A look at items of interest to HR practitioners in the Martin government's first budget
Prime Minister Paul Martin’s first budget isn’t unleashing a wrath of spending, or tax cuts, but it does focus on a couple areas of interest to human resource practitioners.
The budget, delivered by Finance Minister Ralph Goodale, stretches $8.3 billion in new spending over a two year period with the majority of the money going towards education, cities and health care. It was the seventh consecutive balanced budget delivered by the Liberals.
Here’s a look at items of interest to HR:
The importance of learning
Education and lifelong learning received a lot of attention from Goodale during his nearly one-hour long budget speech.
“To be successful, a 21st century economy must be powered by ideas, imagination and innovation,” said Goodale. “Knowledge is the road both to economic progress and individual opportunity, and education is the bridge to take us there. Education can enable people to overcome differences in birth or background.”
Because of that, Goodale said the government was introducing a “broad package” of measures aimed at promoting learning at every stage of life. In recognition of this, the government plans to:
•introduce a new Canada Learning Bond which will provide up to $2,000 for children born after 2003 in families entitled to the National Child Benefit supplement;
•enhance the Canada Education Savings Grant matching rates for low- and middle-income families;
•accelerate funding for early learning and childcare;
•introduce a new upfront grant of up to $3,000 for first year post-secondary students;
•provide an annual upfront grant of up to $2,000 for eligible students with disabilities;
•update and enhance the Canada Student Loans Program; and
•take the first steps toward a workplace skills strategy.
On the last point, Goodale said, “we must be a nation that provides its citizens with the opportunity to improve their skills over the full course of their lives.”
To that end, Ottawa is moving ahead on its workplace skills strategy. In developing a strategic plan for workplace skills in the future, the Minister of Human Resources and Skills Development will seek advice from employers and workers, industry associations, skills providers, provinces and communities.
The first step is $15 million over two years for a pilot project to provide matching funding for union-based training centres. The funding will be used to purchase new equipment and machinery to meet current industry standards and requirements.
It also provides an additional $15 million a year to provide skilled immigrants with work-related language training at more advanced levels.
The government will also make the education tax credit available to employees who pursue career-related studies.
Better opportunities for Aboriginal Canadians
The budget confirmed funding announced earlier for the Aboriginal Human Resources Development Strategy and provides $125 million over five years to replace funds that were scheduled to dry up on March 31, 2004.
Goodale said the funding will allow programs and services currently provided to continue, and ensure training for the organizations administering the strategy. It will also provide access to childcare for many First Nations and Inuit people while they pursue training and employment opportunities.
“Canada’s Aboriginal population is young — 50 per cent are under the age of 25,” he said. “To ensure that this generation receives every opportunity to acquire the skills and knowledge necessary for success, we are renewing funding for the Aboriginal Human Resources Development Strategy.”
Economic development and prospects
Goodale said economic activity slowed in 2003 because of a series of unforeseen shocks, including SARS, the power blackout and mad cow disease. Because of this, the real gross domestic product (GDP) expanded only 1.7 per cent for the year, well below the 3.2 per cent expected by private-sector economists at the time of the 2003 budget.
But the labour market strengthened at the end of 2003, and the government said 271,900 full-time jobs have been created since December 2002. And Ottawa expects that growth to continue in 2004, fuelled by lower interest rates and a more favourable global environment led by a stronger U.S. economy.
Goodale said private-sector economists expect the economy to grow 2.7 per cent this year and 3.3 per cent in 2005. But he cautioned that the uncertainty around the soaring Canadian dollar and questions about the sustainability of the U.S. economy could hurt Canada.
Success in the knowledge economy
Goodale said Canadian firms have embraced the essential formula for success in a knowledge economy — ingenuity plus technology equals productivity.
“To encourage more companies to adopt new technology more quickly, this budget increases depreciation rates for computers and other Internet and broadband technology to better reflect their useful life,” said Goodale. “This will benefit entrepreneurs and innovators in every sector, increasing productivity and creating 21st century jobs.”
The government will increase the capital cost allowance rate for computer equipment to 45 per cent from 30 per cent, and in the rate for broadband, Internet and other data network infrastructure equipment to 30 per cent from 20 per cent.
Canada Pension Plan
Goodale said Canada is uniquely positioned because the Canada Pension Plan is actuarially sound for at least the next 50 years — one of the few public pensions in the world to be so secure.
“And as we look just a bit down the road, we know that an aging population will soon have at least two profound effects on our society,” he said. “There will be fewer people working, and therefore fewer contributing to the social programs we so value and, at the same time, there will be greater demand for those same programs, particularly health care. By prudently managing our finances today, we make sure we have the resources we will need to better satisfy these growing demands.”
Goodale said Canada needs to set a goal of lowering its federal debt-to-GDP ratio to 25 per cent within 10 years.
“It was with that kind of foresight that we restored the foundations of our public pension system, so Canadians can be confident that it will be there for them when they need it,” he said.
Support for small business
Goodale said the small business sector is a key source of innovative ideas that translate into jobs. The budget provides additional support to small firms by:
•accelerating by one year the planned increase in the small business deduction limit — the amount of business income to which the lower 12 per cent income tax rate applies — to $300,000 by 2005;
•removing an impediment that has prevented small businesses, in some cases, from fully accessing the 35 per cent refundable scientific research and experimental development investment tax credit;
•extending the non-capital loss carry-forward period to 10 years. This will be particularly beneficial for innovative, start-up small businesses, which may experience financial losses while developing new technologies and products;
•implementing a new government electronic tendering system to provide fair, equal and less expensive access to all businesses in applying for government procurement opportunities; and
•committing the government to work with small business groups to reduce the paper burden facing small firms, including clarifying and eliminating unnecessary duplication.
