There has been a lot of anticipation surrounding the release of the federal budget, with talk of infrastructure projects to boost the economy and green energy funding to improve the environment. A lot of the contents were expected beforehand but we came across a few takeaways that were worth noting.

Infrastructure –Is it enough?

$11.9 billion over five years has been earmarked for infrastructure. This was not a big surprise but the breakdown within this may be of more interest with ~28% going toward public transportation, ~29% on social infrastructure and ~43% on green infrastructure.  It may be worth noting that green infrastructure refers to wastewater management and water infrastructure opposed to things like solar energy and wind power, which often are thought of in conjunction with the ‘green’ moniker. The conversation that will likely come from this will be whether this is enough to have any real impact on the economy or if there should have been more here to ensure the stimulative impact is felt.

The Canada Child benefit was the big ‘win’ for the middle-class

The maximum annual child benefit for families with children under the age of six will be $6,400 and $5,400 for children between the ages of six and 17. This will be a tax-free benefit starting in July 2016. This benefit targets families with a household income below $150,000. To help fund some of this, other credits will be discontinued such as those targeting health and wellness activities amongst children.  This streamlining of services does seem to be a common theme in the budget, and an effort to reduce redundant services and/or inefficiencies is not a bad thing, but a part of me is sad to see a tax credit that encourages physical activity (which has long-term benefits when considering a healthy population as it ages) being eliminated. This potentially reduces the incentive for individuals to take that extra step and go out to sign a child up for a sports team or other fitness related activities.

Small business tax cut was pushed back

This was largely expected but made official in the budget. Small businesses will not be seeing further tax cuts largely due to the reasoning that sounds a little like ‘small businesses get enough already’.

Stock options are safe for now

There are likely a lot of groups happy that there seemed to be nothing about stock option taxation in the budget, which was becoming a much talked about issue leading up to the budget. This makes sense, as it aligns with the new vision this government has for Canada.

Canada wants to be a global innovation hub

The innovation and technology arena seems to be the area this government wants to really support as can be seen through talk of supporting incubators and innovation clusters. This innovation theme fits well into the idea of also supporting clean technologies and renewable technologies, which is really still at an emerging stage and will require much more research, development and innovation. The government plans on releasing an ‘Innovation Agenda’ to further flesh out these ideas in the coming months. 

Seniors are big ‘winners’ in the budget

While the rollback of the Old-Age-Security (OAS) eligibility to age 65 was well known, the Guaranteed-Income-Supplement (GIS) also got an increase. To add to this, the government is also looking at the idea of indexing these amounts to inflation. This is a point we think some might overlook when reading through this budget. There are no real details on this point, but this could be a huge cost depending on timing and the demographic makeup of Canada when/if it is initiated.  

CBC gets $675 million through Arts and Culture support

The Canadian Broadcasting Corporation received almost half of the budget allocated to the area of arts and culture.  This is an interesting one simply because it is a pretty big number given to a single institution.

Healthcare gets overlooked?

It looks like the healthcare sector only gets an additional $274.9 million. We may be missing something here as this sounds small (and is less than the CBC gets!), but it looks like healthcare is not getting a whole lot of attention in this budget.

Cracking down on corporate class funds

No huge surprises here as tax advantages from corporate class funds were supposed to be eliminated a few years back, the government is now finishing what it started by closing the tax advantages here.

Overall it looks like there were not too many surprises in the budget and the government is largely delivering on past promises. As always, the true impact will take years to be seen. From an investing standpoint, infrastructure and renewable energy companies are likely the ones who stand to benefit from not only this budget, but from longer-term government support. We continue to hope that some day financial literacy will be part of a government’s agenda. It is not as exciting as some things, but we think if you really want to help the middle class (and all of Canada), ensuring that all Canadians understand the importance of saving, investing and the power of compound interest would go a long way in helping individuals ensure their financial future is secure.

For those interested, the budget can be found here.