2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
©His Majesty the King in Right of Canada (2023)
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Foreword v
Deputy Prime Minister’s Foreword
Canada has made a remarkable recovery from the COVID recession.
The strongest economic growth in the G7 over the last year. 830,000 more
Canadians employed than before the pandemic. Near-record low
unemployment. A record 85.7 per cent labour force participation rate for
Canadian women in their prime working years, supported by our Canada-
wide system of aordable early learning and child care. Ination has fallen for
eight months in a row, and the Bank of Canada predicts that it will fall to just
2.6 per cent by the end of the year.
With these strong economic fundamentals, Budget 2023 comes at an important
moment for our country—and at an important moment for the world.
In the near-term, we must contend with a slowing global economy, elevated
interest rates around the world, and ination that is still too high.
In the months and years to come, we must seize the remarkable opportunities
for Canada that are presented by two fundamental shifts in the global economy:
the race to build the clean economies of the 21
st
century, and our allies’
accelerating eorts to friendshore their economies by building their critical
supply chains through democracies like our own.
Budget 2023 is a direct response to these essential challenges, and it delivers:
1. New, targeted ination relief for the Canadians who need it most.
2. Stronger public health care, including dental care for millions of Canadians.
3. Signicant investments to build Canada’s clean economy, create good
middle class careers, and help usher in a new era of economic prosperity for
Canadians.
4. A responsible scal plan that will see Canada maintain the lowest decit and
the lowest net debt-to-GDP ratio in the G7.
I am proud to introduce Budget 2023: our plan to build a stronger, more
sustainable, and more secure Canadian economy—for everyone.
We have the remarkable good fortune to live in the greatest country in the world.
Canada is lled with people who can do big things, and I have never been more
optimistic about the future of our country than I am today.
At a challenging time in a challenging world, there is no better place to be
than Canada.
The Honourable Chrystia Freeland, P.C., M.P.
Deputy Prime Minister and Minister of Finance
Table of Contents
Deputy Prime Minister’s Foreword ................................................................v
Economic Overview .........................................................................................3
1. Recent Economic Developments.....................................................................................5
Canada’s Recovery Has Created the Strongest Job Market in Decades ......5
Ination Is Coming Down but Remains a Challenge for Canadians .............. 8
The Canadian Economy Has Been Resilient, but Canadian and
Global Growth Is Slowing ............................................................................................ 10
2. Canadian Economic Outlook ......................................................................................... 12
Private Sector Economists Expect a Shallow Recession ................................... 12
Budget 2023 Economic Scenario Analysis ............................................................ 14
3. Canada’s Place in a Changing Global Economy .................................................... 16
Moving to Net-Zero ..................................................................................................... 16
Reducing Supply Chain Vulnerabilities ................................................................. 17
Transforming Challenges into Opportunities ...................................................... 18
4. Investing Responsibly in Canada’s Future ................................................................ 19
A Responsible Fiscal Plan in Challenging Times ................................................. 22
International Comparisons ........................................................................................ 24
Preserving Canada’s Fiscal Advantage: Maintaining our Fiscal Anchor ... 25
Chapter 1: Making Life More Aordable and Supporting the Middle Class .. 29
1.1 Making Life More Aordable ..................................................................................... 32
A New Grocery Rebate for Canadians .................................................................... 34
Cracking Down on Junk Fees ..................................................................................... 35
Cracking Down on Predatory Lending ................................................................... 36
Lowering Credit Card Transaction Fees for Small Businesses........................ 36
Supporting Your Right to Repair .............................................................................. 37
Common Chargers for Your Devices ....................................................................... 38
Automatic Tax Filing ...................................................................................................... 38
Making Life More Aordable for Students ......................................................... 39
Improving Registered Education Savings Plans ................................................ 40
Supporting Our Seniors ............................................................................................... 41
1.2 An Aordable Place to Call Home ............................................................................ 42
Launching the New Tax-Free First Home Savings Account ........................... 44
A Code of Conduct to Protect Canadians With Existing Mortgages ......... 44
Building More Aordable Housing..........................................................................45
Investing in an Urban, Rural, and Northern Indigenous Housing Strategy 46
Chapter 2: Investing in Public Health Care and Aordable Dental Care ... 51
2.1 Investing in Public Health Care .................................................................................. 52
Working Together to Improve Health Care for Canadians ............................. 54
Health Care Results and Accountability ................................................................. 56
Investing in Better Health Care Data....................................................................... 56
Encouraging More Doctors and Nurses to Practise in Rural and
Remote Communities .................................................................................................. 57
Strengthening Retirement Saving for Personal Support Workers .............. 57
Fighting Crime and Saving Lives: Combatting the Opioid Crisis ................. 58
Implementing the 988 Suicide Prevention Line ................................................ 60
Building the Shepody Healing Centre .................................................................... 60
Safeguarding Access to Abortion and Other Sexual and
Reproductive Health Care Services ......................................................................... 60
Improving Canada’s Readiness for Health Emergencies ................................. 61
2.2 Dental Care for Canadians ........................................................................................... 61
The New Canadian Dental Care Plan ...................................................................... 62
Expanding Access to Dental Care ........................................................................... 62
Investing in Better Dental Care Data ..................................................................... 62
Chapter 3: Made-In-Canada Plan: Aordable Energy, Good Jobs,
and a Growing Clean Economy ........................................................................ 67
A Strong Foundation ............................................................................................................. 69
A Safe, Smart, and Competitive Place to Do Business.............................................. 69
The Opportunities Ahead .................................................................................................... 70
The Challenges We Face ....................................................................................................... 71
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and
a Growing Clean Economy .................................................................................................. 73
3.1 Investing in Clean Electricity ...................................................................................... 76
An Investment Tax Credit for Clean Electricity .................................................... 79
A Clean Electricity Focus for the Canada Infrastructure Bank ....................... 80
Supporting Clean Electricity Projects ...................................................................... 81
The Atlantic Loop ............................................................................................................ 81
3.2 A Growing, Clean Economy ......................................................................................... 82
An Investment Tax Credit for Clean Technology Manufacturing.................. 83
Securing Major Battery Manufacturing in Canada ............................................ 84
Delivering the Canada Growth Fund ....................................................................... 85
An Investment Tax Credit for Clean Hydrogen .................................................... 88
Growing Canada’s Biofuels Sector ........................................................................... 89
Enhancing the Reduced Tax Rates for Zero-Emission Technology
Manufacturers ..................................................................................................................90
Supporting Clean Technology Projects .................................................................. 90
Expanding Eligibility for the Clean Technology Investment Tax Credit ...... 91
Getting Major Projects Done ....................................................................................................92
Enhancing the Carbon Capture, Utilization, and Storage Investment
Tax Credit ...........................................................................................................................93
3.3 Investing in Canadian Workers ................................................................................. 94
Fair Pay for Workers Who Build the Clean Economy ....................................... 96
Ensuring Fairness for Canadian Workers with Federal Reciprocal
Procurement .....................................................................................................................96
Doubling the Tradespeople’s Tool Deduction .................................................... 97
Supporting Employee Ownership Trusts .............................................................. 99
Investing in Canada’s Labour Market Transfer Agreements ......................... 99
Continuing to Support Seasonal EI Claimants ................................................... 99
Protecting Federally Regulated Gig Workers ...................................................100
Protecting Jobs with Timely Access to Work-Sharing Agreements ......... 100
Continuing Support for the Student Work Placement Program ...............101
Prohibiting the Use of Replacement Workers ...................................................101
3.4 Reliable Transportation and Resilient Infrastructure ........................................101
Strengthening Canada’s Trade Corridors ............................................................102
Delivering Canada’s Infrastructure Funding .....................................................104
Supporting Resilient Infrastructure Through Innovation ..............................106
Investing in VIA Rail Trains and Services ............................................................106
Investing in the Canadian Coast Guard ...............................................................106
Safe and Reliable Ferry Services in Eastern Canada ........................................107
Redeveloping the Bonaventure Expressway and Supporting
Transportation Infrastructure in Montreal .........................................................107
Delivering the Lac-Mégantic Rail Bypass Project .............................................108
3.5 Investing in Tomorrow’s Technology ......................................................................108
Review of the Scientic Research and Experimental Development
Tax Incentive Program.................................................................................................109
Using College Research to Help Businesses Grow .........................................111
Supporting Canadian Leadership in Space .........................................................111
Investing in Canada’s Forest Economy ...............................................................112
Establishing the Dairy Innovation and Investment Fund .............................112
Supporting Farmers for Diversifying Away from Russian Fertilizers .........113
Providing Interest Relief for Agricultural Producers ......................................113
Maintaining Livestock Sector Exports with a Foot-and-Mouth Disease
Vaccine Bank ..................................................................................................................113
Chapter 4: Advancing Reconciliation and Building a Canada
That Works for Everyone ............................................................................ 121
Key Ongoing Actions ........................................................................................................... 121
Investments in Indigenous Priorities .............................................................................122
4.1 Self-Determination and Prosperity for Indigenous Peoples .........................125
Supporting Indigenous Governance, Capacity, and Participation
in Decision-Making ......................................................................................................125
Building an Economy That Works for Indigenous Peoples .........................127
4.2 Investing in Indigenous Communities ..................................................................129
Supporting Indigenous Health Priorities ............................................................129
Supporting Safe and Aordable Housing in Indigenous Communities..130
Implementing the National Action Plan to End the Tragedy of Missing
and Murdered Indigenous Women and Girls .................................................... 130
Supporting First Nations Children .........................................................................131
Gottfriedson Band Class Settlement Agreement ............................................132
4.3 Clean Air and Clean Water .........................................................................................132
Protecting Our Freshwater ........................................................................................134
Protecting Canada’s Whales ..................................................................................... 135
Cleaner and Healthier Ports ...................................................................................... 135
Protecting Species at Risk ........................................................................................135
Supporting Natural Disaster Resilience................................................................136
4.4 Stronger and More Inclusive Communities ........................................................137
Supporting Our Ocial Languages ......................................................................137
Investing in Employment Assistance Services for Ocial Language
Minority Communities ............................................................................................... 139
Supporting the Canadian Screen Sector ............................................................140
Supporting the Growth of Canada’s Tourism Sector ..................................... 140
Fighting Systemic Racism, Discrimination, and Hate ...................................... 141
Supporting Black Canadian Communities .........................................................142
Supporting a More Equitable, Diverse, and Inclusive Public Service ......143
Advancing Public Safety Research ........................................................................ 143
Addressing Wrongful Convictions .........................................................................144
Advancing Gender Equality in Canada ................................................................. 144
A Safe and Accountable Sport System ................................................................144
Helping Canadians Stay Active ..............................................................................145
Local Food Infrastructure Fund Top-Up ..............................................................145
Making Life More Aordable for Persons With Disabilities ........................145
Advancing Inclusion of Canadians with Disabilities ....................................... 146
Building Communities Through Arts and Heritage ......................................... 148
Creating a New Leave for Pregnancy Loss ........................................................148
Improving Access to Leave Related to the Death or Disappearance
of a Child .........................................................................................................................148
4.5 A Stronger Immigration System .............................................................................149
Safe and Ecient Citizenship Applications .......................................................149
Supporting Travel to Canada ..................................................................................150
Supporting Legal Aid for Asylum Seekers .........................................................150
Chapter 5: Canada’s Leadership in the World .......................................... 161
Key Ongoing Actions ........................................................................................................... 162
5.1 Defending Canada .........................................................................................................162
Defence Policy Update ...............................................................................................163
Establishing the NATO Climate Change and Security Centre of Excellence
in Montreal ...................................................................................................................... 164
Securing Our Economy ............................................................................................... 165
Protecting Diaspora Communities and All Canadians From
Foreign Interference, Threats, and Covert Activities .......................................165
5.2 Supporting Ukraine ....................................................................................................... 166
Financial Assistance to Ukraine in 2023 ............................................................... 168
Bolstering the Defence of Ukraine ........................................................................168
Humanitarian, Development, and Security and Stabilization Assistance
for Ukraine ....................................................................................................................... 169
A Safe Haven for Ukrainians ..................................................................................... 169
Indenite Withdrawal of Most-Favoured-Nation Status From Russia
and Belarus ...................................................................................................................... 169
5.3 Standing Up for Canadian Values ............................................................................170
Supporting the Economic Growth of Developing Countries ....................... 170
Eradicating Forced Labour from Canadian Supply Chains ...........................171
5.4 Combatting Financial Crime ......................................................................................171
Combatting Money Laundering and Terrorist Financing ..............................172
Strengthening Eorts Against Money Laundering and Terrorist Financing ....173
Implementing a Publicly Accessible Federal Benecial
Ownership Registry ...................................................................................................... 173
Modernizing Financial Sector Oversight to Address Emerging Risks ......174
Canada Financial Crimes Agency ............................................................................175
Protecting Canadians from the Risks of Crypto-Assets ................................175
Chapter 6: Eective Government and a Fair Tax System ........................ 181
Key Ongoing Actions ........................................................................................................... 182
6.1 Eective Government ................................................................................................... 183
Refocusing Government Spending to Deliver for Canadians ....................183
Realigning Previously Announced Spending ..................................................... 184
Eective Government Programs .............................................................................184
6.2 Improving Services for Canadians ........................................................................... 185
Protecting Passenger Rights .....................................................................................185
Improving Airport Operations and Passenger Screening ............................ 186
Faster Passport Processing and Improved Immigration Services ............. 186
Faster Services for Veterans ......................................................................................187
Improving Canada.ca and 1 800 O-Canada .......................................................187
Old Age Security IT Modernization .......................................................................187
Ensuring the Integrity of Emergency COVID19 Benets ..............................188
Renewing Equalization and Territorial Formula Financing ..........................188
6.3. A Fair Tax System ...........................................................................................................188
Ensuring the Wealthiest Canadians Pay Their Fair Share .............................188
International Tax Reform ...........................................................................................189
A Tax on Share Buybacks ...........................................................................................190
Fair Taxation of Dividends Received by Financial Institutions .................... 191
Strengthening the General Anti-Avoidance Rule ............................................ 191
Annex 1: Details of Economic and Fiscal Projections .............................. 197
Annex 2 : Debt Management Strategy ..................................................... 237
Annex 3: Legislative Measures................................................................... 247
2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
Economic Overview
1. Recent Economic Developments.....................................................................................5
Canada’s Recovery Has Created the Strongest Job Market in Decades ......5
Ination Is Coming Down but Remains a Challenge for Canadians .............. 8
The Canadian Economy Has Been Resilient, but Canadian and Global
Growth Is Slowing...........................................................................................................10
2. Canadian Economic Outlook ......................................................................................... 12
Private Sector Economists Expect a Shallow Recession ................................... 12
Budget 2023 Economic Scenario Analysis ............................................................ 14
3. Canada’s Place in a Changing Global Economy .................................................... 16
Moving to Net-Zero ..................................................................................................... 16
Reducing Supply Chain Vulnerabilities ................................................................. 17
Transforming Challenges into Opportunities ...................................................... 18
4. Investing Responsibly in Canada’s Future ................................................................ 19
A Responsible Fiscal Plan in Challenging Times ................................................. 22
International Comparisons ........................................................................................ 24
Preserving Canada’s Fiscal Advantage: Maintaining our Fiscal Anchor ... 25
Economic Overview 3
Economic Overview
In many ways, the Canadian economy is doing well. Our unemployment rate is
near its record low, 830,000 more Canadians are employed compared to when
COVID-19 rst hit, and Canada’s economic growth was the strongest in the G7
over the last year.
At the same time, many Canadians are faced with real aordability challenges,
and are feeling the eects of higher grocery prices and housing costs. While
ination has fallen in Canada for eight straight months, it remains elevated—
both in Canada and around the world. For many advanced economies, interest
rates have risen to their highest levels in more than 15 years. This is resulting
in slowing economic growth, both in Canada and around the world. The rapid
rise in interest rates has also led to turmoil in some parts of the global banking
system and volatility in global nancial markets, highlighting the considerable
uncertainty about how economic conditions will evolve going forward.
Canada is well positioned to navigate these turbulent times. Our economy
entered 2023 on a better footing than most of our peers, and with strong
economic fundamentals, including robust population growth, a strong labour
market, and a well-regulated and well-capitalized nancial system, Canada will
be able to weather a global economic slowdown.
Canada’s strength and resilience in the face of global economic challenges has
been underpinned by steps the government has taken since 2015 to support
Canadians and build an economy that creates good jobs and opportunities:
Jobs
By helping workers acquire the skills they need, and helping our lowest-paid—
and often most essential—workers and their families achieve a good standard
of living.
People
By investing in our public health care system, making childcare more aordable,
and reinforcing Canada’s social safety net, including enhancing supports
for children and seniors.
Communities
By investing in infrastructure, more aordable housing, public transit,
and broadband.
Growth
By investing in infrastructure, supporting investment in Canada’s clean economy,
and helping Canadian businesses grow and create jobs.
4 Overview
Since 2015, close to 2.7 million fewer Canadians are living in poverty, income
inequality has continued to fall, the labour force participation rate for women
aged 15 to 64 years is at record highs, and young Canadians have access to
a greater number of good-paying jobs than before the pandemic. Signicant
investments in infrastructure and in the capacity of the Canadian economy will
continue to benet Canadians for decades.
A More Inclusive Economy: Progress Since 2015
2.7 million fewer Canadians are living in poverty, a 56 per cent decrease;
Income inequality has declined by 11 per cent;
The gender wage gap is getting smaller, having decreased by 12 per cent;
Women are closing the labour force participation gap, which has
decreased by 28 per cent; and,
More young people have good jobs, with the youth unemployment
rate down by 22 per cent.
In the face of a rapidly changing global economic landscape, there is more work
to be done to build a more sustainable and prosperous future for Canadians.
In the years to come, Canada will contend with two intertwined global
economic shifts: rst, the accelerating global race to build net-zero economies
and the industries of tomorrow; and second, a realignment of global trade
patterns as democracies move to friendshore their economies by limiting their
strategic economic dependence on countries like Russia and China.
