Federal Budget 2016: Restoring Hope for the Middle Class

Speech by the Honourable Bill Morneau, Minister of Finance, at a breakfast hosted by the Canadian Club of Toronto and the Empire Club of Canada

April 8, 2016
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Good morning and thank you for joining me here today.

It’s a great honour to serve as Canada’s Finance Minister. But I am, first and foremost, the Member of Parliament for Toronto Centre.

So it feels really good to be addressing the hometown crowd this morning.

Sincere thanks for coming out.

Before I begin, I’d like to thank the Canadian Club of Toronto and the Empire Club for hosting this breakfast. Thank you Dany for that kind introduction.

I’d also like to thank my friend Charles Sousa, and our colleagues at Queen’s Park as well as the City of Toronto for being here today—your ongoing collaboration and support is appreciated.

And let me reiterate how important it is for us to be a reliable partner with you in service of the people of this great city.

For those of you who didn’t hear—though I suspect you’re now in the wrong room—I tabled our government’s first budget a couple of weeks ago in Ottawa.

Since March 22nd I’ve had the opportunity, along with the Prime Minister and my cabinet colleagues, to tell our budget’s story both here at home and around the world.

Earlier this week I was in Atlantic Canada—in St John’s, Charlottetown and Cape Breton before heading to Southwestern Ontario yesterday.

Before that I was in Ottawa, Montreal and the South Shore.

I also had the chance to take our message to international audiences—in New York, Paris and London last week.

I met with economists, representatives of the financial sector and investors—and I’m happy to report that the reviews are in, and they are glowing.

The people I met abroad all said the same thing: “I really like what you guys are doing up there in Canada.”

Everywhere I go, people are taking note of Canada’s new government, and of our fundamentally new approach to fiscal policy.

From Wall Street to the International Monetary Fund (IMF) to the Organisation for Economic Co-operation and Development and the Group of Twenty (G20)—to the rural village of Saint-Valentin in Quebec’s Eastern Townships—people seem to feel we’re on to something.

The Financial Times calls Canada a “glimmer of light” for our wise use of fiscal policy to invest in our economy—a clear sign, they say, of our understanding of what we need to do.

And just this week, Christine Lagarde of the IMF praised Canada’s approach, using the fiscal space available to us, but in a manner that is credible, targeted and realistic.

And that’s because, I believe, our government is focused on exactly the right things.

First and foremost: People.

Budget 2016 is about restoring hope for the middle class.

It is about revitalizing the economy and providing support for Canadian families.

Even before taking office, Canadians told us to do two things: Invest in people and families; and grow the economy for the long term.

So that’s what we set out to do—but first, we listened.

In January, I criss-crossed Canada, speaking to as many people as possible about how we can work together to grow our economy.

And it worked.

In places like the Eastern Townships and rural Manitoba, people told us about the importance of high-speed internet access for small businesses trying to compete locally and globally.

From Dalhousie to the University of Calgary, students told us about their struggles with debt and opportunities after graduation.

We addressed much of what we heard in our budget.

Solutions to many of these problems are now part of our government’s plan. We heard you.

More broadly, though, in all parts of the country Canadians talked with passion about their livelihoods and communities.

Most of all, they talked about their kids, and the future they hoped to provide for them.

They told us they don’t feel like they’re getting ahead, that raising kids and caring for aging parents is squeezing them.

They want to leave a better future for their children.

People work hard. They expect their government and their economy to work hard for them in return.

At the core of our plan is the notion that when you have an economy that works for the middle class, you have a country that works for everyone.

That’s why in December, at the very first opportunity, we cut taxes for nearly 9 million Canadians.

With our budget, we took even bigger steps to put more money directly back in the pockets of families with children through the new Canada Child Benefit.

It’s a plan to help families more than any other social program since universal health care.

It will give 9 out of 10 families with children more money every month to spend on everything from school supplies to healthier food.

By targeting our actions to those who need it most, we not only strengthen the middle class, we will also lift hundreds of thousands of children out of poverty. That’s real change.

But in addition to providing direct help to families, we need to make strategic investments in order to grow the economy for the long term, and we need to better position Canada for the global economy of tomorrow.

