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Briefing: Federal Budget 2016

Briefing: Federal Budget 2016

On March 22nd, Canada's Finance Minister Bill Morneau announced the Federal Budget for the 2016-2017 fiscal year. The Budget titled "Growing the Middle Class" focused largely on increased funding to government programs. Of specific interest to municipalities, Finance Minister Morneau addressed funding to public infrastructure, immigration, employment insurance, and innovation.

(To learn more about the issues raised in this PSD Briefing, download our associated webinars identified below.)


The federal deficit is now expected to exceed earlier projections each year for the next three years, amounting to $29.4 billion for 2016-2017, $29.0 billion for 2017-2018, and $22.8 billion for 2018-2019. There is currently no plan set by the Liberal government to return to surplus before the next election. The overall debt is expected to grow by $113 billion by 2020-2021, while GDP-to-debt ratio is expected to remain relatively constant over the same period. In order to finance the proposed budget, the government plans to borrow $278 billion through bonds and treasury bills.


The government has pledged to spend $120 billion over the next 10 years on infrastructure projects. Of this total:

  • $11.9 billion over five years will be invested in water, green infrastructure, public transit, and social infrastructure 
  • $500 million over five years will be set aside for developing and installing high speed internet connectivity to rural communities
  • $89.9 million over two years is committed to shelters for victims of domestic violence
  • $111.8 million over two years will be put towards the Homelessness Partnering Strategy 
  • $125 million will be committed to the Federation of Canadian Municipalities' (FCM) Green Municipal Fund
  • $2 billion over four years towards a Clean Water and Wastewater Fund
  • $3.4 billion to upgrade public parks, harbours, border infrastructure, and contaminated sites across the country 
  • $2 billion over three years will be committed to a new strategic investment fund supporting infrastructure projects at post-secondary institutes

Asset management will be a strategic priority of the federal government moving forward. To help communities in Canada develop long-term asset management plans and encourage strategic investing, it promises to deliver $50 million through the Federation of Canadian Municipalities (FCM) in the form of a capacity-building fund. 


Emphasizing Canada's efforts to develop its innovation sector and positioning the Kitchener-Waterloo region as the next Silicon Valley, Finance Minister Morneau pledged to invest $800 million over four years to support "innovation clusters."

The government is also focusing on making data more available and open to Canadians. The Treasury Board will be given $13 million to create a website where Canadian citizens can request and obtain their own personal information and $11.5 million to make data more open and accessible. Infrastructure Canada and Statistics Canada will also be working together in order to provide relevant and viable infrastructure data to communities. 


In addition to the 25,000 Syrian refugees already admitted by the Canadian government, Finance Minister Morneau has promised to admit 10,000 more by contributing $245 million over five years for processing and settlement. More generally, the government pledges to accept 300,000 immigrants for permanent settlement in 2016, and will move to accelerate processing times for those immigrants categorized under family reunification.


The federal government plans to extend Employment Insurance to regions and municipalities of Canada that have experienced high unemployment. These regions include northern British Columbia, northern and southern Alberta, Calgary, northern Saskatchewan, Saskatoon, northern Manitoba, northern Ontario, Sudbury, Newfoundland and Labrador, Whitehorse, and Nunavut. Regular benefits will be extended by five weeks to these regions, and "long-tenured" workers will be extended an additional 20 weeks.


For the federal public service, the government has taken steps to curtail its dependence on outsourcing professional services. The federal government currently spends over $10 billion per year on outsourcing professional services. The public service will need to find innovative ways to maintain service delivery without as much support or guidance from the private sector - likely a welcome challenge for many public servants. 

The entire 2016 Federal Budget "Growing the Middle Class" can be found here.