While these two global shifts represent signicant economic opportunities for
Canadian workers and businesses, signicant investment will be required to
capitalize on them, from both the private and the public sectors. To support this,
Budget 2023 takes substantial action to mobilize private investment in building
Canada’s clean economy. The goal of these investments is to grow Canada’s
economic capacity in the industries of the future, create good careers, and usher
in a new generation of prosperity for all Canadians, while simultaneously reducing
Canada’s emissions and strengthening our essential trading relationships.
Moreover, at a time of elevated global ination, investing in Canada’s long-term
prosperity must be balanced with the need to avoid exacerbating ination.
Against this backdrop, the government is taking a responsible, balanced
approach to scal management: supporting the most vulnerable Canadians,
strengthening our public health system, and investing in Canada’s future
prosperity while preserving Canada’s long-term scal sustainability. Canada’s
enviable scal position—the lowest net debt and decit as a share of gross
domestic product (GDP) in the G7—means we can aord to make these
essential investments. Over time, the growing returns of these essential
investments will further enhance Canada’s economic prospects.
Economic Overview 5
1. Recent Economic Developments
Canada’s Recovery Has Created the Strongest Job
Market in Decades
Canada’s economy is now 103 per cent the size it was before the pandemic,
marking the fastest recovery of the last four recessions, and the second strongest
recovery in the G7 (Chart 1). Throughout 2022, our economy demonstrated
sustained strength, with Canada posting the fastest growth in the G7 over the past
year (Chart 2). Resilient household and business nances and strong population
growth, supported by the government’s COVID-19 Economic Response Plan and
Immigration Levels Plan, underpinned this strong economic performance.
Chart 1
Real GDP Recovery From the
Pandemic in G7 Economies
Chart 2
Real GDP Growth in G7 Economies,
2021Q4 to 2022Q4
75
80
85
90
95
100
105
2019
Q4
2020
Q2
2020
Q4
2021
Q2
2021
Q4
2022
Q2
2022
Q4
Range of Other G7
Canada
index, 2019Q4 = 100
0.0 0.5 1.0 1.5 2.0 2.5
U.K.
Japan
France
U.S.
Germany
Italy
Canada
per cent
Note: Last data point is 2022Q4.
Sources: Statistics Canada; Haver Analytics.
Note: The growth rate shown is the percentage change in
real GDP from 2021Q4 to 2022Q4.
Sources: Statistics Canada; Haver Analytics.
Canada’s strong recovery has supported the strongest labour market in several
decades. About 830,000 more Canadians are employed compared to the pre-
pandemic period, and at just 5 per cent, the unemployment rate is near its
record low of 4.9 per cent (Chart 3).
6 Overview
Chart 3
Unemployment Rate
Current Rate (5.0%)
4
6
8
10
12
14
1976 1981 1986 1991 1996 2001 2006 2011 2016 2021
per cent
Recessions
Note: Last data point is February 2023.
Source: Statistics Canada.
The benets of this strong labour market are being widely shared among
Canadians. More people aged 15 to 64 years are engaged in the labour market
than ever before, with meaningful increases for historically under-represented
groups, including women, newcomers, and young Canadians. Today, more
Canadians have good middle class jobs than before the pandemic, with many also
benetting from stronger wage growth, particularly among lower-wage workers.
A Growing Workforce Benets All Canadians
A strong and inclusive labour market has been a key driver of Canada’s economic
resilience over the past year.
Canada’s job gains compared to when COVID-19 rst hit have outperformed almost
all of our G7 peers, supported by a rapidly expanding workforce (Chart 4). Notably,
the government’s historic investment in early learning and child care is helping
more women fully participate in the workforce. The labour force participation rate
for women aged 25 to 54 years has reached a record high of nearly 86 per cent,
compared to just 77 per cent in the U.S. At the same time, a record high of 80
per cent of Canadians aged 15 to 64 years are now participating in the workforce,
reecting broad-based gains in employment opportunities across demographic
groups (Chart 5). Making full use of the skills and talents of Canadians is a key driver
of a stronger economy, helps to address labour market shortages, and increases the
rate at which the economy can grow without generating inationary pressures.
Immigration is a signicant driver of economic growth and helps to build a
stronger economy for everyone. Canada continues to post the fastest population
growth in the G7, with strong immigration levels pushing population growth to
its fastest pace since the 1950s (Chart 6).
Economic Overview 7
A Growing Workforce Benets All Canadians
Together, higher immigration and higher labour force participation are
expanding the pool of available workers, and osetting population aging more
than in other G7 economies. The resulting boost to employment has helped
maintain real household disposable income per capita, even as it declined in
peer economies (Chart 7). This is expected to continue to support the Canadian
economy throughout 2023.
Chart 4
Employment Recovery From the
Pandemic in G7 Economies
Chart 5
Change in Employment Rates From
the Pre-Pandemic Period
-1 0 1 2 3 4 5
U.K.
Japan
Italy
U.S.
Germany
Canada
France
change from pre-pandemic peak, per cent
0 2 4 6 8
Youth
All Canadians
Women
Women, youngest
child under 6
Off-reserve Indigenous
Recent Immigrants
change from 2019 to 2022, percentage points
Note: Last data points: February 2023 (Canada, U.S.),
January 2023 (Germany, Italy, Japan), December 2022
(U.K.), and 2022Q4 (France).
Source: Haver Analytics.
Note: The age of each group is 25 to 54 years, except
youth which is 15 to 24 years.
Source: Statistics Canada.
Chart 6
Population Growth in Selected
Economies
Chart 7
Real Household Disposable Income
Per Capita in G7 Economies
-0.5
0.0
0.5
1.0
1.5
2.0
2000 2004 2008 2012 2016 2020
United States
European Union
Canada
per cent
Note: Last data point is 2022.
Sources: Statistics Canada, Haver Analytics.
Note: Japan is not included. Last data point is 2022Q3.
Source: Organisation for Economic Co-operation and
Development (OECD).
95
100
105
110
115
120
2019
Q4
2020
Q2
2020
Q4
2021
Q2
2021
Q4
2022
Q2
Range of Other G7
Canada
index, 2019Q4 = 100
8 Overview
With strong labour markets supporting household income, Canadians have
also built up signicant savings since the beginning of the pandemic (Chart 8).
Notably, many people have continued to add to their pool of savings despite
the elevated cost of living (Chart 9).
Chart 8
Change in Household Gross Savings
Rates in G7 Economies
Chart 9
Household Savings Rate and Build-
Up in Deposits
- 10
- 5
0
5
10
15
20
25
2019
Q4
2020
Q2
2020
Q4
2021
Q2
2021
Q4
2022
Q2
Range of Other G7
Canada
change from 2019Q4, percentage points
0
50
100
150
200
0
10
20
30
40
2019
Q4
2020
Q2
2020
Q4
2021
Q2
2021
Q4
2022
Q2
2022
Q4
Built-Up Deposits (right axis)
Savings Rate (left axis)
per cent
$billions (annualized
)
Note: Japan is not included. Last data point is 2022Q3.
Source: Organisation for Economic Co-operation and
Development (OECD).
Note: Built-up deposits are calculated as actual relative to
pre-pandemic trend.
Sources: Statistics Canada; Department of Finance Canada
calculations.
A strong economic recovery has also resulted in labour shortages, as evidenced
by Canada’s near record-low unemployment rate combined with many unlled
job openings. These ongoing labour shortages are a challenge for many
employers. Many businesses continue to face diculties hiring workers, with
the number of vacant job positions for every unemployed person currently
about 75 per cent above the pre-pandemic norm. Canada’s immigration system
will continue to play an important role in helping our businesses grow.
Ination Is Coming Down but Remains a Challenge
for Canadians
As the global economy recovered from the pandemic, ination emerged as a
major global economic challenge. Ination was already rising when Russia’s full-
scale illegal invasion of Ukraine drove up commodity prices, pushing consumer
price ination globally to multi-decade highs (Chart 10). In Canada, consumer
price ination reached a peak of 8.1 per cent in June 2022, putting pressure on
many household budgets.
In addition to the eect on commodity prices of Russia’s full-scale invasion,
rising global ination was driven by supply-chain disruptions, strong
consumption of goods, and rebounding global demand. A shortage of workers
combined with higher demand for services have also contributed to upward
pressure on services prices in many countries.
Economic Overview 9
Chart 10
Consumer Price Ination in G7
Economies
Chart 11
Change in Consumer Price Ination
Since the Peak of June 2022 for
Selected Items in Canada
0
2
4
6
8
10
12
14
year-over-year, per cent
Latest Most recent peak
-39.4
-19.9
-2.9
-1.2
0.1
0.1
1.1
-20 -15 -10 -5 0 5
Energy
Child care services
All-items
Goods, excluding groceries and
energy
Services, excluding shelter
services
Shelter services
Groceries
change in inflation rate from June 2022, percentage points
-50
-30
Note: Last data point is February 2023, except for Japan
which is January 2023. Canadian CPI ination peaked at 8.1
per cent in June 2022.
Sources: Statistics Canada; Haver Analytics.
Note: Last data point is February 2023.
Sources: Statistics Canada; Department of Finance Canada
calculations.
In recent months, some of these pressures have started to ease, with
commodity prices falling, supply-chain bottlenecks easing, and the demand for
goods normalizing (Chart 11). At 5.2 per cent in February, Canadian consumer
price ination has fallen meaningfully since its June 2022 peak and is below the
rates seen in many peer economies. Services price ination in Canada—a gauge
of underlying inationary pressures—has also plateaued in recent months, while
it has continued to rise in some other countries.
Ination is still too high. To bring ination down, central banks around the
world have sharply raised interest rates in what has been one of the fastest and
most synchronised monetary policy tightening cycles since the 1980s. As the
government continues to make targeted investments to support Canadians and
grow the Canadian economy, it is important that governments remain mindful
of not fuelling ination. Measures in Budget 2023 to provide ination relief to
the most vulnerable are thus carefully targeted, while investments in jobs and
economic growth will play a meaningful role in Canada’s continued prosperity.
Continued progress on reducing ination will be needed over the coming year
to ensure that this period of elevated ination is only temporary. As a result,
there remains uncertainty about how long interest rates around the world will
need to remain elevated.
10 Overview
The Canadian Economy Has Been Resilient,
but Canadian and Global Growth Is Slowing
While the Canadian economy has remained solid, higher interest rates are
beginning to work their way through both the global and Canadian economies.
This is resulting in weaker economic activity.
After growth of around 3 per cent annualized over the rst three quarters of
2022, economic activity in Canada was unchanged in the nal quarter. Despite
slowing economic growth, nal domestic demand—a measure of underlying
economic strength—has shown resilience, and data so far suggest modest
growth in the rst quarter of 2023. So far, the consequences of moderating
growth have been concentrated in housing markets, with higher mortgage rates
pushing resales down 40 per cent, and prices down 16 per cent from their peaks
in February 2022 (Chart 12). New construction is also slowing.
Ination, elevated interest rates, and the higher costs, driven by global factors
such as Russia’s illegal invasion of Ukraine, are also creating aordability
pressures for many Canadians. This is reected in lower consumer condence
(Chart 13).
While business activity is at a healthy level and most businesses continue to
report strong sales, many are also under nancial pressure as the signicant rise
in interest rates boosts borrowing costs. A growing proportion of businesses
expect activity to weaken in the coming year as the lagged impact of higher
interest rates continues to feed into weaker consumer spending. As a result,
many businesses have started to dial back their investment plans in recent
months.
Chart 12
Home Sales, House Prices and
Housing Starts, Canada
Chart 13
Measures of Consumer and Business
Condence, Canada
25
50
75
100
125
150
Jan
2020
Jul
2020
Jan
2021
Jul
2021
Jan
2022
Jul
2022
Jan
2023
Home Sales
Housing Starts (6-month moving average)
House Prices
index, 100 = 2019 average
Index of Consumer
Confidence (left axis)
Business Barometer, 12-month
index (right axis)
30
40
50
60
70
80
25
50
75
100
125
150
2007 2009 2011 2013 2015 2017 2019 2021 2023
index, 100 = 2014 index, >50 = stronger
Note: Last data point is February 2023.
Sources: Canadian Real Estate Association; Canada
Mortgage and Housing Corporation; Haver Analytics.
Note: Last data point is February 2023.
Sources: Conference Board of Canada; Canadian Federation
of Independent Business.
Economic Overview 11
Outside of Canada, the rapid tightening in monetary policy has revealed
pockets of vulnerabilities in the global banking system. Since March 8, three
medium-sized regional U.S. banks—Silicon Valley Bank, Signature Bank, and
Silvergate Bank—have failed. In Europe, one large and systemically important
bank, Credit Suisse, was also nearing failure before UBS agreed to acquire it.
While the global banking system remains well capitalized, uncertainty over the
extent and magnitude of additional credit-related losses that could accrue as
economies slow remains elevated. In response, nancial authorities have taken
a series of steps to stabilize the nancial system, maintain condence in the
banking system, and limit further negative feedback into the global economy.
These events sent tremors across global markets, which saw an abrupt rise in
risk aversion, a sudden tightening in global nancial conditions, and a sharp
decline in global crude oil prices (Chart 14). While the responses by U.S. and
Swiss authorities have calmed markets, uncertainty remains, and a handful
of smaller U.S. banks are under review for potential downgrades. On March
19, ve central banks, including the Federal Reserve and the Bank of Canada,
announced coordinated action to enhance the provision of liquidity in the
nancial system to ease strains in global funding markets.
Globally, most central banks are set to maintain their policy rates at elevated
levels or raise them further, with some continuing to shrink their balance sheets.
This could keep broad liquidity conditions tighter than they have been in recent
years. While the ramications of banking sector stresses for the global economy
are not yet clear, were the crisis to broaden, it could result in higher funding
costs, restricted credit, and the amplication of the global economic slowdown.
These developments also complicate the ght against global ination, and
markets now expect some pullback in policy rates as early as the second half
of the year (Chart 15), suggesting the perceived likelihood of a soft landing
has decreased.
The Canadian nancial system is well-equipped to cope with the challenging
global nancial situation, and the Canadian banking sector is well-known for
its stability and resilience, having fared better than many peers through the
global nancial crisis in 2008. Despite the healthy position of Canadian nancial
institutions, intensication of global nancial stresses could have negative
eects on the Canadian economy through tighter nancial conditions and lower
global economic activity.
12 Overview
Chart 14
Expected Future WTI Crude Oil Prices
Chart 15
Canada and United States Policy Rate
Expectations
Futures as of
Feb 15, 2023
Futures as of
Mar 20, 2023
0
20
40
60
80
100
120
2019 2020 2021 2022 2023 2024 2025
$US per barrel
United
States
Canada
0
1
2
3
4
5
6
2017 2019 2021 2023 2025
per cent
Forecast (market
expectations
as of Mar 22)
Note: Last data point is March 2025.
Sources: Bloomberg; Haver Analytics.
Note: Last data point is December 2024. Futures
pricing converted into market-based odds of future
announcements of the target interest rate.
Sources: Bloomberg; Haver Analytics.
2. Canadian Economic Outlook
Private Sector Economists Expect a Shallow Recession
The Department of Finance surveyed a group of private sector economists in
February 2023. The average of private sector forecasts has been used as the
basis for economic and scal planning since 1994, helping to ensure objectivity
and transparency, and introducing an element of independence into the
government’s economic and scal forecast.
With higher interest rates, as well as slower economic growth in the U.S. and
around the world, private sector economists expect Canada’s economy to slow
more than was projected in the 2022 Fall Economic Statement (Chart 16). Private
sector economists expect the Canadian economy to enter a shallow recession
in 2023. With a peak-to-trough decline of just 0.4 per cent, the contraction in
real GDP is signicantly smaller than during the 2008-09 recession (-4.4 per
cent) and is less severe than the 1.6 per cent decline considered in the 2022 Fall
Economic Statement downside scenario.
On an annual basis, real GDP growth is projected to decelerate from a strong
3.4 per cent in 2022 (slightly better than the 3.2 per cent projected in the 2022
Fall Economic Statement) to 0.3 per cent in 2023, before rebounding to 1.5 per
cent in 2024 (previously 0.7 per cent and 1.9 per cent, respectively).
As the economy slows, Canada’s near record-low unemployment rate is
expected to rise to a peak of 6.3 per cent by the end of 2023. However, driven
by Canada’s strong labour market, unemployment is expected to remain low by
historical standards, and far below the peaks of past recessions (Chart 17).
Economic Overview 13
Chart 16
Real GDP Growth Projections
Chart 17
Peak Unemployment Rates in Past
Recessions
Actual
(0.0)
Actual
-1
0
1
2
3
4
2022
Q4
2023
Q1
2023
Q2
2023
Q3
2023
Q4
2022 2023 2024
February 2023 Survey
FES 2022 (September
2022 Survey)
per cent, period-to-period at annual rates
Quarterly
Annual
13.0
11.7
8.7
13.4
6.3
0
2
4
6
8
10
12
14
16
1982
Q4
1992
Q4
2009
Q3
2020
Q2
2023
Q4
per cent
Current Rate
(5.0%)
Sources: Statistics Canada; Department of Finance Canada
September 2022 and February 2023 surveys of private
sector economists.
Sources: Statistics Canada; Department of Finance Canada
February 2023 survey of private sector economists.
Private sector economists expect Consumer Price Index (CPI) ination to continue
to ease. Ination is expected to fall below 3 per cent in the third quarter of 2023
and to reach about 2 per cent, the Bank of Canada’s target, in the second quarter
of 2024, little changed from 2022 Fall Economic Statement projections.
After surging following Russia’s full-scale invasion of Ukraine, commodity prices
fell sharply in the second half of 2022, helping to reduce CPI ination—largely
through lower energy prices. This had a negative impact on GDP ination
(a measure of the selling price of goods and services that are produced in
Canada, including our exports), which in the last two quarters of 2022 was much
lower than expected by private sector economists in the 2022 Fall Economic
Statement. As a result, GDP ination in 2022 was lower than projected and is
revised down signicantly in 2023.