And that’s why we have to look at all of the investments we make today in the context of how they will help to build Canada’s future.

Over the next 10 years, our government will implement a $120 billion infrastructure plan that will help reshape Canada in the 21st century.

As an immediate first step, the first phase of our infrastructure plan invests $11.9 billion over five years.

These investments will accelerate our transition to a low-carbon, clean growth economy, make traffic flow more smoothly, create and repair affordable housing, and so much more.

What does this mean for Toronto?

I am willing to bet that every single person in this room has been stuck in traffic in the last week.

We want to do something about that.

Mayor John Tory and Toronto Transit Commission (TTC) Chair Josh Colle have made a compelling case for keeping public transit as a top priority for Canada’s biggest city, and by extension, all cities coping with fast-growing populations and aging transit.

To start, Toronto will be eligible for a portion of the $3.4 billion Public Transit Infrastructure Fund, of which $1.49 billion will be invested right here in Ontario.

We’ve also committed to tie funding levels to ridership, which is significant in a province that accounts for 44 per cent of all public transit ridership in Canada, where over one and a half million people take some form of it every single day.

This money is going to help Toronto make needed upgrades, which could include the purchase of new subway cars, low-floor buses and street cars.

We’re also taking a first step on a new high-frequency rail service linking Windsor to Quebec City.

Over the coming months, we will evaluate a VIA Rail proposal that could one day build a dedicated track that will make it easier and faster to get to where you’re going from Toronto, whether you’re going east or west.

And Toronto will remain eligible for a share of the annual $3 billion for infrastructure projects through the Gas Tax Fund and the incremental Goods and Services Tax Rebate for Municipalities.

So by now you know that people and infrastructure are at the heart of our plan. But perhaps the greatest untold story of Budget 2016 is that it takes a huge leap in positioning Canada in the global economy of tomorrow—an area where Ontario is leading the way in many respects.

In my budget speech in the House of Commons, I used the example of Waterloo as a model that Canada can and must build on.

Yesterday, I was in Kitchener-Waterloo to meet with Communitech—an industry-led innovation centre dedicated to fostering and supporting tech companies.

The ideas generated there will inform future investments and programs that support start-ups, small and medium-sized enterprises and, in particular, women in technology.

Even closer to home we have the Ryerson Digital Media Zone, or DMZ, another shining example of a successful incubator working to support entrepreneurs.

These leaders see what’s coming.

And they know, as we know, that making Canada more innovative will require all hands on deck.

Communitech and Ryerson DMZ have tapped into a basic truth: We need to be better partners with each other—across sectors and disciplines—so that together, we are stronger.

The federal government is ready to do its part.

In the next year, we will define a bold new Innovation Agenda that will position Canada as a centre of global innovation.

We want to be on the leading edge of the changes happening in the global economy—not just because it is good for tomorrow, but because it is good for today.

To get things started, Budget 2016 covers the waterfront in support of post-secondary education and institutions, targeting students as well as the places where they study.

We will increase Canada Student Grant amounts by 50 per cent for students from low- and middle-income families and part-time students, and invest $2 billion over three years for a new Post-Secondary Institutions Strategic Investment Fund to modernize on-campus research, commercialization and training facilities.

We will also invest an additional $95 million in discovery research through the granting councils—the highest amount of new annual funding for discovery research in more than a decade.

Finally, we will take a page from Communitech, MaRS and Ryerson’s DMZ by working with stakeholders to identify and build on regional strengths, and provide $800 million to support innovation networks and clusters.

This is a good start.

We need fresher, broader and more collaborative efforts to embrace the innovation opportunities that change brings.

Working together is the Canadian way.

Public sectors must work together with the private sector to help create the conditions for success.

Many of you know this, and your organizations are already actively involved in the research and development space. But—as my colleague Minister Bains has said more than once—we need to do more.

Business investment in research and development is paramount. And I am calling on you, as well as business leaders from across the country, to work with us. With your help, we can put Canadian-made ideas, products and solutions in the storefront of the global economy.

I am confident this approach will bring about economic growth now, and in the years to come. But this will be for naught if all Canadians, and especially the middle class, do not benefit from our shared success.

After all, how we treat the most vulnerable in our society is really a measure of what kind of society we choose to be.

