Four Key Items in Review: Federal Budget 2016

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Ottawa Plans to Invest $11.9 Billion in Infrastructure Over Next Five-Years

Budget 2016 contained the details of Phase I of its infrastructure investment plan, which will involve $11.9B in spending for three priority areas:

  1. Public transit ($3.4B over three years)
  2. Water, wastewater and green infrastructure projects ($5B over five years)
  3. Social infrastructure ($3.4B over five years)

However, the government has postponed investments in infrastructure meant to spur “global trade” to Phase II of their infrastructure plan, commencing in two years.

Phase II also includes planned investments in:

  • economic sustainability and modernization
  • the creation of a more inclusive society
  • the repositioning of Canada’s economy to better capitalize on global trade
  • maintaining and upgrading federal infrastructure assets, including trade-enabling assets such as airports and border infrastructure ($3.4B over five years)

OSPE’s Response:

  • Encouraged by the government’s expressed commitment to infrastructure investment
  • Engineers should benefit in the immediate (Phase I) and medium term (Phase II) from these investments
  • Phase II projects should commence sooner than scheduled, particularly regarding long time horizon builds, because they are paramount to the province’s economic growth

Innovation Clusters and Networks

  • The budget promised to spend $800M over four years beginning in 2017 on supporting innovation “clusters and networks” across the country
  • These are regions where government, industry, and universities can work together, like the high-tech cluster in Kitchener-Waterloo or the aerospace industry in Montreal and Toronto
  • Exact details on where the money will go was not communicated

OSPE’s Response:

  • The engineering community certainly cares about federal investments in innovation and encourages specific investments in Ontario

University Infrastructure: Research Labs & Training Facilities

  • $2B to universities over three years to pay for 50% of big infrastructure projects like new research labs or training facilities
  • Another $95M will be spent annually on research-granting councils

OSPE’s Response:

  • Ontario struggles with finding ways to turn our research into high-demand commercial products and services
  • Ottawa needs to recognize the vital importance of (and directly invest in) the engineering community, as it is well-positioned to enable the downstream success of these research programs and bring innovative ideas to market

No Changes to Stock Options Taxation

  • Budget 2016 saw a retreat from Trudeau’s campaign promise to increase taxes on stock options, which serve as a compensatory incentive for start-up companies to attract highly skilled professionals by offering equity in replacement of high salaries should the company become a success
  • Across many sectors, including technology and oil and gas, these options represent a vital tool for organizations to attract and retain experts and executives, including plenty of engineers

OSPE’s Response:

  • Increasing taxes on stock options would discourage investment and risk-taking across Canada’s private-sector, and critically harm major start-up and innovation hubs in Ontario
  • Maintaining the status quo is important at this critical juncture in Canada’s economic recovery and development, and we appreciate the federal government having the courage to recognize and respect the net-benefit of the status quo on this issue

What do you consider the most important budget promise?

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