Together, the downward revisions to GDP ination and, to a lesser extent, real
GDP have weighed considerably on nominal GDP projections. On an annual
basis, nominal GDP increased by 11.0 per cent in 2022 (below the 11.6 per cent
projected in the 2022 Fall Economic Statement) and is projected to slow to
0.9 per cent in 2023 (previously 2.6 per cent). As a result, nominal GDP is now
expected to be $60 billion lower, on average per year, compared to the private
sector economists’ projections in the 2022 Fall Economic Statement. It is also
$16 billion lower, on average per year, compared to the downside scenario
considered in the 2022 Fall Economic Statement. As the broadest measure of
the tax base, the downward revision to nominal GDP is having an impact on tax
receipts and the government revenue outlook. Slowing growth in nominal GDP in
2023 will push up the debt-to-GDP ratio in 2023-24 before it continues trending
down (see Annex 1 for further details on the economic and scal outlook).
14 Overview
Budget 2023 Economic Scenario Analysis
Canada’s near-term economic outlook remains uncertain. While the February
2023 survey suggests a shallow recession in 2023, the wide range of views
among forecasters highlights many plausible outcomes, ranging from a soft
landing to a more pronounced downturn.
In January 2023, the IMF upgraded its global growth forecast for 2023 to
2.9 per cent (previously 2.7 per cent in its October outlook). China’s reopening
is expected to provide a boost to global growth. In other major economies,
including the U.S. and Europe, easing supply-chain bottlenecks and lower
commodity prices have reduced inationary pressures, while economic activity
has been more resilient than expected. Likewise, Canada has continued to show
progress on lowering ination while the economy has remained solid, especially
in the labour market.
The risks underpinning the downside scenario considered in the 2022 Fall
Economic Statement remain areas of concern. Should elevated global ination
persist, central banks could take their policy rates higher or keep them elevated
for longer. This could occur, for example, if labour markets remain constrained,
or if there is a resurgence in global commodity prices related to a faster
rebound in China’s economy or further supply shocks related to Russia’s illegal
invasion of Ukraine.
In addition to the path of ination, there is also uncertainty about the impact
of higher interest rates on the global economy. With the rapid tightening in
monetary policy across the world, further disruptions in the global nancial
system could emerge. Some funding markets have become more strained due
to lower levels of liquidity, as has been seen recently with the failure of three
medium-sized regional U.S. banks and challenges for Credit Suisse, and an
abrupt repricing of risk could trigger a broader tightening of lending standards.
Overall, the economic outlook in the February 2023 survey continues to provide
a reasonable basis for scal planning, and outcomes that are better or worse
than the survey are both plausible. Still, the latest developments in nancial
markets have raised the odds of a more pronounced slowdown. To facilitate
prudent economic and scal planning, and in light of elevated global uncertainty
and recent developments in nancial markets, the Department of Finance has
developed two scenarios that consider faster or slower growth tracks relative to
the February survey (see Annex 1 for further details on the scenarios).
The downside scenario considers a more pronounced recession in Canada amid
persistent elevated ination, stresses in the global nancial system associated
with the sharp rise in interest rates, and a steeper housing correction. Real GDP
contracts by 1.9 per cent from peak to trough compared to only 0.4 per cent in
the survey, leading to slower growth in 2023 and 2024 (Chart 18). At the same
time, weaker global demand weighs on commodity prices, with crude oil prices
US$13 per barrel below the survey in 2023 and remaining US$3 per barrel
below the survey over the rest of the forecast horizon.
Economic Overview 15
In contrast, the upside scenario sees the Canadian economy avoid a recession as
easing of supply challenges, both in Canada and globally, helps to bring down
ination even as economies remain stronger than anticipated. In Canada, this
improved global economic backdrop is also supported by a larger boost from
our rapidly growing population, expanding Canada’s growth potential. A faster
rebound in China’s economy provides a boost to global growth and commodity
prices, with crude oil prices US$4 per barrel above the survey in 2023 and
US$8 per barrel higher for the rest of the forecast horizon. At the same time,
an accelerated easing of global supply chain frictions, supported by China’s
reopening, results in lower ination and interest rates compared to the survey.
Overall, nominal GDP is $41 billion above the survey, on average per year, in the
upside scenario, while it is $41 billion lower in the downside scenario (Chart 19).
Chart 18
Real GDP Growth
Chart 19
Nominal GDP Level Dierence With
February 2023 Survey Outlook
-1
0
1
2
3
2023 2024 2025 2026 2027
Downside Scenario
Upside Scenario
February 2023 Survey
per cent
-60
-40
-20
0
20
40
60
2023 2024 2025 2026 2027
Downside Scenario Upside Scenario
$ billions
Sources: Department of Finance Canada February 2023
survey of private sector economists; Department of Finance
Canada calculations.
Sources: Department of Finance Canada February 2023
survey of private sector economists; Department of Finance
Canada calculations.
16 Overview
3. Canada’s Place in a Changing Global Economy
The government is navigating the near-term economic challenges of ination,
higher interest rates, and supporting vulnerable Canadians with the rising cost
of living, while also ensuring that Canada is well-placed to thrive in a rapidly
changing global economy.
The accelerating work to build a net-zero global economy has sparked a global
race to attract investment in clean economies and the growing industries of
tomorrow. In the aftermath of Russia’s illegal invasion of Ukraine, which exposed
strategic economic vulnerabilities among many of the world’s democracies,
Canada’s allies are also moving at speed to limit their dependence on
dictatorships, and to friendshore their economies by building their critical supply
chains through democracies like our own. In Budget 2023, the government makes
transformative investments to ensure Canada does not fall behind at a time of
signicant opportunity for Canadians and Canadian businesses.
Moving to Net-Zero
As a major energy producer, the global shift to net-zero presents both a
challenge and a great opportunity for Canada (Chart 20). Analysis conducted
by the Bank of Canada and the Oce of the Superintendent of Financial
Institutions suggests that decisive action is required to ensure Canada
remains competitive during the global shift to net-zero. Inaction could, in
some scenarios, leave Canada’s GDP approximately 10 per cent lower than it
otherwise would be by 2050. Canada’s future economic prosperity depends on
the speed and scale of our response.
Chart 20
Aggregate Historical and Future Trajectory of GHG Emissions, 2000-2030
0
100
200
300
400
500
600
700
800
2000 2005 2010 2015 2020 2025 2030
megaton (Mt) C02 equivalent
Historical
emissions
Future
emissions
trajectory
Note: Historical data excludes eects from land use, land use change and forestry sector (LULUCF) while future emissions
include these eects.
Source: Environment and Climate Change Canada (2022), National Inventory Report 1990-2020 and 2030 Emissions
Reduction Plan.
Economic Overview 17
Having invested heavily in our clean economy since 2015, along with our
highly skilled workforce and abundance of natural resources, Canada is well-
positioned to succeed in the growing global clean economy if we continue to
make smart long-term investments today. The scale of investments that Canada
requires to reach net-zero by 2050 is signicant, with estimates ranging from
$60 billion to $140 billion per year on average. It will be up to the private sector
to make the majority of these investments, but to avoid the consequences of
underinvestment, it is critical that governments invest in policy frameworks
capable of mobilizing private capital. Supporting the private sector to make the
investments needed to thrive and create good middle class jobs in the clean
economy is a joint responsibility. The federal government cannot do this alone,
and provinces and territories must similarly invest heavily if Canada is to avoid
the consequences of being underprepared for the global shift to net-zero.
Reducing Supply Chain Vulnerabilities
Simultaneously, Canada must navigate a fundamental shift in the patterns of
global trade. For much of the past three decades, the global economy has
become increasingly interconnected. While economic integration lowered costs
for many goods, it also built a system of global trade that was vulnerable to the
disruption of critical supply chains.
For Canada and our democratic partners, the vulnerability created by
dependence on authoritarian regimes for critical goods is no longer tenable.
Russia’s weaponization of energy exports has forced the world’s democracies
to fundamentally rethink their supply chain vulnerabilities. China currently
dominates key portions of supply chains for clean technologies, including
batteries (Chart 21).
The mitigating of these vulnerabilities by the world’s democracies will require a
realignment of global trade, and the shifting of critical supply chains away from
dictatorships and towards democracies like our own.
This process, which has been referred to as “friendshoring,” represents a
signicant economic opportunity for Canada and for Canadian workers. As a
stable democracy with a skilled workforce and a rich endowment of natural
resources, Canada has a strong foundation from which to become a supplier
of critical goods for our allies. Building upon this foundation will require
investments in Canada’s economic capacity, both now and into the future.
18 Overview
Chart 21
China’s Comparative Concentration in the Global Electric Vehicle (EV)
Battery Supply Chain, 2022
0
25
50
75
100
Lithium Nickel Cobalt Graphite Cathode Anode Production Assembly
Material processing Cell Components Battery cells EVs
China USA Europe Other
per cent
Source: International Energy Agency.
Transforming Challenges into Opportunities
The need for investment to manage these structural challenges will not be
limited to one sector or one aspect of the economy. Broad-based investment
will be required to grow our economy and create good middle class jobs in the
years to come. The scale of required investments is massive and the private
sector alone is unlikely to mobilize the level of capital required in Canada at
sucient speed.
Many of the investments that need to be made will stretch over decades and
involve high up-front costs. Moreover, key sectors and technologies will have
signicant spillover eects by driving development of related industries. For
example, fundamental inputs to clean production and the production of clean
technologies, such as electricity, critical minerals, and carbon capture, utilization
and storage (CCUS), will provide foundations for an expanding clean economy.
For related sectors, such as hydrogen and clean manufacturing, this will boost
their productivity and support their resilience, and help to generate new middle
class jobs. Private investment decisions may not take full account of these
spillovers, which increases the risk of underinvestment.
Without the right policy framework, Canada could see underinvestment in
critical areas and a slow pace of innovation in new clean technology. Together,
these would result in Canada falling behind the United States and other
countries that are moving forward aggressively to build their clean economies,
create middle class jobs, and ensure more prosperous futures for their people.
Canada must act decisively to ensure it remains the location of choice for new
investment in these sectors, particularly in the face of recent passage of U.S.
Ination Reduction Act (IRA).
Economic Overview 19
Budget 2023 proposes substantial measures as the next steps in the
government's plan to “crowd-in” new private investment by leveraging
public investment and government policy. The goal of this approach is not
to substitute government for the private sector, nor supplant market-based
decision making. It is to leverage the tools of government to mobilize the
private sector.
This approach is not about the government picking individual corporate
winners in an eort to engineer a preferred vision of the economy in 2050.
That approach did not work in the past, and is even less likely to work in today’s
environment of rapid technological change. The tax incentives and investment
supports proposed in Budget 2023 are designed to set a framework for
boosting overall investment, while leaving the private sector to determine how
to invest based on market signals.
At the same time, the government has an indispensable role in ensuring that
investment happens where it will have the greatest long-term impact for
Canadians’ standard of living and the reduction of our emissions. This means
focusing on areas where Canada has a comparative advantage, and making
investments that will have the greatest impact on Canada’s productive capacity
and ability to create good middle class jobs. It will also mean looking to
industries that will grow in a changing global economy, and seeking out areas
where Canada can both benet at home and contribute to the economic
resilience of our friends and allies.
Budget 2023 takes a strategic approach to supporting Canada’s long-term
economic competitiveness and prosperity by investing in securing Canada’s
clean technology advantage, our future as a global leader in clean fuels, and our
natural advantage as a producer of clean electricity. In doing so, we can help to
usher in a new era of prosperity for Canadians.
4. Investing Responsibly in Canada’s Future
Budget 2023 lays out a responsible plan to grow Canada’s economy and create good
middle class jobs for Canadians; to strengthen Canada’s universal public health care
system and provide dental care for Canadians; to protect our environment; and to
support a range of other key priorities that matter to Canadians.
Years of responsible scal stewardship have left Canada in an enviable scal
position relative to our global peers. This responsible stewardship also allows
the government to act proactively, with support for those who need it most
and critical investments in the long-term prosperity of Canadians. At the same
time, the government recognizes there is an opportunity to refocus existing
spending, following the pandemic, on priorities that matter most to Canadians.
20 Overview
Table 1
Economic and Fiscal Developments, Policy Actions and Measures
billions of dollars
Projection
2022– 2023– 2024– 2025– 2026– 2027–
2023 2024 2025 2026 2027 2028
Budgetary balance – 2022 Fall
Economic Statement (FES 2022)
-36.4 -30.6 -25.4 -14.5 -3.4 4.5
Economic and scal developments
since FES 2022
6.4 -4.7 -4.9 -5.1 -7.5 -10.3
Budgetary balance before policy
actions and measures
-30.0 -35.3 -30.3 -19.5 -10.9 -5.8
Policy actions since FES 2022 -5.4 0.7 3.2 2.6 1.7 0.1
Budget 2023 measures (by
chapter)
1. Making Life More Aordable and
Supporting the Middle Class
-2.5 -0.8 -0.3 -0.5 -0.5 -0.6
2. Investing in Public Health Care
and Aordable Dental Care
-2.0 -3.6 -4.6 -6.4 -6.8 -7.9
3. A Made in Canada Plan:
Aordable Energy, Good Jobs, and a
Growing Clean Economy
0.0 -1.2 -3.1 -4.4 -5.9 -6.3
4. Advancing Reconciliation and
Building a Canada That Works for
Everyone
-3.1 -2.5 -1.3 -1.0 -0.6 -0.6
5. Canada’s Leadership in the World -0.1 -0.2 -0.1 -0.1 -0.1 -0.1
6a. Eective Government and
Improving Services to Canadians
0.1 2.8 0.1 0.8 2.9 3.2
6b. A Fair Tax System 0.0 0.2 1.5 1.6 4.4 4.0
Total – Actions Since FES 2022 and
Budget 2023 Measures
-13.0 -4.8 -4.7 -7.3 -4.9 -8.3
Budgetary Balance -43.0 -40.1 -35.0 -26.8 -15.8 -14.0
Budgetary Balance (per cent of GDP) -1.5 -1.4 -1.2 -0.9 -0.5 -0.4
Federal debt (per cent of GDP) 42.4 43.5 43.2 42.2 41.1 39.9
A negative number implies a deterioration in the budgetary balance (lower revenue or higher expenses). A positive
number implies an improvement in the budgetary balance (higher revenue or lower expenses).
Economic Overview 21
Investing in Canada’s Future is a Joint Responsibility
Driven by the federal government providing eight out of every ten dollars
in emergency pandemic spending, provincial and territorial governments
continue to signicantly outperform scal projections. Fiscal results to date
show that the aggregate provincial-territorial budgetary balance moved into
a surplus position in 2021-22, with an expectation that it will remain broadly
balanced thereafter. This stands in contrast to the decit of 1 per cent of GDP
in 2021-22 that had been expected through provincial and territorial 2022
budgets (Chart 22).
The solid provincial-territorial scal position means that, together, provinces
and territories have the ability to take proactive action to help build Canada’s
clean economy.
Chart 22
Federal and Provincial Budgetary Balances
-0.6
-0.5
-0.5
-0.2
-0.8
-2.2
0.4
0.4
-0.2
-0.1
-0.1
-0.9
-0.9
-0.6
-1.7
-14.9
-3.6
-1.5
-1.4
-1.2
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Total Provincial-Territorial Federal Government
Per cent of GDP
Note: Actual data up to 2021-22. The provincial-territorial aggregate for years 2022-23 reect 2022
fall updates and 2023 budgets; for 2023-24 and 2024-25, the balance reects 2022 budgets, 2022 fall
updates, and 2023 budgets.
22 Overview
A Responsible Fiscal Plan in Challenging Times
The scal outlook presented in Budget 2023 continues to place the government’s
scal stance well within key scal sustainability indicators, including:
While rising slightly in 2023-24 due to the global economic slowdown
and lower forecasted GDP, the federal debt-to-GDP ratio continues on a
declining path from 2024-25 onward (Chart 23).
The decit is projected to decline in every year of the forecast and return
to 1 per cent of GDP or lower in 2025-26 and ongoing, ensuring Canada’s
longer-term scal sustainability by keeping the debt-to-GDP ratio on a
downward path.
Even with higher borrowing costs, public debt charges as a share of the
economy are projected to remain at historically low levels (Chart 24).
This would also be the case under even higher interest rates.
These indicators underscore the government’s continued commitment to its
scal anchor of reducing federal debt as a share of the economy over the
medium-term, even as the government invests in Canadians.
Chart 23
Federal Debt
Chart 24
Public Debt Charges
20
30
40
50
60
70
1981 19861991 1996 2001 2006 201120162021 2026
per cent of GDP
Budget 2023
Forecast
0
2
4
6
8
1981 1986 1991 1996 2001 2006 2011 2016 2021 2026
Forecast Historical
per cent of GDP
With 100 basis-
point increase in
interest rates
Source: Department of Finance Canada. Source: Department of Finance Canada.
Economic Overview 23
Scenario Analysis
As discussed in section 2, while the latest developments in nancial markets have
raised the odds of a more pronounced slowdown, outcomes that are better or
worse than the February survey of private sector economists are both plausible.
To facilitate prudent economic and scal planning, and in light of elevated global
uncertainty and recent developments in nancial markets, the Department of
Finance has developed two scenarios that consider faster or slower growth tracks
relative to the February survey.
In the upside scenario, the budgetary balance would improve by an average of
approximately $6.5 billion per year (Chart 25) and remove 1.3 percentage points
from the federal debt-to-GDP ratio by 2027-28 (Chart 26).
In the downside scenario, the budgetary balance would deteriorate by an average
of approximately $7.2 billion per year and add 1.6 percentage points to the
federal debt-to-GDP ratio by 2027-28. That said, even under the downside
scenario, the decit would remain below 1 per cent of GDP by the end of
the forecast horizon, and the federal debt-to-GDP ratio would still be lower
in 2027-28 than it is today.