Perhaps the best example I can give is our renewed efforts to ensure that Indigenous peoples share in Canada’s prosperity.

It is simply unconscionable that we live in a country where children live without access to clean drinking water.

This is Canada.

So in addition to significant investments in education, we will take important steps to put an end to boil water advisories on reserves by investing nearly $2 billion in water and wastewater infrastructure.

And we'll do more for our veterans—the women and men that have dedicated their lives in service to our country.

They’ve earned our gratitude, our respect and our support, so we’re working to make sure that we take care of them when they need it most.

We are also providing support for affordable housing, an issue of critical importance in my riding of Toronto Centre and across the Greater Toronto Area.

When I was chair of St. Michael’s hospital, I was struck by the link between proper housing and health outcomes.

Doctors told me, point blank, the road to healthier communities is through affordable housing.

That made an impact on me. And it’s one of the reasons I chose public life.

In Toronto right now, about 265,000 people live in social housing of some kind, including shelters.

There are nearly 95,000 people on a waiting list for affordable housing. That’s equal to the population of Belleville.

And the number is rapidly rising, especially amongst seniors.

The average family is waiting up to four years to access affordable housing—and in many cases, it’s much longer.

Budget 2016 invests $2.3 billion over two years in support of affordable housing.

This includes doubling our support for the Investment in Affordable Housing initiative, with an additional funding of $504.4 million over the next two years.

This funding will help support low-income families, as well as the construction of new affordable housing units, and renovate and repair existing ones.

We’re also providing $200.7 million in dedicated funding specifically targeting seniors.

And finally, through our partners at Canada Mortgage and Housing Corporation, we will establish an Affordable Rental Housing Innovation Fund, providing $208.3 million over five years to test new ways to encourage more construction of affordable rental housing. This investment is expected to support the construction of up to 4,000 affordable rental units.

Beyond that, we will work towards developing a long-term solution that aims to help make the social housing sector self-reliant—and we look forward to consulting on a new National Housing Strategy.

I am personally committed to this initiative, as I know my colleagues are.

As people in Toronto know better than anyone, our commitment to the most vulnerable does not stop at our borders.

I am proud of the fact that our community has emerged as a shining example of our welcoming nation.

Over the past few months, we have all been touched by the outpouring of support this community has shown to Syrian refugees.

The efforts of people like my friend Mohammad Al Zaibak of Lifeline Syria, who is here today, and countless others represent the very best of Canada, and I want to thank you for all you have done.

In this spirit, Budget 2016 takes steps to welcome newcomers, which we know are vital to the Canadian economy.

In fact, we intend to welcome 300,000 new permanent residents to Canada in 2016, and many will choose to make Toronto their home.

We’re also going to step up our efforts at family reunification, and through that, we expect to see 20,000 admissions under the Parent and Grandparent Program in 2016.

Conclusion

But Budget 2016 is just the beginning.

I want to conclude by reminding you why we are doing all of this.

When I was in New York, London and Paris last week, and when I represented Canada at G20 meetings in Turkey and Shanghai, I realized that the global consensus is almost exactly what Canadians are telling us right here at home: Investments in the economy are needed now more than ever.

And we are lucky, because we find ourselves at a time in our history in which we have both the capacity and the willingness to act to make the future better for our kids and grandkids.

We need to seize this opportunity. We can’t afford to let it go.

Thanks to leadership in the 1990s and 2000s, Canada has a very manageable debt position.

Our federal debt-to-gross domestic product ratio is low—and by the end of our mandate it will be even lower.

This, combined with low Interest rates, means that we can make the necessary investments to strengthen our economy with confidence, and in a responsible way.

But having the capacity to act isn’t enough.

We need the resolve to follow through on sustained, strategic investments, guided by a vision of the future in which all Canadians have a real and fair chance at success.

This is our government’s central mission.

We are choosing to take advantage of an historic opportunity to invest in people and the economy, and to prepare Canada for a brighter future.

Of course, we recognize that this is only the beginning—we have much work ahead of us.

But we know there is no limit to what we can achieve as a country.

And I look forward to working with all of you to make sure Toronto, Ontario and Canada live up to that potential.

Thank you very much.