The 2019 federal budget was delivered by Finance Minister Bill Morneau on March 19, 2019. The budget anticipates a $14.9 billion deficit for 2019, and forecasts deficits of $19.8 billion for 2020 and $19.7 billion for 2021. Budget 2019 – Investing in the Middle Class introduced a number of proposals which are of interest to local governments in BC.
One-time Gas Tax Fund transfer
The Government is continuing to invest in infrastructure and announced a one-time transfer of $2.2 billion through the federal Gas Tax Fund to provide infrastructure funds to municipalities and First Nation Communities. This results in gas tax funding in 2019 being doubled, with BC’s allocation being approximately $278.6 million. In BC, the federal Gas Tax Fund is administered by the Union of British Columbia Municipalities through the Administrative Agreement on the Federal Gas.
The top-up funds are earmarked for three project categories – Productivity and Economic Growth; Clean Environment; and Strong Cities and Communities. In a post-budget interview on March 20th, Minister Morneau explained that this one-time top-up will not become an annual item.
Federation of Canadian Municipalities (FCM)
There were a number of proposed investments that will be delivered through FCM:
- $350 million for Collaboration on Community Climate Action to provide financing to retrofit and improve energy efficiency of large community buildings and to fund pilot and demonstration projects.
- $300 million for Community EcoEfficiency Acceleration to provide financing for local government initiatives to support home energy efficiency retrofits, such as replacing furnaces or installing renewable energy technologies.
- $300 million for Sustainable Affordable Housing Innovation to provide financing for energy efficiency in affordable housing developments.
- $60 million in 2018-19 for Municipal Asset Management Capacity Fund to help support skills training in small communities relating to infrastructure asset management.
High-Speed Internet Connectivity
Up to $1.7 billion over 13 years, starting in 2019-20, will be invested into the Universal Broadband Fund to help support initiatives for high-speed internet in rural, remote and northern communities. The Government has also partnered with Canada Infrastructure Bank (Bank) to finance the high-speed internet infrastructure. The Bank will invest $1 billion over 10 years and seek to find an additional $2 billion in private sector investments.
Housing affordability was a focal point in the 2019 federal budget with a number of measures proposed to increase housing affordability.
These include support for first-time home buyers:
- Implementing a First-Time Home Buyer Incentive (Incentive) which is a shared equity mortgage program with Canada Mortgage and Housing Corporation (CMHC) funding 5 per cent (for purchase of an existing home) or 10 per cent (for purchase of a newly constructed home) of the home purchase price. CMHC will provide up to $1.25 billion over 3 years under the program. The Incentive is only available to first-time home buyers with less than $120,000 annual household income. With a limit of four times annual household income, the amount of the CMHC insured mortgage and Incentive is capped at $480,000.
- Increasing the Home Buyers’ Plan (HBP) withdrawal limit to $35,000. The HBP allows a first-time buyer to withdraw funds from their Registered Retirement Savings Plan to purchase or build a home without taxes payable on the withdrawal.
The Government also launched a new $300 million Housing Supply Challenge. Local governments and other stakeholders can apply for funding on proposals of new ways to break down barriers that limit the creation of new housing. Applications will be evaluated based on merits.
More than $1.7 billion over five years, and $586.5 million per year, is proposed to establish a new Canada Training Benefit to help Canadians get skills and training. The Canada Training Benefit will consist of
- A new non-taxable Canada Training Credit that accumulates a credit balance of $250 per year, up to a lifetime limit of $5,000, for eligible workers between the ages of 25 and 64 to help with the cost of training fees. The accumulation of the credit is available for workers with earnings between $10,000 and $150,000 per year.
- A new Employment Insurance Training Support Benefit to provide income support when an individual requires time to take off work, expected to be launched in late 2020. The benefit will provide up to four weeks of income support, every four years, paid at 55 per cent of a person’s average weekly earnings.
Advancing reconciliation and taking the next step in the ongoing path toward a better future for Indigenous Peoples was a major component of the budget. Highlights include:
- $1.4 billion over 7 years to forgive all outstanding comprehensive claim negotiation loans and to reimburse Indigenous governments that have already repaid these loans
- $78.9 million over 7 years, starting in 2019-20, and $13.7 million per year ongoing to fund Indigenous surveys.
- $48.0 million over 2 years, starting in 2019-20, to build governance capacity by directly supporting First Nations communities in greatest need obtain the expertise, advice and tools required to govern their communities and deliver critical programs and services.
- $126.5 million in 2020–21 to establish a National Council for Reconciliation and endow it with initial operating capital
- $672 million over five years and $34.7 million per year ongoing provided to the RCMP to support policing operations, including amounts for specific measures including law enforcement at the border, enhanced federal policing capacity, money laundering, transportation security, and national economic security.
- $1.18 billion over five years to support implementation of the Border Enforcement Strategy.
- $151.23 million over five years and $9.28 million per year ongoing provided to strengthen Canada’s ability to respond to emergencies and natural disasters and improve emergency management in Canada, including in Indigenous communities,
For other 2019 federal budget and tax-related highlights, check out KPMG’s TaxNewsFlash athttps://home.kpmg/ca/en/home/insights/2019/03/2019-federal-budget-highlights.html.
The Government’s 2019 federal budget website is https://www.budget.gc.ca/2019/home-accueil-en.html.