Details of the government’s scal outlook and the scal impact of the scenarios
can be found in Annex 1.
Chart 25
Federal Budgetary Balance under
Economic Scenarios
Chart 26
Federal Debt-to-GDP under
Economic Scenarios
-43.0
-40.1
-35.0
-26.8
-15.8
-14.0
-43.0
-47.0
-42.1
-34.2
-23.3
-21.4
-42.2
-32.3
-28.6
-20.2
-10.3
-7.8
-50
-40
-30
-20
-10
0
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28
Budget 2023
Downside
Upside
billions of dollars
43.5
43.2
42.2
41.1
39.9
42.4
41.9
41.0
39.8
38.6
42.4
44.3
44.4
43.5
42.5
41.5
38
40
42
44
46
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28
per cent of GDP
Budget 2023
Downside
Upside
Sources: Department of Finance Canada February 2023 survey of private sector economists; Department
of Finance Canada calculations.
24 Overview
International Comparisons
Including new measures in Budget 2023, Canada’s net debt as a share of
the economy is still lower today than in any other G7 country prior to the
pandemic—an advantage that Canada is forecasted to maintain (Chart 27).
Canada is also forecasted to post one of the largest improvements in its scal
balance among G7 countries since the beginning of the COVID-19 pandemic,
resulting in Canada having the smallest decit in the G7, both this year and next
(Chart 28).
Canada maintains a long tradition of responsible scal management along with
several other strengths, such as sound macroeconomic policy frameworks, a
large and diverse economy, and strong governing institutions which continue
to shape Canada’s excellent credit ratings from Moody’s (Aaa), S&P (AAA),
and Fitch (AA+). Canada is the third-largest economy in the world to have a
AAA rating from at least two of the three major global credit rating agencies,
together with only the United States and Germany.
Combined with the signicant investments made since 2015 in the long-term
capacity and resiliency of the Canadian economy, the additional investments
in health care and Canada’s clean economy presented in Budget 2023 can
be expected to generate social and economic returns for decades, helping to
bolster Canada’s international economic and scal strengths, and maintain our
enviable credit ratings.
Chart 27
General Government Net Debt
Forecasts, G7 Countries
Chart 28
General Government Balance
Forecasts, G7 Countries
0 100 200
Japan
Italy
France
United States
United Kingdom
Germany
Canada
per cent of GDP
2022
2019
2024
-20
-15
-10
-5
0
2019 2020 2021 2022 2023 2024
per cent of GDP
Other G7 country range
Budget 2023 impact
Canada (IMF October 2022)
Notes: The internationally comparable denition of “general government” includes the central, state, and local levels of
government, as well as social security funds. For Canada, this includes the federal, provincial/territorial, and local and
Indigenous government sectors, as well as the Canada Pension Plan and the Quebec Pension Plan. The incremental
impacts of Budget 2023 was added to the IMF’s October 2022 forecasts.
Sources: International Monetary Fund, October 2022 Fiscal Monitor; Department of Finance Canada calculations.
Economic Overview 25
Preserving Canada’s Fiscal Advantage: Maintaining
our Fiscal Anchor
The federal government’s scal anchor—reducing the federal debt-to-GDP ratio
over the medium term—remains unchanged and is being met.
The Budget 2023 forecast shows the federal debt-to-GDP ratio declining
in 2024-25 and throughout the remainder of the period. The government’s
spending plan is also projected to remain scally sustainable over the long
term. Modelling scenarios based on a set of reasonable economic and
demographic assumptions show the federal debt-to-GDP ratio continuing
to decline over the entire long-term projection horizon ending in 2055-56
(Chart 29). This is despite adverse demographic trends, including an aging
population, assumed modest future productivity growth rates and projected
increases in borrowing costs.
While based on reasonable assumptions, these long-term projections should
not be viewed as forecasts. Notably, these projections do not reect all
potential economic and scal impacts of the global economic evolutions
that Canada will have to navigate over the coming decades, nor do they
reect positive impacts that can be expected to result from the foundational
investments made by the government up to this budget. Details and sensitivity
analysis around these long-term scal projections are presented in Annex 1.
Chart 29
Long-Term Projections of the Federal Debt
0
10
20
30
40
50
2015-16 2020-21 2025-26 2030-31 2035-36 2040-41 2045-46 2050-51 2055-56
per cent of GDP
Upside
Downside
Budget 2023
Long-Term
Projections
Budget
2023
Forecast
Sources: Statistics Canada; Department of Finance Canada.
2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
Chapter 1
Making Life More Aordable and
Supporting the Middle Class
1.1 Making Life More Aordable ..................................................................................... 32
A New Grocery Rebate for Canadians .................................................................... 34
Cracking Down on Junk Fees ..................................................................................... 35
Cracking Down on Predatory Lending ................................................................... 36
Lowering Credit Card Transaction Fees for Small Businesses........................ 36
Supporting Your Right to Repair .............................................................................. 37
Common Chargers for Your Devices ....................................................................... 38
Automatic Tax Filing ...................................................................................................... 38
Making Life More Aordable for Students ......................................................... 39
Improving Registered Education Savings Plans ................................................ 40
Supporting Our Seniors ............................................................................................... 41
1.2 An Aordable Place to Call Home ............................................................................ 41
Launching the New Tax-Free First Home Savings Account ........................... 44
A Code of Conduct to Protect Canadians With Existing Mortgages ......... 44
Building More Aordable Housing..........................................................................45
Investing in an Urban, Rural, and Northern Indigenous Housing Strategy .... 46
Making Life More Aordable and Supporting the Middle Class 29
Chapter 1
Making Life More Aordable and
Supporting the Middle Class
Since 2015, the federal government’s focus has been investing in the middle
class, growing the economy, strengthening Canada’s social safety net, and
making life more aordable for Canadians.
The government introduced the Canada Child Benet, and as a result, hundreds
of thousands of children have been lifted out of poverty and millions of
Canadian families have support with the costs of raising children.
Increases to the Guaranteed Income Supplement, Old Age Security, and the
Canada Pension Plan mean more seniors can enjoy the secure and dignied
retirements they deserve.
An historic 2021 investment in a Canada-wide system of aordable early
learning and child care has already delivered a 50 per cent average reduction
in fees for regulated child care, brought fees down to just $10 a day in six
provinces and territories, with the rest on track to reach this milestone by 2026,
and strengthened the existing child care system in Quebec.
To ensure every Canadian has a safe and aordable place to call home, the
government has a plan that will help put Canada on the path to double the
number of new homes that will be built in Canada within a decade, help more
Canadians buy their rst home, and curb the unfair practices that are driving
up prices.
At a time of elevated global ination, the government has also provided
new, targeted support to the Canadians who need it most, and strengthened
existing programs, such as the Canada Workers Benet, that support millions of
hardworking Canadians.
But we know that, for millions of Canadians, ination means it is still dicult to
make ends meet and put food on the table. In response, Budget 2023 delivers
new, targeted ination relief for the most vulnerable Canadians to support them
with the cost of living.
Budget 2023 also announces new support for students, new measures that will
make life more aordable for the middle class, and further progress on the
government’s plan to make housing more aordable for Canadians.
30 Chapter 1
Federal Investments That Are Making Life More Aordable
This year, Canadians will continue to benet from the federal government’s
eorts since 2015 to make life more aordable. For example:
A family with one child in Ontario, with income of $85,000, in 2023 could
benet from about $11,300 as a result of reduced child care costs, the
Canada Child Benet, the Canada Dental Benet, tax relief from an increased
Basic Personal Amount, and increased Climate Action Incentive payments.
A single parent with one child in Newfoundland and Labrador, with
income of $40,000 in 2023, could benet from $7,300 as a result of
reduced child care costs, the Canada Child Benet, enhancements to
the Canada Workers Benet, the Canada Dental Benet, the proposed
Grocery Rebate, tax relief from an increased Basic Personal Amount, and
increased Climate Action Incentive payments.
A 76-year-old senior in British Columbia with a maximum Guaranteed
Income Supplement (GIS) entitlement could receive more than $2,000 in
additional support in 2023, thanks to the proposed Grocery Rebate, the
GIS top-up increase for single seniors from 2016, and the increase in the
Old Age Security pension for seniors aged 75 and older.
A low-income student in Manitoba could receive more than $5,600 in
additional support in 2023 thanks to proposed enhancements to Canada
Student Grants and Canada Student Loans, the proposed Grocery Rebate,
and increased Climate Action Incentive payments. If they have a disability
or dependents, they could receive an additional $12,800 in specialized
student grants, plus an extra $640 per dependent. After graduating, all of
their federal student loans will be interest-free, with repayment assistance
if their income is below $40,000 per year.
Making Life More Aordable and Supporting the Middle Class 31
Key Ongoing Actions
Since 2015, the federal government has made signicant investments to
support Canadians and make life more aordable. These have included:
Supporting about 3.5 million families annually through the tax-free Canada
Child Benet, with families this year receiving up to $6,997 per child under
the age of six, and up to $5,903 per child aged six through 17;
Increasing Old Age Security benets for seniors age 75 and older by ten per
cent as of July 2022, which is providing more than $800 in additional
support to full pensioners;
Reducing fees for regulated child care by 50 per cent on average, delivering
regulated child care that costs an average of just $10-a-day by 2026—with
six provinces and territories reducing child care fees to $10-a-day or less
by April 2, 2023—and strengthening the child care system in Quebec with
more child care spaces;
Strengthening the Canada Pension Plan, which will eventually raise the
maximum retirement benet by up to 50 per cent;
Enhancing the Canada Workers Benet for our lowest-paid—and often
most essential—workers, to provide up to $1,428 for a single worker
without children, up to $2,461 to a family, and an additional $737 for
workers with disabilities;
Permanently eliminating interest on Canada Student Loans, and ensuring
borrowers do not need to make payments on their loans until they earn at
least $40,000 per year; and,
Fighting climate change while making life more aordable with a federal
price on pollution that puts more money back in the pockets of eight out of
every ten Canadians in the provinces where it applies.
32 Chapter 1
1.1 Making Life More Aordable
Despite Canada’s strong recovery from the pandemic, today, too many
Canadians are struggling with the impacts of global ination, which is making
the cost of living a real challenge.
In the past year, the federal government has strengthened Canada’s social
safety net and provided targeted ination relief to the Canadians who need it
most. In Budget 2023, the government is introducing new, targeted measures to
support Canadians. As with previous ination relief, this new support has been
carefully designed to avoid exacerbating ination.
Budget 2023 also takes new steps to put money in the pockets of people who
need it most, crack down on junk fees, save Canadians money, and make post-
secondary education more aordable.
New Support for Those Who Need It Most
In the past year, the government has introduced a suite of new, targeted
measures to provide support to the Canadians who need it most and help
them pay the bills. This includes:
An enhanced Canada Workers Benet, which means families could
receive up to $2,461 this year, and a single Canadian without children
could receive up to $1,428;
$2.5 billion for one-time ination relief payments to about 11 million
low- and modest-income Canadians, worth up to $467 for a couple with
two children, and up to $234 for a single Canadian without children;
Direct, tax-free payments of up to $1,300 per child over two years to
eligible families to cover dental expenses for their children under 12;
A tax-free payment of $500 to help low-income people who are
struggling with the cost of rent;
A ten per cent increase in Old Age Security (OAS) payments for seniors
who are 75 and older, which is providing over $800 in new supports to
full pensioners in the rst year; and,
A cross-Canada reduction of fees for regulated child care of 50 per cent
on average, with six provinces and territories reducing child care fees to
$10-a-day or less by April 2, 2023, based on Quebec’s strong example.
In addition, important benets like the Canada Child Benet, Canada Pension
Plan, OAS, and the Guaranteed Income Supplement all keep pace with ination.
Making Life More Aordable and Supporting the Middle Class 33
Delivering Savings for Families Through Early Learning and Child Care
The federal government’s historic investment in a Canada-wide early leaning and child
care system is making life more aordable for families, helping to give children across
Canada the best start in life, and strengthening our workforce. Today, fewer women have
to choose between their family and their career, and in February 2023, the labour force
participation rate for women in their prime working years reached a record 85.7 per cent.
By April 2, 2023, six provinces and territories will be providing regulated child care
for an average of just $10-a-day or less—signicantly ahead of schedule. All other
provinces and territories remain on track to achieve $10-a-day child care by 2026.
In Quebec, federal investments are continuing to make the existing child care system
more accessible through the creation of new spaces.
Table 1.1
Estimated Savings for Families Under the Canada-wide Early Learning and Child Care
System
Province /
Territory
Status of Fee Reduction Estimated Savings per Child
(Gross, Annual)
1
BC 50 per cent on average reduction achieved as of
December 2022
Savings of up to $6,600 per child
AB 50 per cent on average reduction achieved as of
January 2022
Savings of up to $10,330
2
per child
SK $10-a-day eective April 1, 2023 Savings of up to $6,900
3
per child
MB $10-a-day eective April 2, 2023 Savings of up to $2,610 per child
ON 50 per cent on average reduction achieved as of
December 2022
Savings of up to $8,500
4
per child
NB 50 per cent on average reduction achieved as of
June 2022
Savings of up to $3,900 per child
PEI 50 per cent on average reduction achieved as of October
2022
Savings of up to $2,000 per child
NS 50 per cent on average reduction achieved as of
December 2022
Savings of up to $6,000
5
per child
NL
$10-a-day achieved as of January 1, 2023 Savings of up to $6,300 per child
YK
$10-a-day achieved in April 2021, prior to Budget 2021 Savings of up to $7,300 per child
NWT
50 per cent
on average reduction achieved as of January
2022
Savings of up to $4,950 per child
NU $10-a-day achieved as of December 2022 Savings of up to $14,300 per child
QC
6
Under its asymmetrical agreement, Quebec has committed to creating 30,000 new child care
spaces by March 2026.
1
Estimated savings for BC, AB, SK, ON, NB, PEI, NS, NL, and NWT are provincial and territorial estimates. Remaining savings
calculations (MB, YK, and NU) are Employment and Social Development Canada estimates and are illustrative only. All estimates
are relative to 2019 levels unless updated data is provided by provinces and territories. All estimates are based on out-of-pocket
parent fees excluding amounts that would be recovered through provincial/territorial tax credits or the federal child care expense
deduction at tax time, or changes to provincial/territorial or federal benets as a result of lower child care expenses. Actual savings
for families will vary based on factors such as actual fees paid prior to reductions. Provincial and territorial methodologies and data
for calculating estimated savings may vary.
2
Based on Alberta’s savings scenario of a family earning $130,000/year previously paying $1,200/month for infant care and now
paying $339/month.
3
Based on Saskatchewan’s average savings estimate of $573/month for full-time infant care as of April 2023.
34 Chapter 1
Delivering Savings for Families Through Early Learning and Child Care
4
Based on Ontario’s savings scenario of a family paying $62-a-day per child at the beginning of 2022 and $29.30-a-day
eective December 31, 2022.
5
Based on Nova Scotia’s savings scenario for an infant in full-time licensed child care.
6
The Government of Canada has entered into an asymmetrical agreement with the province of Quebec that will
allow for further improvements to its early learning and child care system, where parents with a subsidized, reduced
contribution space already pay a single fee of less than $10-a-day.
A New Grocery Rebate for Canadians
Groceries are more expensive today, and for many Canadians, higher prices
on essential goods are causing undue stress. In Budget 2023, the federal
government is providing new, targeted ination relief to the Canadians who
need it most.
For 11 million low- and modest-income Canadians and families, the Grocery
Rebate will provide eligible couples with two children with up to an extra
$467; single Canadians without children with up to an extra $234; and seniors
with an extra $225 on average. This will be delivered through the Goods and
Services Tax Credit (GST Credit) mechanism.
By targeting the Grocery Rebate to the Canadians who need it most, the
government will be able to provide important relief without making ination
worse.
Budget 2023 proposes to introduce a one-time Grocery Rebate,
providing $2.5 billion in targeted ination relief to the Canadians who
need it most. The Grocery Rebate will be delivered through a one-time
payment from the Canada Revenue Agency as soon as possible following
the passage of legislation.
Alex works as a cashier at a convenience store, and Sam works part-time as a
cook at a restaurant. Together, they earn $38,000 to support their two young
children. Higher prices at the grocery store have strained their already tight
budget, and they are struggling to make ends meet. On top of the enhanced
Canada Workers Benet, the Canada Child Benet, and the GST Credit they
already receive, the Grocery Rebate will make it easier for them to buy the
healthy food their growing children need by providing them with $467.
Brandan earns $32,000 per year working at a gym. Between the higher costs
of rent, car payments, and groceries, he is having a tough time paying the
bills at the end of the month. The Grocery Rebate will provide him with $234,
on top of the enhanced Canada Workers Benet and the GST Credit.
Making Life More Aordable and Supporting the Middle Class 35
Cracking Down on Junk Fees
Unexpected, hidden, and additional fees add up quickly. From internet overage
charges, to roaming fees, to event fees, Canadians deal with junk fees every day.
In Budget 2023, the federal government is taking action to crack down on junk
fees, to continue to ensure businesses are transparent with prices, and to make
life more aordable for Canadians.
Budget 2023 announces the government’s intention to work with
regulatory agencies, provinces, and territories to reduce junk fees for
Canadians. This could include higher telecom roaming charges, event
and concert fees, excessive baggage fees, and unjustied shipping and
freight fees.
The government will strengthen existing tools or create new ones, including
through new legislative amendments, to achieve this objective.
This builds on recent steps the government has taken to protect Canadians
from hidden costs, including:
Amendments to the Competition Act to strengthen protections against
hidden prices;
Amendments to the Bank Act and Financial Consumer Agency of Canada
Act to protect Canadians’ rights and interests when dealing with their
banks; and,
A new policy direction to the Canadian Radio-television and
Telecommunications Commission to ensure Canadians can aordably and
easily change, downgrade, or cancel services.
