The actions taken by the Government over the last two years are working. Stimulus measures are maintaining and creating jobs and securing the economic recovery. As the economy improves, the Government will refocus its attention on its long-term economic plan. The cornerstone of this plan is a return to balanced budgets.

Budget 2010 outlines a three-point plan for returning to budget balance once the economy has recovered.

• First, the Government will follow through with the exit strategy built into the Economic Action Plan. Temporary measures in the Action Plan will be wound down as planned.
• Second, the Government will restrain spending through targeted measures. Towards achieving this objective, Budget 2010 proposes $17.6 billion in savings over five years.
• Third, the Government will undertake a comprehensive review of government administrative functions and overhead costs in order to identify opportunities for additional savings and improve service delivery.

The Government will not raise taxes and will not cut major transfers to persons and other levels of government.

As a result of the expiration of the Economic Action Plan and the measures in this budget, the deficit is projected to decline by almost half over the next two years to $27.6 billion in 2011–12, and by two-thirds to $17.5 billion in 2012–13. In 2014–15, the deficit is projected to be $1.8 billion.

Canada’s fiscal health is the envy of the world. The Government is fully committed to sustaining our fiscal advantage.

• The global economy has begun to stabilize after undergoing a deep and synchronized recession, which stemmed from the worst global financial crisis since the 1930s.
• With support from the extraordinary measures in Canada’s Economic Action Plan, the Canadian economy has started to recover.
• Canada has weathered the global recession better than all other major industrialized countries, reflecting several important financial, economic and fiscal strengths.
• Canadian labour markets have fared much better than in the U.S., where job losses to date have been proportionately more than three times as large as in Canada.
• Domestic demand in Canada has also rebounded more strongly than in all other G7 countries since the beginning of 2009.
• While unemployment remains a concern, the rise in the unemployment rate has been smaller than was initially forecast by private sector forecasters.
• The Department of Finance conducted a survey of private sector forecasters in December 2009. In early February, private sector forecasters met with the Minister of Finance to discuss the economic forecast from the survey as well as the risks associated with that forecast.
• The average private sector economic forecast from the December 2009 survey forms the basis of the Government’s fiscal planning.
• The use of private sector forecasts introduces an element of independence into the Government’s economic and fiscal forecast.
• Over the short term, the average private sector economic forecast has improved somewhat since the September 2009 Update of Economic and Fiscal Projections. Private sector forecasters expect the Canadian economic recovery to build momentum through 2010.
• Private sector forecasters have not materially changed their medium-term outlook since the September Update. Over the medium term, the level of uncertainty surrounding the outlook has declined since the Update but remains high.
• The average private sector forecast from the December survey provides a prudent basis for fiscal planning.

Delivering Year 2 of Canada’s Economic Action Plan—$19 billion in New Stimulus in 2010–11

Budget 2010 will deliver Year 2 of Canada’s Economic Action Plan, with $19 billion in new federal stimulus in 2010–11, by:

• Providing $3.2 billion in personal income tax relief to support growth and job creation.
• Delivering $1.6 billion to strengthen benefits for the unemployed.
• Providing $1 billion to enhance training opportunities for all Canadian workers.
• Freezing the Employment Insurance premium rate at $1.73 per $100 of insurable earnings to the end of 2010—the lowest rate since 1982—in order to leave more money in the hands of employers and employees.
• Providing $7.7 billion in new stimulus to modernize infrastructure, support home ownership, and improve social housing across Canada.
• Investing almost $1.9 billion in post-secondary education infrastructure, research, technology innovation and environmental protection.
• Providing $2.2 billion in stimulus spending to support adjustment and secure job opportunities in regions, communities and industries that have been most affected by the economic downturn.
• Introducing new measures to strengthen Canada’s financial sector, allowing businesses to continue growing and creating jobs.

Jobs Protection and Youth Employment Measures

Budget 2010 builds on the Economic Action Plan with targeted actions to protect Canadian workers from the effects of the global economic recession by:

• Temporarily extending the maximum length of work-sharing agreements to protect jobs.
• Supporting the next generation of business leaders with $10 million in new funding for the Canadian Youth Business Foundation.
• Providing $60 million in 2010–11 to assist more young Canadians while the labour market recovers.
• Investing $20 million in support of Pathways to Education Canada’s work to support disadvantaged youth.
• Committing $30 million to support better elementary and secondary education outcomes for First Nations students.