Look for expanded coverage of the federal budget and its impact on HR in the April 19 print edition of Canadian HR Reporter.
The budget, delivered by Finance Minister Ralph Goodale, stretches $8.3 billion in new spending over a two year period with the majority of the money going towards education, cities and health care. It was the seventh consecutive balanced budget delivered by the Liberals.
Here’s a look at items of interest to HR:
The importance of learning
Education and lifelong learning received a lot of attention from Goodale during his nearly one-hour long budget speech.
“To be successful, a 21st century economy must be powered by ideas, imagination and innovation,” said Goodale. “Knowledge is the road both to economic progress and individual opportunity, and education is the bridge to take us there. Education can enable people to overcome differences in birth or background.”
Because of that, Goodale said the government was introducing a “broad package” of measures aimed at promoting learning at every stage of life. In recognition of this, the government plans to:
•introduce a new Canada Learning Bond which will provide up to $2,000 for children born after 2003 in families entitled to the National Child Benefit supplement;
•enhance the Canada Education Savings Grant matching rates for low- and middle-income families;
•accelerate funding for early learning and childcare;
•introduce a new upfront grant of up to $3,000 for first year post-secondary students;
•provide an annual upfront grant of up to $2,000 for eligible students with disabilities;
•update and enhance the Canada Student Loans Program; and
•take the first steps toward a workplace skills strategy.
On the last point, Goodale said, “we must be a nation that provides its citizens with the opportunity to improve their skills over the full course of their lives.”
To that end, Ottawa is moving ahead on its workplace skills strategy. In developing a strategic plan for workplace skills in the future, the Minister of Human Resources and Skills Development will seek advice from employers and workers, industry associations, skills providers, provinces and communities.
The first step is $15 million over two years for a pilot project to provide matching funding for union-based training centres. The funding will be used to purchase new equipment and machinery to meet current industry standards and requirements.
It also provides an additional $15 million a year to provide skilled immigrants with work-related language training at more advanced levels.
The government will also make the education tax credit available to employees who pursue career-related studies.
Better opportunities for Aboriginal Canadians
The budget confirmed funding announced earlier for the Aboriginal Human Resources Development Strategy and provides $125 million over five years to replace funds that were scheduled to dry up on March 31, 2004.
Goodale said the funding will allow programs and services currently provided to continue, and ensure training for the organizations administering the strategy. It will also provide access to childcare for many First Nations and Inuit people while they pursue training and employment opportunities.
“Canada’s Aboriginal population is young — 50 per cent are under the age of 25,” he said. “To ensure that this generation receives every opportunity to acquire the skills and knowledge necessary for success, we are renewing funding for the Aboriginal Human Resources Development Strategy.”
Economic development and prospects
Goodale said economic activity slowed in 2003 because of a series of unforeseen shocks, including SARS, the power blackout and mad cow disease. Because of this, the real gross domestic product (GDP) expanded only 1.7 per cent for the year, well below the 3.2 per cent expected by private-sector economists at the time of the 2003 budget.
But the labour market strengthened at the end of 2003, and the government said 271,900 full-time jobs have been created since December 2002. And Ottawa expects that growth to continue in 2004, fuelled by lower interest rates and a more favourable global environment led by a stronger U.S. economy.
Goodale said private-sector economists expect the economy to grow 2.7 per cent this year and 3.3 per cent in 2005. But he cautioned that the uncertainty around the soaring Canadian dollar and questions about the sustainability of the U.S. economy could hurt Canada.
Success in the knowledge economy
Goodale said Canadian firms have embraced the essential formula for success in a knowledge economy — ingenuity plus technology equals productivity.
“To encourage more companies to adopt new technology more quickly, this budget increases depreciation rates for computers and other Internet and broadband technology to better reflect their useful life,” said Goodale. “This will benefit entrepreneurs and innovators in every sector, increasing productivity and creating 21st century jobs.”
The government will increase the capital cost allowance rate for computer equipment to 45 per cent from 30 per cent, and in the rate for broadband, Internet and other data network infrastructure equipment to 30 per cent from 20 per cent.
Canada Pension Plan
Goodale said Canada is uniquely positioned because the Canada Pension Plan is actuarially sound for at least the next 50 years — one of the few public pensions in the world to be so secure.
“And as we look just a bit down the road, we know that an aging population will soon have at least two profound effects on our society,” he said. “There will be fewer people working, and therefore fewer contributing to the social programs we so value and, at the same time, there will be greater demand for those same programs, particularly health care. By prudently managing our finances today, we make sure we have the resources we will need to better satisfy these growing demands.”
Goodale said Canada needs to set a goal of lowering its federal debt-to-GDP ratio to 25 per cent within 10 years.
“It was with that kind of foresight that we restored the foundations of our public pension system, so Canadians can be confident that it will be there for them when they need it,” he said.
Support for small business
Goodale said the small business sector is a key source of innovative ideas that translate into jobs. The budget provides additional support to small firms by:
•accelerating by one year the planned increase in the small business deduction limit — the amount of business income to which the lower 12 per cent income tax rate applies — to $300,000 by 2005;
•removing an impediment that has prevented small businesses, in some cases, from fully accessing the 35 per cent refundable scientific research and experimental development investment tax credit;
•extending the non-capital loss carry-forward period to 10 years. This will be particularly beneficial for innovative, start-up small businesses, which may experience financial losses while developing new technologies and products;
•implementing a new government electronic tendering system to provide fair, equal and less expensive access to all businesses in applying for government procurement opportunities; and
•committing the government to work with small business groups to reduce the paper burden facing small firms, including clarifying and eliminating unnecessary duplication.
Look for expanded coverage of the federal budget and its impact on HR in the April 19 print edition of Canadian HR Reporter.