36 Chapter 1
Cracking Down on Predatory Lending
Predatory lenders can take advantage of some of the most vulnerable people
in our communities, including low-income Canadians, newcomers, and
seniors—often by extending very high interest rate loans. The current criminal
rate of interest under the Criminal Code, equivalent to 47 per cent APR (annual
percentage rate), can trap Canadians in a cycle of debt that they cannot aord
and cannot escape. In Quebec, the maximum interest rate for consumers is
currently 35 per cent.
Budget 2023 announces the federal government’s intention to introduce
changes to the Criminal Code to lower the criminal rate of interest from
the equivalent of 47 per cent APR to 35 per cent APR, and to launch
consultations on whether the criminal rate of interest should be further
reduced.
Budget 2023 announces the government’s intention to adjust the
Criminal Code’s payday lending exemption to require payday lenders to
charge no more than $14 per $100 borrowed. This cap is in line with the
lowest cap among provinces, in Newfoundland and Labrador.
Budget 2023 also announces that the government will launch
consultations on additional revisions to the Criminal Code’s provincial/
territorial-requested payday lending exemption.
Hannah is a single mother in Guelph who makes $35,000 as a cleaner at a
hospital. Her car broke down and she needs $5,000 for immediate repairs so
she can get to her job. Hannah works hard, but as a result of the debts she
has accumulated to support her children, traditional banks will not lend her
money. In need of money quickly, Hannah turns to a lender who has been
advertising across town and takes out a loan with a 46.9 per cent interest rate.
Weeks later, Hannah realizes that she will need to borrow more money to
repay this loan, and has suddenly found herself trapped in a cycle of debt.
With changes the federal government is making to the criminal rate of
interest, the highest interest loan that Hannah could receive would be no
more than 35 per cent. On a $5,000 loan with a two year amortization period
at the new rate, she will have saved $775 over the life of the loan.
Lowering Credit Card Transaction Fees for Small
Businesses
The pandemic brought an increase in people using credit cards when they shop.
Small businesses pay fees to process credit card transactions, with the largest
component being the “interchange fee” paid to credit card issuers. To support
hardworking owners of small businesses, the federal government has been
working closely with the payment card industry and small businesses to lower
these transaction fees.
Making Life More Aordable and Supporting the Middle Class 37
In Budget 2023, the government is announcing that it has secured
commitments from Visa and Mastercard to lower fees for small
businesses, while also protecting reward points for Canadian consumers
oered by Canada’s large banks.
More than 90 per cent of credit card-accepting businesses will see their
interchange fees reduced by up to 27 per cent from the existing weighted
average rate. These reductions are expected to save eligible small businesses
in Canada approximately $1 billion over ve years. Combined with the
prior actions of this government in 2020, these measures amount to nearly
$1.5 billion of costs savings achieved for small businesses.
Small businesses will also benet from free access to online fraud and cyber
security resources from Visa and Mastercard to help them grow their online
sales, while preventing fraud and chargebacks.
The government’s expectation is that the commitments by credit card networks
to lower interchange fees for small businesses will not adversely impact
interchange fees paid by other businesses. The government also expects other
credit card companies to take similar actions to lower fees for small businesses,
and that payment processors will pass these reductions through to small
businesses. To achieve this, the government will be engaging with networks,
acquirers, and payment service providers.
More details, including eligible businesses, will be released in the coming weeks.
Malik and Sebastian own a small local sports store in Edmonton with
$300,000 in annual credit card sales. Because of the commitments secured
by the federal government, they are expected to see interchange savings
of $1,080 per year. This year, Malik and Sebastian can use that $1,080 to
advertise and grow their business.
Supporting Your Right to Repair
When it comes to broken appliances or devices, high repair fees and a lack of
access to specic parts often mean Canadians are pushed to buy new products
rather than repairing the ones they have. This is expensive for people and
creates harmful waste.
Devices and appliances should be easy to repair, spare parts should be readily
accessible, and companies should not be able to prevent repairs with complex
programming or hard-to-obtain bespoke parts. By cutting down on the number
of devices and appliances that are thrown out, we will be able to make life more
aordable for Canadians and protect our environment.
38 Chapter 1
Budget 2023 announces that the government will work to implement
a right to repair, with the aim of introducing a targeted framework for
home appliances and electronics in 2024.
The government will launch consultations this summer, including on the right
to repair and the interoperability of farming equipment, and work closely with
provinces and territories to advance the implementation of a right to repair.
Bella needs to x her phone and goes to a repair booth at her local mall.
Despite it being a simple x, copyright rules prevent third-party access to
the repair she needs. This forces Bella to x her phone directly with the
phone manufacturer, which costs far more than it should. Once the federal
government introduces a right to repair, the simple repair could be done at
the mall for a much lower price.
Common Chargers for Your Devices
Over the past decade, multiple chargers have been developed by manufacturers
for phones, tablets, cameras, laptops, and other devices. Every time Canadians
purchase new devices, they need to buy new chargers to go along with them,
which drives up costs and increases electronic waste. Recently, the European
Union moved towards mandating USB-C charging ports for all small handheld
devices and laptops by the end of 2024.
Budget 2023 announces that the federal government will work with
international partners and other stakeholders to explore implementing
a standard charging port in Canada, with the aim of lowering costs for
Canadians and reducing electronic waste.
Automatic Tax Filing
Up to 12 per cent of Canadians currently do not le their tax returns—
the majority of whom are low-income, and would pay little to no income tax.
In fact, many of these low-income Canadians are missing out on valuable
benets and support to which they are entitled, such as the Canada Child
Benet and the Guaranteed Income Supplement.
Since 2018, the Canada Revenue Agency (CRA) has delivered a free and simple
File My Return service, which allows eligible Canadians to auto-le their tax
return over the phone after answering a series of short questions. Canadians
with simple tax situations and lower or xed income receive an invitation
letter from the CRA to use File My Return, and in the 2022 tax ling season,
approximately 53,000 returns were led using this service.
To ensure more low-income Canadians have the ability to quickly
and easily auto-le their tax returns, Budget 2023 announces that the
federal government will increase the number of eligible Canadians for
File My Return to two million by 2025—almost triple the current number.
The government will report on its progress in 2024.
Making Life More Aordable and Supporting the Middle Class 39
Budget 2023 also announces that, starting next year, the CRA will pilot
a new automatic ling service that will help vulnerable Canadians who
currently do not le their taxes receive the benets to which they are
entitled. Following consultations with stakeholders and community
organizations, the CRA will present a plan in 2024 to expand this service
even further.
The government will continue to explore other avenues, including potential
legislative changes, to ensure vulnerable Canadians receive the benets to
which they are entitled.
Making Life More Aordable for Students
Over 750,000 post-secondary students rely on federal assistance each year
to help them aord the cost of tuition, housing, and everyday essentials. To
make the transition from school to working life easier, the federal government
permanently eliminated interest on Canada Student Loans and Canada
Apprentice Loans, and made changes to loan repayment assistance so that
nobody earning less than $40,000 per year needs to make payments on their
federal student loans.
When COVID-19 disrupted students’ lives, the federal government responded
by doubling Canada Student Grants—income-tested support that hardworking,
ambitious young people receive when the cost of going to school is out
of reach for them and their parents. This meant students could receive up
to $6,000 in up-front, non-repayable aid each school year, for three years
starting in the 2020-21 school year.. This support is currently set to expire
on July 31, 2023. But with life costing more and with students still in need of
support to aord an education, the government knows it is important that
students can aord to pursue their dreams.
Budget 2023 proposes to provide $813.6 million in 2023-24 to enhance
student nancial assistance for the school year starting August 1, 2023.
This includes:
Increasing Canada Student Grants by 40 per cent—providing up to
$4,200 for full-time students.
Raising the interest-free Canada Student Loan limit from $210 to
$300 per week of study.
Waiving the requirement for mature students, aged 22 years or
older, to undergo credit screening in order to qualify for federal
student grants and loans for the rst time. This will allow up
to 1,000 additional students to benet from federal aid in the
coming year.
These changes will allow post-secondary students to access up to $14,400 in
enhanced Canada Student Financial Assistance for the upcoming school year.
Students with disabilities and students with dependents will also receive an
increase in Canada Student Grants.
40 Chapter 1
This builds on ongoing supports the federal government has introduced to
make life more aordable for students and young people, such as extending
enhanced federal student supports to include part-time students with
dependents, and providing up to $20,000 per year to help students with
persistent, prolonged, or permanent disabilities aord necessary services and
equipment for their studies.
The federal government will work with students in the year ahead to develop a
long-term approach to student nancial assistance, in time for Budget 2024.
Quebec, the Northwest Territories, and Nunavut, which do not participate in the
program, can receive federal funding to provide their own comparable support.
Doug is a full-time student at the University of Prince Edward Island.
Despite savings from a summer job and his small scholarship, the rising cost
of living means Doug is still having a hard time aording the cost of tuition,
textbooks, and housing. A $1,200 increase to his $3,000 base Canada Student
Grant, combined with up to $10,200 in interest-free Canada Student Loans, will
help to cover those costs. Because his Canada Student Grant is paid up front,
Doug is able to pay his tuition at the start of the year, purchase his textbooks,
and provide the rst month of rent at his new home in Charlottetown.
Chart 1.1
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
2015 2016 2017 2018 2019 2020 2021 2022 2023
Canada Student Grant Canada Student Loans*
Total Federal Aid Available to a Full-Time Student Based on Financial
Need, by School Year
*Total for Canada Student Loans is based on a 34-week school year.
Improving Registered Education Savings Plans
The cost of attending a post-secondary school has risen in recent years.
Registered Education Savings Plans (RESPs) are an important part of saving for
post-secondary education. In a typical year, nearly 500,000 students withdraw
funds from an RESP to support their education. However, the withdrawal
limits for RESPs have not increased in 25 years. In Budget 2023, the federal
government is taking steps to improve these plans for students and help them
aord the costs of pursuing an education.
Making Life More Aordable and Supporting the Middle Class 41
Budget 2023 proposes to increase limits on certain RESP withdrawals
from $5,000 to $8,000 for full-time students, and from $2,500 to $4,000
for part-time students.
Budget 2023 also proposes to allow divorced or separated parents to
open a joint RESP for their children, which will make it easier and more
aordable for parents to save for their children’s education.
Hélène is planning to start full-time studies at the University of Manitoba in
the fall. She estimates that she’ll need $7,000 for the rst semester to help
cover tuition, books, and living expenses. An increased limit on withdrawals
of Educational Assistance Payments from her RESP helps her access more of
the government support in the account and get through the fall.
Supporting Our Seniors
Our seniors have made Canada what it is today, and the federal government
provides them with much-needed income support.
The Old Age Security (OAS) program—consisting of the OAS pension, the
Guaranteed Income Supplement (GIS), and the Allowances—is Canada’s
largest federal program, forecasted to provide $75.9 billion in support to
seniors in 2023-24. As of January 2023, there were more than seven million
OAS recipients, including close to 2.4 million GIS recipients, plus about 72,000
Allowance recipients. In January, seniors received a maximum of $687.56
through OAS, with $756.32 delivered to those 75 and over. A single senior in
receipt of the GIS received a maximum of an additional $1,026.96.
These benets are adjusted each quarter to help keep up with ination,
which provides important, stable income for seniors.
Since 2016, the federal government has taken signicant action to further
support our seniors. This includes:
A ten per cent increase to the maximum GIS benet for single seniors;
Reversing the previous government’s announced increase to the eligibility
age for OAS and GIS back to age 65 from 67, providing nancial security to
those aged 65 and 66;
As of July 2022, a ten per cent increase to the OAS pension for seniors age
75 and over, which is providing additional benets of over $800 to full
pensioners in the rst year; and,
$6 billion over ten years to provinces and territories for the delivery of
home care services for seniors who want to continue to live at home.
Because of the government’s investments, the indexation of benets to ination,
and the growing seniors population, OAS, GIS, and Allowance expenditures
are projected to grow by close to 30 per cent to $96.3 billion in 2027-28 from
2023-24—an increase of more than $20 billion per year and growing.
42 Chapter 1
1.2 An Aordable Place to Call Home
Everyone should have a safe and aordable place to call home. However, for
too many Canadians, including young people and new Canadians, the dream of
owning a home is increasingly out of reach, and paying rent has become more
expensive across the country. This is undermining the nancial stability of an
entire generation of Canadians.
A lack of aordable housing also has an impact on our economy. Without more
homes in our communities, it is dicult for businesses to attract the workers
they need to grow and succeed, and when people spend more of their income
on housing, it means less money is being spent in our communities.
This is a complex and longstanding issue—one that requires a real plan to address
the multitude of factors that are making housing more expensive in Canada.
Budget 2022 announced signicant investments to make housing more
aordable, including by helping people buy their rst home, tackling unfair
practices that drive up costs, and working with provincial and territorial
governments, municipalities, and both the private sector and non-prots to
double the number of new homes that Canada will build by 2032. Budget 2023
proposes new measures to build on this progress and continue the government’s
work to make housing more aordable from coast to coast to coast.
Making Life More Aordable and Supporting the Middle Class 43
Recent Action to Make Housing More Aordable
Over the past year, the federal government has taken signicant steps
towards making housing more aordable for Canadians. These have
included:
Introducing a two-year ban on non-resident, non-Canadians
purchasing residential property to help curb speculation and ensure
that houses are used as homes for Canadians to live in, rather than as
nancial assets for foreign investors;
Introducing a one per cent annual underused housing tax on the value
of non-resident, non-Canadian owned residential property that is
vacant or underused;
Introducing a new Tax-Free First Home Savings Account to allow
Canadians to save up to $40,000, tax-free, to help buy their rst home;
Making sure that prots from ipping properties held for less than
12 months are taxed fully and fairly;
Doubling the First-Time Home Buyers’ Tax Credit to provide up to
$1,500 in direct support to home buyers to oset closing costs involved
in buying a rst home;
Introducing a new, refundable Multigenerational Home Renovation Tax
Credit, which will provide up to $7,500 in support for constructing a
secondary suite for a senior or an adult with a disability, starting in 2023;
Applying the Goods and Services Tax/Harmonized Sales Tax to all
assignment sales of newly constructed or substantially renovated
residential housing, to help address speculative trading in the
housing market;
Launching a new $4 billion Housing Accelerator Fund to remove
barriers and incentivize housing supply growth, with the goal of
creating at least 100,000 net new homes across Canada;
Launching a $200 million stream under the Aordable Housing
Innovation Fund to develop and scale up rent-to-own projects;
Launching a third round of the Rapid Housing Initiative, which is
providing $1.5 billion to create 4,500 new aordable housing units for
Canadians in severe housing need, with 25 per cent of investments
going to housing projects targeted towards women;
Delivering over $500 million towards the government’s goal of
ending chronic homelessness, through Reaching Home, Canada’s
Homelessness Strategy; and,
Delivering a top-up to the Canada Housing Benet in December 2022,
which provided low-income renters with a $500 payment to help with
the cost of housing.
44 Chapter 1
Launching the New Tax-Free First Home Savings
Account
Over the past several years, as house prices have continued to climb, the cost
of a down payment has become increasingly out of reach for far too many
young people.
In Budget 2022, the federal government committed to introducing a Tax-Free
First Home Savings Account—a new registered plan to give prospective rst-time
home buyers the ability to save $40,000 on a tax-free basis. Like a Registered
Retirement Savings Plan (RRSP), contributions will be tax-deductible, and
withdrawals to purchase a rst home—including from investment income—will
be non-taxable, like a Tax-Free Savings Account (TFSA). Tax-free in; tax-free out.
In Budget 2023, the government is delivering on this commitment.
Budget 2023 announces that nancial institutions will be able to start
oering the Tax-Free First Home Savings Account to Canadians as of
April 1, 2023.
Olivia and Amira want to buy a home. Starting April 1, 2023, they each
save the maximum $8,000 per year in their Tax-Free First Home Savings
Account, which they can deduct from their income at tax time. They both
make between $70,000 and $100,000, and the Tax-Free First Home Savings
Account allows them each to receive an annual federal tax refund of $1,640.
After four years of saving, Olivia and Amira have a combined $90,000,
including tax-free investment income, in their Tax-Free First Home Savings
Account, which they can use towards a down payment on their rst home.
They can withdraw their down payment tax-free, saving thousands of dollars
that can be put towards their new home. In addition, they will claim the First-
Time Home Buyers’ Tax Credit, providing an additional $1,500 in tax relief.
A Code of Conduct to Protect Canadians With
Existing Mortgages
Elevated interest rates have made it harder for some Canadians to
make their mortgage payments, particularly for those with variable rate
mortgages. Canadians have the right to work with their mortgage lender to
explore mortgage relief options that will help them stay in their home.
Making Life More Aordable and Supporting the Middle Class 45
The federal government, through the Financial Consumer Agency of
Canada, is publishing a guideline to protect Canadians with mortgages
who are facing exceptional circumstances. Specically, the government
is taking steps to protect Canadians and ensure that federally regulated
nancial institutions provide Canadians with fair and equitable access
to relief measures that are appropriate for the circumstances they
are facing, including by extending amortizations, adjusting payment
schedules, or authorizing lump-sum payments. Existing mortgage
regulations may also allow lenders to provide a temporary mortgage
amortization extension—even past 25 years.
This guideline will ensure that Canadians are treated fairly and have equitable
access to relief, without facing unnecessary penalties, internal bank fees, or
interest charges, which will help more Canadians aord the impact of elevated
interest rates.
Building More Aordable Housing
Rising interest rates and construction costs have made it more expensive to
build housing. To ensure that Canada’s National Housing Strategy programs can
continue to deliver new aordable homes for Canadians, especially for the most
vulnerable, the federal government is taking action.
Budget 2023 announces the government’s intention to support the
reallocation of funding from the National Housing Co-Investment Fund’s
repair stream to its new construction stream, as needed, to boost the
construction of new aordable homes for the Canadians who need
them most.