Creating Economic Growth and Jobs Through Innovation

Budget 2010 makes targeted changes to improve Canada’s productivity growth through innovation by:

• Providing $45 million over five years to establish a post-doctoral fellowship program to help attract the research leaders of tomorrow to Canada.
• Delivering $222 million in funding over five years to strengthen the world-leading research taking place at TRIUMF, Canada’s premier national laboratory for nuclear and particle physics research.
• Increasing the combined annual budgets of Canada’s research granting councils by an additional $32 million per year, plus an additional $8 million per year to the Indirect Costs of Research Program.
• Providing Genome Canada with an additional $75 million for genomics research.
• Doubling the budget of the College and Community Innovation Program with an additional $15 million per year.
• Providing $135 million over two years to the National Research Council Canada’s regional innovation clusters program.
• Providing $48 million over two years for research, development and application of medical isotopes.
• Providing a total of $497 million over five years to develop the RADARSAT Constellation Mission.
• Launching a new Small and Medium-sized Enterprise Innovation Commercialization Program with $40 million over two years.
• Renewing and making ongoing $49 million in annual funding for the regional development agencies to support innovation across Canada.

Encouraging Investment and Trade to Create Jobs and Growth

Budget 2010 takes further action to improve conditions for investment, enhance competition, and reduce barriers for businesses by:

• Making Canada a tariff-free zone for industrial manufacturers by eliminating all remaining tariffs on machinery and equipment and goods imported for further manufacturing. When fully implemented, this will provide $300 million in annual duty savings for Canadian business to support investment and growth and create jobs.
• Improving Canada’s system of international taxation to facilitate investment, cut red tape, and streamline the compliance process associated with the taxation of cross-border activity.
• Establishing a new Red Tape Reduction Commission.
• Providing $7.2 million over two years to improve Canadian fish and seafood industry access to the international marketplace.
• Delivering $75 million over three years to support investments by Canadian cattle processing plants to help improve their operations to ensure cattle producers have access to competitive cattle processing operations in Canada.

Green Jobs and Growth

Budget 2010 includes measures to promote energy investments, help develop and deploy clean energy technologies, and protect and enrich Canada’s unique environmental heritage by:

• Establishing the Next Generation Renewable Power Initiative, with $100 million over the next four years to support the development, commercialization and implementation of advanced clean energy technologies in the forestry sector.
• Modernizing the regulatory system for project reviews, and supporting consultation with Aboriginal peoples on major resource projects.
• Expanding eligibility for accelerated capital cost allowance for investment in clean energy generation assets.

Modernizing Canada’s Infrastructure

Budget 2010 strengthens the Government’s already significant investments in Canada’s infrastructure by:

• Providing $175 million over two years to renew Marine Atlantic’s fleet and shore facilities and improve its services.
• Providing $28 million to ensure Atlantic ferry services continue to operate in a safe and reliable condition.
• Providing $51 million over two years to The Jacques Cartier and Champlain Bridges Incorporated to maintain the safety of Montréal’s bridges.

Strengthening the Financial Sector

Budget 2010 introduces measures that will support Canada’s strong and competitive financial sector by:

• Moving forward with the majority of provinces and territories to establish a Canadian securities regulator within the next three years.
• Extending access to financing through continuation of the Business Credit Availability Program (BCAP) and the creation of the Vehicle and Equipment Financing Partnership under BCAP.
• Moving ahead with a Code of Conduct for the Credit and Debit Card Industry in Canada and proposing legislation to provide the Minister of Finance with the authority to regulate the market conduct of the credit and debit card networks, if required.
• Introducing a legislative framework to enable credit unions to incorporate and continue federally, which will promote the continued growth and competitiveness of the sector and enhance financial stability.
• Enhancing the financial consumer protection framework through new measures to improve the business practices and disclosure regime for federally regulated financial institutions.