing an additional $60 million over three years throughthe TIOW in support o older workers in a large number o aectedcommunities across the country. The scope o the program has also beenexpanded to include a greater number o vulnerable communities withpopulations o less than 250,000. Agreements have been reached with12 provinces and territories. To date, 58 projects have been approved,providing over 2,000 older workers in vulnerable communities across the

country with access to employment activities such as learning assessments,skills training and help nding a job.


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Apprenticeship Completion Grant: The Apprenticeship Completion Grantis providing a $2,000 grant to those who complete their apprenticeship in

a Red Seal trade, encouraging more young Canadians to nish theirtraining and launch rewarding careers in the skilled trades. Since July,over 10,000 grants have been issued to eligible apprentices in such tradesas construction and carpentry.

Aboriginal Skills and Training: The Economic Action Plan is investing$200 million over three years to provide Aboriginal Canadians withtraining and skills development opportunities and to create jobs intheir communities.

The Aboriginal Skills and Employment Partnership (ASEP) initiativeosters partnerships between Aboriginal organizations, the private sectorand governments to create training and employment opportunities.Ten projects have been approved, with seven already having started andanother three to begin by January 2010. Work has begun to develop upto nine additional projects.

Through the Aboriginal Skills and Training Strategic Investment Fund,

support is being provided to more ocused, short-term initiatives designedto help Aboriginal Canadians receive the specic training they require tobenet rom current employment opportunities, including those generatedby the Economic Action Plan. The Fund will support over 80 projects,o which more than 70 have been approved, with more than 50 o thosehaving started since September.

Maintaining Low Employment

Insurance Premium RatesThe EI program provides needed support to those who have lost their jobs.During harder economic times, EI pays more benets to more people,increasing the cost o the program.

As a stimulus measure, the Government has rozen EI premium rates or2010 at $1.73, the same rate as 2009, and the lowest rate since 1982.This measure leaves more money in the hands o employers and employees.Beginning in 2011, premium rates will be set by the Canada Employment

Insurance Financing Board according to its mandate, which was denedin Budget 2008. Rates will be raised to oset EI expenses over time,excluding the EI enhancements resulting rom the Economic Action Plan.


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Table 2.6

Helping the Unemployed

200910Stimulus Value

Authoritiesin Place

StimulusCommitted

(millionso dollars)

(millionso dollars)

An extra fve weeks o EI benefts 575 Yes 575

EIlong-tenured workers (Career TransitionAssistance initiative) 250 Yes 250

EIlong-tenured workers (extensiono regular benefts) 165 Yes 165

EIwork-sharing 100 Yes 100WageEarnerProtectionProgram 25 Yes 25

EI training programs 500 Yes 500

StrategicTrainingandTransitionFund 250 Yes 250

Canada Summer Jobs Program 10 Yes 10

Federalpublicservicestudentemployment program 10 Yes 10

YMCA-YWCA 15 Yes 15

TargetedInitiativeforOlderWorkers 20 Yes 19

ApprenticeshipCompletionGrant 40 Yes 40

ForeignCredentialRecognitionProgram 25 Yes 25Aboriginal Skills and Employment Partnerships 20 Yes 20

Aboriginal Skills and Training StrategicInvestmentFund 25 Yes 25

Aboriginal Human ResourceDevelopment Strategy 25 Yes 25

KeepingEmploymentInsuranceratesfrozenor 2010

818 Yes 818

Total 2,873 2,872


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Building infrastructureto create JoBs


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Progress Achieved to DateBuilding Inrastructure to Create Jobs

Highlights

Building Inrastructure3 Since the release o Canadas Economic Action Plan, the

Government has committed more than $9 billion in ederalunding towards over 6,700 provincial, territorial and municipalinrastructure projects worth over $25.8 billion.

This includes commitments o:

Over$3.6billionthroughthe$4-billionInfrastructureStimulusFund.Todate,approximately3,200projectsacrossCanadahave been announced under the Fund.

Morethan$2.8billionfromtheMajorInfrastructureComponent o the Building Canada Fund to 96 priorityprojects, worth approximately $9.6 billion.

$170millionin200910,undertheRecreationalInfrastructureCanadaprogram,toover1,500projects.

3 46projectshavebeguntoimproveschools,waterandwastewater

systems, health acilities and policing inrastructure or First Nations.3 VIARailhassignedcontractsforover$330millionofstimulus

work. Construction, including work on track, signalling andbridges, started in early all 2009.

3 Themaincontractfortherepairsplannedfor200910forthe10-yearrepairprogramtotheChamplainBridgeinMontralwasawardedinMarchandworkstartedinApril.Threeadditionalcontracts have been awarded since then. Work is underway on

the Blue Water Bridge in Sarnia and the Peace Bridge in Fort Erie.3 The Government is investing $200 million over two years

or over 260 projects to improve small crat harboursthroughout Canada.

3 1,150repairsandrenovationprojectsforfederalbuildingshavebeenidentiedand119ofthesehavebeencompleted.

3 WorktotwineightkilometresoftheTrans-CanadaHighway

in Ban National Park between Lake Louise and theBritish Columbia border began last April, creating anestimated 1,600 jobs.


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Stimulating Housing Construction

3 ThetaxreliefavailablethroughthetemporaryHomeRenovationTaxCreditofupto$1,350isprovidinganimmediateincentiveor homeowners to invest in their homes and is supporting jobsin the housing industry.

3 Taxreliefofupto$750throughtheFirst-TimeHomeBuyersTaxCreditandhigherHomeBuyersPlanwithdrawallimits

will encourage home ownership and urther support thehousing industry.

3Morethan945projectshavebegunasaresultofagreementswith all provinces and territories to deliver $650 million in ederalinvestmentin200910fortheconstruction,renovationandretrofts o social housing across Canada.

3 $1billioninlow-costloansisavailableformunicipalities in200910toundertakehousing-relatedinfrastructureprojects.64 loanshavealreadybeenapproved.

3 The ederally administered renovation and retroft initiative is

alsoinvesting$75millionin200910toimproveexistingsocialhousingunits.420projectshavealreadybegun.

3 Projectshavebeguntobuildandrenovateon-reservesocialhousinginalmost300FirstNationscommunities.Inaddition,ederal investments are creating jobs and supporting communitiesintheNorth,with106projectsalreadystarted.

3

canada's economic action plan: a fourth report to canadians

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