Figure 1.1
National Housing Strategy
Results and Investments
As of December 2022
New units
Shelters
118,418
Repaired units
298,357
Housing aordability supports
207,110
households
New:
2,879
shelter spaces
Units targeting women and their children
47,344
Repaired:
3,209
shelter spaces
Committed to date
$31.27 billion
National Housing Strategy Results and Investments
46 Chapter 1
Investing in an Urban, Rural, and Northern
Indigenous Housing Strategy
Access to safe and aordable housing is critical to improving health and
social outcomes, and to ensuring a better future for Indigenous communities
and children. That is why the federal government has committed more than
$6.7 billion since 2015 to support housing in Indigenous communities.
In particular, Indigenous people living in urban, rural, and northern areas face
unique challenges accessing adequate housing, and do not qualify for support
that is provided to Indigenous people living on reserve. Delivering on the
government’s previous commitment, Budget 2022 announced $300 million
towards an Urban, Rural, and Northern Indigenous Housing Strategy, which is
currently being co-developed with Indigenous partners.
Budget 2023 proposes to commit an additional $4 billion, over seven
years, starting in 2024-25, to implement a co-developed Urban, Rural,
and Northern Indigenous Housing Strategy.
A Housing Market That Works for Canadians
Homes should be for Canadians to live in—not a nancial asset class.
The federal government remains concerned with the nancialization of housing
across Canada, and introduced important measures in Budget 2022 to address
it, including a two-year ban on foreign investment in Canadian housing, a
tax on underused foreign-owned homes, the taxing of assignment sales, and
ensuring that property ippers pay their fair share.
While large corporate investors own a signicant share of Canada’s rental
units and will play an important role in building new homes, the government
recognizes that too many Canadians have experienced excessive renovictions,
above-guideline rent increases, and other actions that have made rent more
expensive. More needs to be done to ensure these homes are aordable
for Canadians, which is why policy changes applicable to all large corporate
landlords could be considered to ensure best outcomes on aordability and fair
treatment of tenants.
The government is committed to ensuring that investor activity, especially
among those who own a signicant number of investment properties, is
helping, not hurting, housing aordability in Canada and will review whether
the government needs to rebalance the housing market in favour of Canadians
looking for a home to live in.
Making Life More Aordable and Supporting the Middle Class 47
The government is also working with provinces and territories on the
development of a Home Buyers’ Bill of Rights, which will help level the playing
eld for young, middle class, and new Canadians by making the process of
buying a home more open, transparent, and fair. The Home Buyers’ Bill of
Rights could include ensuring the legal right to a home inspection, requiring
that real estate agents disclose whether they are representing both sides of a
potential sale, and ensuring transparency on the history of sale prices.
To ensure the dream of home ownership is a possibility for all Canadians,
Budget 2023 announces that the government will consult on changes
required to remove regulatory barriers for homebuyers from diverse
communities seeking access to alternative nancing products.
Chapter 1
Making Life More Aordable and Supporting the Middle Class
millions of dollars
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
1.1. Making Life More
Aordable 2,475 814 0 0 0 0 3,289
A New Grocery Rebate for
Canadians 2,475 0 0 0 0 0 2,475
Making Life More Aordable for
Students 0 814 0 0 0 0 814
1.2. An Aordable Place to
Call Home 0 0 300 500 500 600 1,900
Investing in an Urban, Rural, and
Northern Indigenous Housing
Strategy 0 0 300 500 500 600 1,900
Additional Investments –
Making Life More Aordable
and Supporting the Middle
Class 0 6 24 25 0 0 55
National Housing Strategy
Implementation 0 6 24 25 0 0 55
Operating funding for CMHC to support National Housing Strategy programs.
Chapter 1 - Net Fiscal Impact 2,475 820 324 525 500 600 5,243
Note: Numbers may not add due to rounding. A glossary of abbreviations used in this table can be found at the end of
Annex 1.
2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
Chapter 2
Investing in Public Health Care and
Aordable Dental Care
2.1 Investing in Public Health Care .................................................................................. 52
Working Together to Improve Health Care for Canadians ............................. 54
Health Care Results and Accountability ................................................................. 56
Investing in Better Health Care Data....................................................................... 56
Encouraging More Doctors and Nurses to Practise in Rural and
Remote Communities .................................................................................................. 57
Strengthening Retirement Saving for Personal Support Workers .............. 57
Fighting Crime and Saving Lives: Combatting the Opioid Crisis ................. 58
Implementing the 988 Suicide Prevention Line ................................................ 60
Building the Shepody Healing Centre .................................................................... 60
Safeguarding Access to Abortion and Other Sexual and
Reproductive Health Care Services ......................................................................... 60
Improving Canada’s Readiness for Health Emergencies ................................. 61
2.2 Dental Care for Canadians ........................................................................................... 61
The New Canadian Dental Care Plan ...................................................................... 62
Expanding Access to Dental Care ........................................................................... 62
Investing in Better Dental Care Data ..................................................................... 62
Investing in Public Health Care and Aordable Dental Care 51
Chapter 2
Investing in Public Health Care and
Aordable Dental Care
Canadians are proud of our universal publicly funded health care system.
No matter how much money you make, or where you were born, or what your
parents do, you will receive the care you need. For generations, this idea has
been fundamental to who we are as Canadians.
However, our public health care system is not delivering the high-quality care
that Canadians deserve. Patients seeking emergency care have found their
emergency rooms overwhelmed. Surgeries have been postponed or cancelled.
Our public health care system, and the workers who uphold it, are under
enormous strain—a situation that was made worse by the pandemic, and which
requires immediate action to deliver better care for Canadians.
To help ensure Canadians receive the care they need, Budget 2023 delivers
an urgent, needed investment of $198.3 billion over the next ten years to
strengthen our public health care system.
Budget 2023 also delivers the next steps in the government’s transformative
plan to ensure Canadians have access to dental care.
With these signicant investments—as well as new measures to address
the shortage of health care professionals in rural and remote communities,
to combat the opioid crisis, and to ensure that Canadians can receive sexual and
reproductive health care and critical mental health support—Budget 2023 will
help build a healthier Canada from coast to coast to coast.
Key Ongoing Actions
Since 2015, the federal government has made signicant investments to
strengthen our public health care system. These have included:
Providing $10 billion to provinces and territories to strengthen home
care, community care, and long-term care for seniors;
Improving Canadians’ access to mental health services, including through
$5 billion to provinces and territories to increase community-based
mental health and addictions services;
Delivering $6.5 billion through Canada Health Transfer top-ups to
provinces and territories to address immediate pressures in our public
health care system, in addition to annual Canada Health Transfer
payments, which amount to $49.4 billion in 2023-24;
Launching the Canada Dental Benet for children under 12, which has
already helped more than 240,000 children receive the dental care
they need;
52 Chapter 2
Providing $5.5 billion for primary care and public health on reserve,
distinctions-based mental health support, and non-insured health
benets for First Nations and Inuit;
$1.2 billion to support 248 health-related infrastructure projects in First
Nation communities;
Investing more than $800 million since 2017 through the Canadian Drugs
and Substances Strategy to support a compassionate and evidence-
based response to the overdose crisis; and
Launching a Sexual and Reproductive Health Fund to help make sexual
and reproductive health information and services—including access to
abortion—more accessible for vulnerable populations.
2.1 Investing in Public Health Care
During the COVID-19 pandemic, the federal government stepped up to
protect Canadians and safeguard our public health care system. The federal
government provided unprecedented funding for provincial and territorial
health systems, personal protective equipment, vaccines, treatments and
testing, and public health measures for everything from schools to public
transit.
Chart 2.1
Federal COVID-19 Response
0
10
20
30
40
50
60
70
80
90
100
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
CHT Bilateral agreements Pandemic Support
Note: Pandemic Support includes relevant amounts in 2020-21 and 2021-22 from Budget 2022, Table A1.13.
Canada was able to weather the worst of the pandemic thanks to the support
provided by the federal government, which amounted to eight out of every ten
dollars spent to ght COVID-19. This signicantly contributed to the budgetary
surpluses that many provinces and territories enjoy today.
Investing in Public Health Care and Aordable Dental Care 53
Chart 2.2
Federal and Provincial Budgetary Balances Following Emergency Federal
Pandemic Spending
-0.6
-0.5
-0.5
-0.2
-0.8
-2.2
0.4
0.4
-0.2
-0.1
-0.1
-0.9
-0.9
-0.6
-1.7
-14.9
-3.6
-1.5
-1.4
-1.2
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Total Provincial-Territorial Federal Government
Per cent of GDP
Note: Actual data up to 2021-22. The provincial-territorial aggregate for 2022-23 reects 2022 fall updates and 2023
budgets; for 2023-24 and 2024-25, the balance reects 2022 budgets, 2022 fall updates, and 2023 budgets.
If Canada had experienced the same COVID mortality rate as the United States,
nearly 70,000 additional Canadians would have died—more than the
populations of communities like Fredericton, North Bay, and Medicine Hat.
Had the federal government not delivered unprecedented nancial support, our
health care system and economy would have collapsed, and many millions of
Canadians would have been unable to make ends meet.
Federal investments saved lives, protected our health care system—and laid the
groundwork for Canada’s remarkable economic recovery.
The provincial and territorial governments deliver health care with support from
federal funding, which ensures that our collective Canadian commitment to
the Canada Health Act is upheld.
In fact, it’s written right into the Canada Health Act that, as governments, we
need to “protect, promote and restore the physical and mental well-being
of residents of Canada and to facilitate reasonable access to health services
without nancial or other barriers.”
The federal government shields and protects this fundamental covenant with
Canadians, enforcing our shared values in the Canada Health Act and delivering
signicant funding through the Canada Health Transfer.
The Canada Health Transfer grows in line with gross domestic product (GDP),
and thanks to Canada’s strong recovery from the pandemic, will increase by
9.3 per cent in 2023-24 and provide $49.4 billion in health care funding to
provinces and territories.
This support, when combined with the impact of nearly $25 billion provided
annually through tax points, means the federal government supports roughly
one-third of provincial and territorial health expenditures—as has been the case
since 2004.
54 Chapter 2
Working Together to Improve Health Care
for Canadians
In recent months, Canada’s universal public health system has been unable to
deliver the high-quality care that Canadians expect.
Emergency rooms and pediatric hospitals are overwhelmed, Canadians are
waiting too long for surgeries, and our health care workers are under enormous
strain. Even long before COVID-19 rst hit, and despite comparatively high
levels of health care spending relative to many of our global peers, Canadians
were not always receiving the access and health care outcomes they deserve.
The federal government is committed to supporting provinces and territories in
delivering better health care results for Canadians.
Budget 2023 lays out the federal government’s plan to provide an additional
$195.8 billion over ten years in health transfers to provinces and territories,
including $46.2 billion in new funding through new Canada Health Transfer
measures, tailored bilateral agreements to meet the needs of each province
and territory, personal support worker wage support, and a Territorial Health
Investment Fund. This funding is to be used to improve and enhance the health
care Canadians receive, and is not to be used by provinces and territories in
place of their planned health care spending.
The federal government will also work with Indigenous partners to provide
additional support for Indigenous health priorities by providing $2 billion
over ten years, which will be distributed on a distinctions basis through the
Indigenous Health Equity Fund.
A strong and eective public health care system is essential to the well-being
of Canadians—and is an important foundation of a growing, healthy economy.
When people are healthy and can get the care they need before complications
arise; when people don’t have to worry about losing health care when they
move jobs, and don’t have to miss work and slow down their careers because
they can’t receive the proper treatment—it makes our economy stronger.
With historic federal health investments and a range of new measures to
ensure Canadians receive the care they need, Budget 2023 will help deliver the
improvements to health care that Canadians expect and deserve.
Investing in Public Health Care and Aordable Dental Care 55
An Historic Federal Investment in Public Health Care
Chart 2.3
Federal Health Transfers to Provinces and Territories
25
30
35
40
45
50
55
60
65
70
75
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33
$ Billions
2022-23 CHT Level Pre-pandemic growth track
Post-pandemic surge Backlogs 2022-23 (CHT top-up)
Pediatrics & Wait Times 2023-24 (CHT top-up) CHT 5 Per Cent Guarantee
Existing Bilateral Agreements New Bilateral Agreements
$2B Pediatrics
& Wait Times
Existing
Bilateral
Agreements
New Bilateral
Agreements
Pre-Pandemic
Growth Track
Post-Pandemic
Surge
CHT 5 Per
Cent
Guarantee
Backlogs
Note: Canada Health Transfer (CHT) values subject to change. Existing Bilateral Agreements include 2017 Agreements
and $3 billion for long-term care. New Bilateral Agreements include additional funds to increase personal support
worker wages.
GDP-Driven Growth: As the Canada Health Transfer’s escalator is based on
GDP growth, an additional $141.8 billion is projected to be provided over
the next ten years through the Canada Health Transfer, over and above the
$45.2 billion provided in 2022-23.
Canada Health Transfer Top-Up: The federal government will provide
$2 billion in 2022-23 to address urgent pressures in emergency rooms,
operating rooms, and pediatric hospitals, building on $6.5 billion in top-ups
provided throughout the pandemic.
Canada Health Transfer Five Per Cent Guarantee: The federal government
will provide top-up payments to achieve Canada Health Transfer increases of at
least ve per cent per year for the next ve years. The last top-up payment will
be rolled into the Canada Health Transfer base at the end of the ve-year period,
resulting in a permanent funding increase. This represents an estimated $17.1
billion over ten years in additional funding through the Canada Health Transfer.
Tailored Bilateral Agreements: The federal government will provide $25 billion
over ten years through a new set of bilateral agreements to address individual
provincial and territorial health system needs, such as expanding access to family
health services, supporting health workers and reducing backlogs, increasing
mental health and substance use support, and modernizing health systems.
Personal Support Worker Wage Support: The federal government will
provide $1.7 billion over ve years to support hourly wage increases for
personal support workers and related professions.
Territorial Health Investment Fund: The federal government will provide
$350 million over ten years in recognition of medical travel and the higher cost
of delivering health care in the territories.
56 Chapter 2
Health Care Results and Accountability
More funding isn’t enough to deliver better health care outcomes. That is why,
in exchange for the new funding, the government has asked provinces and
territories to:
Ensure that new federal investments are used in addition to provincial
spending, and that provinces and territories do not divert away health
care funding of their own;
Uphold the Canada Health Act and use new federal spending to
strengthen Canada’s public health care system;
Streamline foreign credential recognition for internationally educated
health professionals and advance multi-jurisdictional credential
recognition so that Canada’s well-trained health care professionals can
work wherever there is need;
Improve how health information is collected, shared, used, and reported
to Canadians, and adopt common data standards;
Develop action plans to measure and report progress to Canadians,
including: improved access to family health services, mental health and
substance use services, supporting health care workers, and reducing
backlogs and wait lists; and,
Commit to reconciliation with Indigenous Peoples, including fair and
equitable access to quality and culturally safe health care services.
What gets measured, gets done. The federal government is prepared to
measure and report annual progress on common indicators and is requiring the
provincial and territorial governments to do the same.
Investing in Better Health Care Data
In addition to providing funding to provinces and territories, the federal
government will also provide $505 million over ve years, starting in 2023-24, to
the Canadian Institute for Health Information, Canada Health Infoway, and other
federal data partners. Together, these organizations will work with provinces
and territories to develop new health data indicators, support the creation of a
Centre of Excellence on health worker data, advance digital health tools and an
interoperability roadmap, and support provincial and territorial eorts to use
data to improve the safety and quality of health care.
Investing in Public Health Care and Aordable Dental Care 57
Encouraging More Doctors and Nurses to Practise in
Rural and Remote Communities
Many rural and remote communities lack access to primary health care because of
a shortage of health professionals. As one way to address this shortage, the federal
government introduced student loan forgiveness for doctors and nurses who work
in underserved rural or remote communities. While this measure has helped many
underserved rural and remote communities across Canada, there are still many who
don’t qualify under the current loan forgiveness program design.
Budget 2023 proposes to provide $45.9 million over four years, starting
in 2024-25, with $11.7 million ongoing, to Employment and Social
Development Canada to expand the reach of the Canada Student
Loan Forgiveness program to more rural communities, including all
communities with populations of 30,000 or fewer, like Sheet Harbour,
Nova Scotia. Currently eligible communities with a population over
30,000 will remain eligible until the 2026 Census.
This complements the Budget 2022 decision to increase the Canada Student
Loan Forgiveness amount by 50 per cent for eligible doctors and nurses. The
government is continuing to examine eligible occupations for loan forgiveness.
Quebec, Nunavut, and the Northwest Territories, which do not participate in the
Canada Student Loans program, can receive federal funding to provide their
own comparable support.
Strengthening Retirement Saving for Personal
Support Workers
Personal support workers are the backbone of long-term care for our seniors
and for persons with disabilities. Personal support workers perform jobs that are
mentally and physically exhausting, but they often do not enjoy the same job
protections, compensation, and benets as their peers in the health care sector.
To complement the investments the federal government has made to improve
the state of long-term care facilities, including the working conditions and
wages of personal support workers, the government is proposing new
investments to support Canada’s personal support workers.
Budget 2023 proposes to provide up to $50 million over ve years,
starting in 2023-24, to Employment and Social Development Canada
to develop and test innovative solutions to strengthen the retirement
savings of personal support workers without workplace retirement
security coverage.
58 Chapter 2
Fighting Crime and Saving Lives: Combatting the
Opioid Crisis
Too many communities and families have been ravaged by toxic illegal drug
supplies. We must save and rebuild lives and communities. We must end the
opioid crisis through increased access to evidence-based services and supports
including harm reduction, treatment and recovery, prevention, and by aggressively
dismantling criminal drug tracking organizations. The overdose crisis and toxic
illegal drug supplies take the lives of an average of 20 Canadians per day—many
of which are experiencing homelessness—resulting in immeasurable strain on our
communities, health care systems, and local social services.
In addition to tackling drug tracking and targeting criminal organizations, since
2017, the federal government has invested more than $800 million through the
Canadian Drugs and Substances Strategy, restored harm reduction as an essential
pillar of the strategy, and worked to support a compassionate and evidence-
based response to the overdose crisis and the stigma associated with it.
Health Canada has authorized safe consumption sites to provide a safe space
for tens of thousands of Canadians dealing with substance use issues. Health
care workers have been able to treat 42,000 overdoses, without a single death
on site. This is saving lives in communities across the country.
Among other improvements to health care services for Canadians, new funding
of $46.2 billion for provinces and territories will help provide Canadians with
access to timely, equitable mental health and substance use services. To
complement these investments:
Budget 2023 proposes to provide a total of $359.2 million over ve
years, starting in 2023-24, with $5.7 million ongoing and $1.3 million
in remaining amortization, to support a renewed Canadian Drugs and
Substances Strategy, which would guide the government’s work to save
lives and protect the health and safety of Canadians. This includes:
- $144 million over ve years, starting in 2023-24, to Health Canada
for the Substance Use and Addictions Program to fund community-
based supports, including safer supply, supervised consumption sites,
and other evidence-based health interventions;
- $20.2 million over ve years, starting in 2023-24, to the Public Health
Agency of Canada for a new community-based program to prevent
substance use among young people;
- $73.9 million over ve years, starting in 2023-24, with $4.6 million
ongoing, to Health Canada to streamline authorizations for
supervised consumption sites and drug checking services, scale-up
access to safer supply, and evaluate innovative approaches;
Investing in Public Health Care and Aordable Dental Care 59
- $50.8 million over ve years, starting in 2023-24, with $1.1 million
ongoing and $1.3 million in remaining amortization, to Health
Canada; and $16 million over ve years, starting in 2023-24, to the
Public Health Agency of Canada to support vital data collection
on substance-related harms and lab-based analysis of the illegal
drug supply;
- $4.6 million over ve years, starting in 2023-24, to Public Safety
Canada to develop an overdose monitoring app for paramedics and
other rst responders; and,
- $42 million over ve years, starting in 2023-24, to the Royal Canadian
Mounted Police; $6.2 million over ve years, starting in 2023-24,
to Public Services and Procurement Canada; and $1.6 million over
ve years, starting in 2023-24, sourced from existing resources,
to Global Aairs Canada to take further action to work with our
partners to tackle drug tracking and stem the global ow of these
devastating substances.
Improving Mental Health Services for Canadians
Since 2015, the federal government has made it a priority to invest in mental
health services for Canadians. Key investments include:
$5 billion over ten years to provinces and territories, starting in 2017-18,
to improve and increase the availability of mental health and addiction
services;
Over $240 million since 2020-21 for the Wellness Together Canada portal,
which provides Canadians with free tools and services to support their
mental health and well-being;
$100 million over three years, starting in 2021-22, to support projects for
innovative mental health interventions for populations disproportionately
impacted by COVID-19, including health care workers, frontline workers,
youth, seniors, persons with disabilities, Indigenous people, and racialized
communities;
$25 million over ve years, starting in 2019-20, and $5 million ongoing,
to support a pan-Canadian suicide prevention service to provide people
across Canada with access to bilingual 24/7 crisis support from trained
responders; and,
More than $1.5 billion over six years, starting in 2021-22, to support
trauma-informed, culturally appropriate, Indigenous-led services
to improve mental wellness, including over $825 million through
Budget 2021 and Budget 2022 to support distinctions-based mental
health and wellness strategies with First Nations, Inuit, and Métis.
60 Chapter 2
Implementing the 988 Suicide Prevention Line
It’s important that people know they are not alone, and those suering from
suicidal thoughts need to be able to access timely, urgent support. The federal
government is committed to making sure that all Canadians have access to
critical mental health resources and suicide prevention services, when they need
it, no matter where they live.
As of November 30, 2023, Canadians will be able to call or text 988 at any time
to access quality, eective, and immediate suicide prevention and mental health
crisis support.
Budget 2023 proposes to provide $158.4 million over three years,
starting in 2023-24, to the Public Health Agency of Canada to support
the implementation and operation of 988.
The federal government is undertaking a review to establish a long-term
funding mechanism for this service in 2025-26.
Building the Shepody Healing Centre
The federal government is committed to ensuring Canadians have access to the
mental health services they need.
Budget 2023 proposes to accelerate the construction of the
Shepody Healing Centre in Dorchester, New Brunswick.
Safeguarding Access to Abortion and Other Sexual
and Reproductive Health Care Services
The overturning of Roe v. Wade in the United States served as a reminder that we
must continue to do everything we can to protect Canadians’ access to the full
spectrum of sexual and reproductive health care services, including abortion care.
With a woman’s right to choose under threat around the world, the federal
government is ensuring that abortion services are accessible across Canada.
The federal government is committed to ensuring that no Canadian pays
out of pocket to receive an abortion. Abortion is health care, and the federal
government will continue to withhold Canada Health Transfer payments to
provinces and territories that allow any patient charges for abortion services.
In Budget 2023, the government is continuing to reduce existing barriers to care
and ensuring that Canadians have access to accurate, culturally safe information
about sexual and reproductive health care.
Budget 2023 proposes to provide $36 million over three years, starting in
2024-25, to Health Canada to renew the Sexual and Reproductive Health
Fund. This fund supports community-based organizations that help make
access to abortion, as well as other sexual and reproductive health care
information and services, more accessible for vulnerable populations.
Investing in Public Health Care and Aordable Dental Care 61
Improving Canada’s Readiness for Health Emergencies
Vaccines and other cutting-edge life-science innovations have helped us to
take control of the COVID-19 pandemic. To support these eorts, the federal
government has committed signicant funding towards the revitalization
of Canada’s biomanufacturing sector through a Biomanufacturing and Life
Sciences Strategy. To date, the government has invested more than $1.8 billion
in 32 vaccine, therapeutic, and biomanufacturing projects across Canada,
alongside $127 million for upgrades to specialized labs at universities across
the country. Canada is building a life sciences ecosystem that is attracting major
investments from leading global companies, including Moderna, AstraZeneca,
and Sano.
To build upon the progress of the past three years, the government will explore
new ways to be more ecient and eective in the development and production
of the vaccines, therapies, and diagnostic tools that would be required for
future health emergencies. As a rst step, the government will further consult
Canadian and international experts on how to best organize our readiness
eorts for years to come.
2.2 Dental Care for Canadians
Dental care is an important component of our health, but seeing a dentist can
be expensive. A third of Canadians currently do not have dental insurance, and
in 2018, more than one in ve Canadians reported avoiding dental care because
of the cost. Delaying preventative care can have wide-reaching impacts,
including costlier treatments, worsening health outcomes, and time away from
school and work.
To make dental care aordable for more Canadians, the federal government has
committed to providing dental care for uninsured Canadians with family income
of less than $90,000 annually, starting with children under 12-years-old.
In September 2022, the government announced the creation of the Canada
Dental Benet, and applications opened in December. The Canada Dental
Benet is now providing eligible parents or guardians with direct, up-front,
tax-free payments of up to $1,300 over two years, per child, to cover the cost
of dental care for their children. To date, the Canada Dental Benet has helped
more than 240,000 children receive the dental care they need.
62 Chapter 2
The New Canadian Dental Care Plan
It isn’t just children who need aordable dental care. Across Canada, millions of
Canadians are avoiding the dental care they need because it costs too much—
and nobody should have to choose between taking care of their teeth and
being able to pay the bills at the end of the month.
In Budget 2023, the federal government is moving forward with a
transformative investment to provide dental care to Canadians who need it.
Budget 2023 proposes to provide $13.0 billion over ve years, starting
in 2023-24, and $4.4 billion ongoing to Health Canada to implement the
Canadian Dental Care Plan. The plan will provide dental coverage for
uninsured Canadians with annual family income of less than $90,000, with
no co-pays for those with family incomes under $70,000. The plan would
begin providing coverage by the end of 2023 and will be administered
by Health Canada, with support from a third-party benets administrator.
Details on eligible coverage will be released later this year.
Expanding Access to Dental Care
In addition to cost, other factors may also prevent Canadians from accessing
the dental care they need, such as living in a remote community, or requiring
specialized care due to a disability.
Budget 2023 proposes to provide $250 million over three years, starting
in 2025-26, and $75 million ongoing to Health Canada to establish an
Oral Health Access Fund. The fund will complement the Canadian Dental
Care Plan by investing in targeted measures to address oral health gaps
among vulnerable populations and reduce barriers to accessing care,
including in rural and remote communities.
Investing in Better Dental Care Data
Existing data on oral health in Canada is limited and cannot be disaggregated
by region or socio-economic characteristics—restricting the government’s
ability to support those who need it most.
Budget 2023 proposes to provide $23.1 million over two years, starting
in 2023-24, to Statistics Canada to collect data on oral health and access
to dental care in Canada, which will inform the rollout of the Canadian
Dental Care Plan.
Of these combined investments, $6 billion over four years, starting in 2024-25,
and $1.7 billion ongoing would be sourced from the existing dental care
funding provided through Budget 2022.
Investing in Public Health Care and Aordable Dental Care 63
Chapter 2
Investing in Public Health Care and Aordable Dental Care
millions of dollars
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
2.1. Investing in Public Health
Care 2,000 3,255 3,336 4,399 4,899 5,473 23,362
Working Together to Improve
Health Care for Canadians 2,000 3,060 3,068 4,116 4,702 5,280 22,226
Investing in Better Health Care
Data 0 115 115 115 80 80 505
Encouraging More Doctors and
Nurses to Practise in Rural and
Remote Communities 0 0 11 11 12 12 46
Strengthening Retirement Saving
for Personal Support Workers 0 2 3 10 14 21 50
Less: Funds Sourced From
Existing Departmental Resources 0 0 0 0 0 0 -1
Fighting Crime and Saving Lives:
Combatting the Opioid Crisis 0 41 77 80 79 82 359
Less: Funds Sourced From
Existing Departmental Resources 0 0 0 0 0 0 -2
Implementing the 988 Suicide
Prevention Line 0 43 55 60 0 0 158
Less: Funds Sourced From
Existing Departmental Resources 0 -5 -5 -5 0 0 -15
Safeguarding Access to
Abortion and Other Sexual and
Reproductive Health Care Services 0 0 12 12 12 0 36
2.2. Dental Care for Canadians 0 117 983 1,817 1,940 2,458 7,315
The New Canadian Dental Care
Plan 0 107 2,038 3,267 3,540 4,058 13,010
Less: Funds Previously
Provisioned in the Fiscal
Framework 0 0 -1,069 -1,500 -1,700 -1,700 -5,969
Expanding Access to Dental Care 0 0 0 50
100 100 250
Investing in Better Dental Care
Data 0 10 13 0 0 0 23
Additional Investments –
Investing in Public Health Care
and Aordable Dental Care 0 246 232 150 10 0 639
Supporting the Public Health
Agency of Canada 0 246 232 150 10 0 639
Funding proposed for PHAC to help maintain the Agency’s core capacities and secure new
antimicrobials for Canadians.
Chapter 2 - Net Fiscal Impact 2,000 3,618 4,551 6,367 6,849 7,932 31,316
Note: Numbers may not add due to rounding. A glossary of abbreviations used in this table can be found at the end of
Annex 1.
2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
Chapter 3
A Made-In-Canada Plan: Aordable Energy,
Good Jobs, and a Growing Clean Economy
A Strong Foundation ............................................................................................................. 69
A Safe, Smart, and Competitive Place to Do Business.............................................. 69
The Opportunities Ahead .................................................................................................... 70
The Challenges We Face ....................................................................................................... 71
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing
Clean Economy ........................................................................................................................ 73
3.1 Investing in Clean Electricity ...................................................................................... 76
An Investment Tax Credit for Clean Electricity .................................................... 79
A Clean Electricity Focus for the Canada Infrastructure Bank ....................... 80
Supporting Clean Electricity Projects ...................................................................... 81
The Atlantic Loop ............................................................................................................ 81
3.2 A Growing, Clean Economy ......................................................................................... 82
An Investment Tax Credit for Clean Technology Manufacturing.................. 83
Securing Major Battery Manufacturing in Canada ............................................ 84
Delivering the Canada Growth Fund ....................................................................... 85
An Investment Tax Credit for Clean Hydrogen .................................................... 88
Growing Canada’s Biofuels Sector ........................................................................... 89
Enhancing the Reduced Tax Rates for Zero-Emission Technology
Manufacturers ..................................................................................................................90
Supporting Clean Technology Projects .................................................................. 90
Expanding Eligibility for the Clean Technology Investment Tax Credit ...... 91
Getting Major Projects Done ....................................................................................................92
Enhancing the Carbon Capture, Utilization, and Storage Investment
Tax Credit ...........................................................................................................................93
3.3 Investing in Canadian Workers ................................................................................. 94
Fair Pay for Workers Who Build the Clean Economy ....................................... 96
Ensuring Fairness for Canadian Workers with Federal Reciprocal
Procurement .....................................................................................................................96
Doubling the Tradespeople’s Tool Deduction .................................................... 97
Supporting Employee Ownership Trusts .............................................................. 99
Investing in Canada’s Labour Market Transfer Agreements ......................... 99
Continuing to Support Seasonal EI Claimants ................................................... 99
Protecting Federally Regulated Gig Workers ...................................................100
Protecting Jobs with Timely Access to Work-Sharing Agreements ......... 100
Continuing Support for the Student Work Placement Program ...............101
Prohibiting the Use of Replacement Workers ...................................................101
3.4 Reliable Transportation and Resilient Infrastructure ........................................101
Strengthening Canada’s Trade Corridors ............................................................102
Delivering Canada’s Infrastructure Funding .....................................................104
Supporting Resilient Infrastructure Through Innovation ..............................106
Investing in VIA Rail Trains and Services ............................................................106
Investing in the Canadian Coast Guard ...............................................................106
Safe and Reliable Ferry Services in Eastern Canada ........................................107
Redeveloping the Bonaventure Expressway and Supporting
Transportation Infrastructure in Montreal .........................................................107
Delivering the Lac-Mégantic Rail Bypass Project .............................................108
3.5 Investing in Tomorrow’s Technology ......................................................................108
Review of the Scientic Research and Experimental Development
Tax Incentive Program.................................................................................................109
Using College Research to Help Businesses Grow .........................................111
Supporting Canadian Leadership in Space .........................................................111
Investing in Canada’s Forest Economy ...............................................................112
Establishing the Dairy Innovation and Investment Fund .............................112
Supporting Farmers for Diversifying Away from Russian Fertilizers .........113
Providing Interest Relief for Agricultural Producers ......................................113
Maintaining Livestock Sector Exports with a Foot-and-Mouth Disease
Vaccine Bank ..................................................................................................................113
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 67
Chapter 3
A Made-In-Canada Plan: Aordable Energy,
Good Jobs, and a Growing Clean Economy
Today, the world’s major economies are moving at an unprecedented pace to
ght climate change, retool their economies, and build the net-zero industries
of tomorrow. At the same time, our closest allies are looking to shift their
economic dependence away from dictatorships and towards stable, reliable
democracies like our own.
Together, these two shifts represent a signicant economic opportunity for Canada.
At the turn of the last century, the new Transcontinental Railway connected Canada
and the Canadian economy for the rst time. It was a major national project,
ushering in a new generation of prosperity for a growing country. The prosperity
it brought was not shared equally—with Indigenous Peoples, with women, or with
new Canadians. But the Canada we know today would not exist without it.
With the race to build the global clean economy already underway, there is
a new national project in front of us: to build our generation’s version of the
Transcontinental Railway—one that will protect our environment, grow our
economy, and ensure every single Canadian can share in the prosperity we will
create together.
Canada has the potential to become a clean electricity superpower with a cross-
Canada electricity grid that is more sustainable, more secure, and more aordable.
The measures proposed in this Budget are important steps toward that goal.
From the resource workers that mine critical minerals or provide clean energy
to the world, to the engineers designing next generation batteries, to the
autoworkers assembling the electric vehicles people want to buy, we can ensure
that Canadians produce the goods and resources that Canada and our allies
will need for generations to come. We will help Canadian businesses grow,
and we will make it easier for them to invest in our communities—right across
Canada—and create good careers for Canadians.
This is a country of big ideas, big opportunities, and hardworking people who
can do big things.
We have an opportunity to build a thriving, sustainable made-in-Canada clean
economy—for ourselves, for our children, and for our grandchildren, in every
corner of our country.
Now is the time to seize it.
Budget 2023 lays out the next steps in the government’s plan to build Canada’s
clean economy—one that is good for workers, good for business, good for the
environment, and which makes life more aordable for Canadians from coast-
to-coast-to-coast.
68 Chapter 3
Snapshot of Recent Major Investment Decisions in Canada
Over the past year, a number of signicant investment commitments have been
made in Canada, which will help to build the economy of the future. Some
examples include:
Spring 2022: Honda, General Motors, and Stellantis all announced plans
to invest in their existing assembly plants to help support the production
of hybrid and electric vehicles in Canada. Together these multibillion
projects will be supported by $919.6 million in federal funding.
Summer 2022: The government announced support for projects across
Canada, including up to $100 million to minimize the carbon footprint
and improve worker safety at BHP’s $7.5 billion Jansen Stage 1 mine in
Saskatchewan. In Ontario, Umicore announced its plan to invest $1.5
billion in a net-zero facility that will produce essential components of
electric vehicle batteries.
Fall 2022: In Quebec, Rio Tinto Fer et Titane announced its plans to
increase its production of critical minerals, cut emissions, and help build
clean technology supply chains, supported by up to $222 million in federal
funding. Nokia also announced a $340 million project to expand its Ottawa
facility and revitalize its laboratories with the goal to further advance
wireless technology research and development in Canada.
Winter 2022-23: In March 2023, Volkswagen announced that its
subsidiary, PowerCo, will build its rst overseas electric vehicle battery
manufacturing ‘gigafactory’ in St. Thomas, Ontario. MEDTEQ+ announced
it will invest in a $154 million envisAGE Network, supported by $47 million
in federal funding, that will help bring together industry, health experts,
and investors to commercialize new health technologies. Together with
Ontario, the federal government announced it will support the Oneida
Energy storage project, which will be the largest electricity battery storage
project in Canada.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 69
A Strong Foundation
Since 2015, the federal government has taken action to build Canada’s clean
economy and create good middle class jobs. This includes:
Putting in place a federal carbon pricing system, which puts money back
in the pockets of Canadians and gives businesses the exibility to decide
how best to reduce their emissions;
$15 billion for the Canada Growth Fund to incentivize private sector
investment into projects and companies that will grow Canada’s clean
economy at speed and scale;
$8 billion for the Net Zero Accelerator to make large-scale investments in
clean technologies;
$4.2 billion for the Low Carbon Economy Fund to support the installation
of emission-reducing technologies for provinces and territories,
businesses, Indigenous communities, and other organizations;
$3.8 billion for Canada’s Critical Minerals Strategy, which will help make
Canada a global supplier of choice for the critical minerals that are the
bedrock of clean and digital technologies;
$3.9 billion to make zero-emission vehicles more aordable for Canadians
and Canadian businesses, and to build new charging stations across
Canada;
$1.5 billion for the Clean Fuels Fund to encourage investment in the
production of clean fuels, including clean hydrogen and biofuels;
$4.7 billion for the National Trade Corridors Fund for investments in our
ports, roads, railways, and airports;
$33.5 billion for the Investing in Canada Infrastructure Program
to support new investments in public transit; green infrastructure;
community, culture and recreation infrastructure; and rural and northern
communities;
$35 billion for the Canada Infrastructure Bank to attract private capital to
major infrastructure projects and help build more infrastructure across
the country; and,
$2.6 billion for the new Canada Innovation Corporation, which will
support Canadian businesses in investing in research and development.
A Safe, Smart, and Competitive Place to Do Business
Investments the government has made since 2015 have built upon Canada’s
existing competitive advantages, which have made us a destination of choice for
investments in the global clean economy. Our competitive advantages include:
A free and stable democracy, home to a diverse population and an
inclusive society—one that is supported by publicly funded health care,
dental care, child benets, and aordable early learning and child care;
Leading education and research institutions that have produced the most
educated workforce in the world;
70 Chapter 3
Preferential access to global markets through 15 free trade agreements,
which cover 51 countries with nearly 1.5 billion consumers, representing
two-thirds of the global economy, making Canada the only member of
the G7 with free market access to every other G7 country;
Abundant supplies of critical minerals and metals, clean energy, and
technologies needed to power the global clean economy;
A strong and stable, and accessible nancial system; and,
A competitive corporate income tax system, including the lowest
marginal eective tax rate on new business investment in the G7.
The Opportunities Ahead
The accelerating transition to net-zero has started a global race to attract
investment as our friends and allies build their clean economies. Canada must
keep pace. We cannot aord to fall behind.
Investments in strengthening Canada’s competitiveness in the clean economy
will not only promote the shift towards net-zero and reduce pollution. They will
also deliver good middle class jobs for Canadian workers in communities right
across Canada.
For example, the International Energy Agency estimates the global market for
clean technology manufacturing alone will triple by 2030, to US$650 billion per
year. Many of the careers in the clean technology manufacturing sector do not
require a university degree, and even at this early stage of development, the
average worker compensation in this sector in 2021 was $90,252—well above
Canada’s economy-wide average of $69,311.
Seizing our opportunity to lead the way in rapidly expanding global industries
will ensure Canada can create the good middle class jobs needed to build more
vibrant communities from coast-to-coast-to-coast.
At the same time, the pandemic and Russia’s illegal invasion of Ukraine exposed
strategic economic vulnerabilities among many of the world’s democracies.
Our allies are moving at speed to limit their dependence on dictatorships by
building their critical supply chains through democracies like our own.
This shift, often referred to as ‘friendshoring,’ represents a signicant economic
opportunity for Canada and Canadian workers. As a stable democracy with a skilled
workforce and a rich endowment of natural resources, Canada can reap the benets
of becoming a reliable supplier of critical goods for our democratic allies.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 71
The Challenges We Face
Despite our competitive advantages and the foundational investments we have
made in building Canada’s clean economy over the past seven years, there are
two fundamental challenges that Canada must address.
First, many of the investments that will be critical for the realignment of global
supply chains and the net-zero future are large-scale, long-term investments.
Some investments may require developing infrastructure, while others may
require nancial incentives or a patient source of nancial capital. For Canada to
remain competitive, we must continue to build a framework that supports these
types of investments in Canada—and that is what we are doing.
Second, the recent passage of United States’ Ination Reduction Act (IRA) poses
a major challenge to our ability to compete in the industries that will drive
Canada’s clean economy.
Canada has taken a market-driven approach to emissions reduction. Our world-
leading carbon pollution pricing system not only puts money back in the pockets
of Canadians, but is also ecient and highly eective because it provides a clear
economic signal to businesses and allows them the exibility to nd the most
cost-eective way to lower their emissions. At the same time, it also increases
demand for the development and adoption of clean technologies.
In contrast, the United States has chosen to rely heavily on new industrial
subsidies to reduce its emissions. The IRA has introduced subsidies for the
production of clean technologies and clean products. The IRA’s federal
clean growth incentives are ocially estimated at US$369 billion by the U.S.
Congressional Budget Oce, though a number of observers estimate the nal
total will be signicantly higher. As a result of these uncapped subsidies, private
sector estimates suggest that the IRA could mobilize as much as US$1.7 trillion
of private and public investments in the U.S. clean economy over ten years.
As the United States’ closest trading partner—and with our economies so
closely intertwined—Canada stands to benet from the IRA, both from the
accelerated pace of technological development, and from new opportunities
in North American supply chains for clean energy and technologies. The IRA
also oers tax credits to U.S. consumers for purchasing electric vehicles (EVs)
produced in North America. The Government of Canada led a relentless
advocacy and outreach eort to ensure that the tax credits would apply to
Canadian production, given the integrated nature of Canada-U.S. supply chains
in the auto sector. This ‘Buy North American’ policy stands to benet both
Canada and the United States, and ensures that the supply of critical minerals
processed, and batteries manufactured, in Canada supports a continued
partnership in auto-making.
72 Chapter 3
Canada has all of the fundamentals required to build one of the strongest clean
economies in the world. However, without swift action, the sheer scale of U.S.
incentives will undermine Canada’s ability to attract the investments needed
to establish Canada as a leader in the growing and highly competitive global
clean economy.
If Canada does not keep pace, we will be left behind. If we are left behind,
it will mean less investment in our communities, and fewer jobs for an entire
generation of Canadians.
We will not be left behind.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 73
A Made-In-Canada Plan: Aordable Energy,
Good Jobs, and a Growing Clean Economy
Building on the foundation the government has been laying since 2015,
Budget 2023 delivers a series of major investments to ensure Canada’s clean
economy can deliver prosperity, middle class jobs, and more vibrant communities
across Canada.
With new investments in clean electricity—the driving force of a clean
economy—we will build a national electrical grid that connects Canadians from
coast-to-coast-to-coast, and delivers cleaner, more aordable electricity to
Canadians and Canadian businesses.
We will deliver investments to put Canadian workers and Canadian businesses
at the heart of essential global supply chains, and we will become the reliable
supplier of the goods and resources that a net-zero world will need.
Our made-in-Canada plan is centered on three tiers of federal nancial
incentives that will attract new investment, create good middle class jobs, and
build Canada’s clean economy. These include:
An anchor regime of clear and predictable investment tax credits, which
will be broadly accessible to eligible organizations. In addition, many
of these new credits will be accompanied by provisions to ensure that
workers see the benets of a clean economy;
Low-cost strategic nancing; and,
Targeted investments and programming, where necessary, to respond to
the unique needs of sectors or projects of national economic signicance.
These investments will be underpinned by Canada’s pollution pricing systems
and large-emitter credit markets, which Budget 2023 proposes to reinforce with
other tools, such as contracts for dierence. Together these instruments set a
framework for boosting overall investment, while leveraging the expertise of
the private sector to determine how to invest based on how the global clean
economy evolves. Together, they will incentivize businesses to reduce their
emissions, become leaders in the global clean economy, and create new middle
class jobs for Canadians.
74 Chapter 3
Targeted
Programming
Strategic Finance
Investment Tax Credits
Strategy and Main Tools
Pollution Pricing &
Regulatory Framework
Strategic Innovation Fund
Smart Renewables & Electrification Pathways Program
Clean Fuels Fund
Low Carbon Economy Fund
Large-Emitter Pricing Systems
Contracts for Difference
Clean Fuel Regulations
Clean Electricity
Clean Hydrogen
Clean Technology Adoption
Clean Technology
Manufacturing
Carbon Capture,
Utilization, & Storage
Canada Infrastructure Bank
Canada Growth Fund
· Electrification;
· Clean Energy;
· Clean Manufacturing;
· Emissions Reduction;
· Critical Minerals;
· Infrastructure;
· Electric Vehicles & Batteries; and,
· Major Projects
Priorities
Canada’s Plan for a Clean Economy
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 75
Strengthening
Trade
· Establishing a National Supply Chain Strategy with
strategic trade corridor investments.
· Ensuring preferred free trade access to the whole G7,
and two-thirds of global consumers through the
new NAFTA, the Canada-European Union Comprehensive
Economic and Trade Agreement (CETA), and the
Comprehensive and Progressive Agreement for Trans-
Pacific Partnership, while securing Canada’s share of
global investment.
· Canada’s inclusion in the U.S. Inflation Reduction Act
for electric vehicle incentives and critical minerals used in
electric vehicle battery production.
Increasing
Innovation and
Productivity
· Spurring business research and development through
the creation of the Canada Innovation Corporation for
both new and established industries.
· Supporting invention and innovation through global
innovation clusters, intellectual property, and funding for
advanced research, artificial intelligence, quantum,
genomics, and life sciences.
· Modernizing Canada’s world class advanced research
infrastructure through investments in facilities at the
National Research Council and university and college
campuses across Canada.
· Maintaining a highly competitive regime of corporate
taxation.
· Building Canada’s infrastructure through the Investing in
Canada Infrastructure Program, the Canada Infrastructure
Bank, and other infrastructure programming.
Investing in
People and
a Canada
that Works
for Everyone
· Substantial funding for health care, child benefits, and
affordable early learning and child care.
· Ensuring Canadian workers benefit from investment tax
credits that require fair wages and apprenticeships.
· Responding to labour shortages, including in health care,
manufacturing and building trades, through ambitious
immigration targets and mid-career training.
· Providing targeted tax supports for Canadian
tradespeople through the labour mobility deduction and
the doubling of the deduction for tool expenses.
· Preparing our workforce for high-quality jobs through
skills development, including the Sectoral Workforce
Solutions Program, Skills for Success, the Union Training
and Innovation Program, and the Apprenticeship Service.
· Supporting Canada’s students and youth through
student grants and loans programming.
76 Chapter 3
3.1 Investing in Clean Electricity
The growing clean economy—both here in Canada and around the world—
will depend almost entirely on clean electricity.
Fortunately, Canada already has one of the cleanest electricity grids in the
world. Roughly 83 per cent of our electricity comes from non-emitting sources,
such as hydroelectricity, wind, solar, and nuclear.
Chart 3.1
Electricity Generation by Source, 2020
Coal, 6%
Natural gas,
petroleum and other,
12%
Hydro, 60%
Nuclear, 15%
Wind, solar and
other renewables,
8%
Source: data compiled by Natural Resources Canada.
However, if we are to preserve this advantage and position Canada to compete
in the next generation of electricity-intensive sectors, such as clean hydrogen
and green steel and aluminum, signicant investments must be made today.
Industry’s need for electricity is only slated to grow.
Electricity’s importance to Canadians will also increase. From powering our cars to
providing a clean, secure, and aordable source of energy in communities across
Canada, investments in clean electricity today will make life more aordable for
Canadians in the years and decades to come. To reach our goal of achieving net-
zero emissions by 2050—and to power our homes, vehicles, and industries for
generations to come—Canada must become a clean electricity superpower.
As electricity becomes the main source of energy, daily and seasonal demand
peaks will become more pronounced. Canada will need to invest heavily in
renewable generation, to meet this demand. At the same time, some renewable
energy generation, such as solar and wind, can vary with the weather and season.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 77
Chart 3.2
Cost of Renewables Has Come Down Dramatically in the Last Decade
Levelized cost of electricity, US$/MWh
0
50
100
150
200
250
300
350
400
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Wind Solar Gas
Source: RBC Economics
This will necessitate larger generation capacity and enhanced transmission
networks to ensure the reliability of our electrical grids. Canada’s electricity
demand is expected to double by 2050 (Chart 3.3), and to meet this increased
demand with a sustainable, secure, and aordable grid, our electricity capacity
must increase by 2.2 to 3.4 times compared to current levels (Chart 3.4).
Chart 3.3
Projected Electricity Generation
Requirements in Canada, 2019-2050
Chart 3.4
Projected Electricity Capacity
Requirements in Canada, 2019-2050
Highest
Projection
Lowest
Projection
0
1
2
3
2010 2020 2030 2040 2050
generation relative to 2020
x2.1
x1.6
Highest
Projection
Lowest
Projection
0
1
2
3
2010 2020 2030 2040 2050
installed capacity relative to 2020
x3.4
x2.2
Source: Canadian Climate Institute (2022), Bigger, Cleaner,
Smarter: Pathways for Aligning Canadian Electricity Systems
with Net Zero
Source: Canadian Climate Institute (2022), Bigger, Cleaner,
Smarter: Pathways for Aligning Canadian Electricity Systems
with Net Zero
78 Chapter 3
Such a signicant expansion of clean, secure, and aordable electricity will
require massive new investments in power generation and transmission. Given
the long lead times and high upfront costs for electricity generation and
transmission projects—and with our allies and partners set to invest heavily
in preparing their own electrical grids for the future—Canada needs to move
quickly to avoid the consequences of underinvestment.
Underinvestment in Canada’s electrical grid today would risk our ability to
power our economy and deliver cleaner and cheaper energy to Canadians.
It would hamstring Canada’s electricity-intensive manufacturing sector, and
impede the development of new electricity-intensive sectors, such as hydrogen,
that can be a source of good middle class jobs for generations to come.
Put simply, Canada’s economic prosperity depends on signicant investments
today in building a sustainable, secure, and aordable electricity grid. Abundant
and low-cost clean electricity will underpin the investments needed to create
middle class jobs, provide the energy that will power our daily lives and the
entire Canadian economy, and provide more aordable energy to millions upon
millions of Canadian homes.
In Budget 2023, the federal government is proposing signicant investments
to accelerate the supply and transmission of clean electricity. We will expand
Canada’s electricity grid, connect it from coast-to-coast-to-coast, and ensure
that Canadians and Canadian businesses have access to cleaner and cheaper
energy into the next century.
This made-in-Canada plan follows the federal tiered structure to incent the
development of Canada’s electricity sector and provide additional support for
projects that need it. This plan includes:
A clear and predictable investment tax credit as the anchor that oers
foundational support for investments in clean electricity;
Beyond this investment tax credit, as needed, low-cost and abundant
nancing through a targeted focus on clean electricity from the Canada
Infrastructure Bank; and,
Targeted electricity programs, where needed, to ensure critical projects
get built.
This plan introduces the necessary tools to put Canada’s electricity sector on
the path to reduce its emissions to net-zero from the 56 Mt CO2-equivalent in
2020, and to meet its commitment to achieve a net-zero electricity grid by 2035.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 79
An Investment Tax Credit for Clean Electricity
Canada’s electrical system includes a mix of private, public, and Indigenous-
owned assets. The government believes a clear and predictable incentive that
is available to this range of asset owners is needed to accelerate our progress
toward a net-zero grid.
By extending support to a broad base of clean electricity technologies and
proponents, we can accelerate the investments needed to expand the capacity
of our clean electricity grid and ensure it delivers more sustainable, more
secure, and more aordable electricity across Canada.
To support and accelerate clean electricity investment in Canada,
Budget 2023 proposes to introduce a 15 per cent refundable tax credit
for eligible investments in:
- Non-emitting electricity generation systems: wind, concentrated solar,
solar photovoltaic, hydro (including large-scale), wave, tidal, nuclear
(including large-scale and small modular reactors);
- Abated natural gas-red electricity generation (which would be
subject to an emissions intensity threshold compatible with a net-zero
grid by 2035);
- Stationary electricity storage systems that do not use fossil fuels
in operation, such as batteries, pumped hydroelectric storage, and
compressed air storage; and,
- Equipment for the transmission of electricity between provinces
and territories.
Both new projects and the refurbishment of existing facilities will be eligible.
Taxable and non-taxable entities such as Crown corporations and publicly
owned utilities, corporations owned by Indigenous communities, and pension
funds, would be eligible for the Clean Electricity Investment Tax Credit.
The Clean Electricity Investment Tax Credit could be claimed in addition to the
Atlantic Investment Tax Credit, but generally not with any other investment
tax credit.
The Clean Electricity Investment Tax Credit would be available as of the day
of Budget 2024 for projects that did not begin construction before the day of
Budget 2023. The Clean Electricity Investment Tax Credit would not be available
after 2034.
Labour requirements, including ensuring that wages paid are at the prevailing
level, and that apprenticeship training opportunities are being created, will need
to be met to receive the full 15-per-cent tax credit. If labour requirements are
not met, the credit rate will be reduced by ten percentage points. These labour
requirements will come into eect on October 1, 2023. The government will
consult with labour unions and other stakeholders to rene these labour
requirements in the months to come.
80 Chapter 3
In order to access the tax credit in each province and territory, other
requirements will include a commitment by a competent authority that the
federal funding will be used to lower electricity bills, and a commitment to
achieve a net-zero electricity sector by 2035.
The Department of Finance will engage with provinces, territories, and other
relevant parties to develop the design and implementation details of the
Clean Electricity Investment Tax Credit. The government will also conduct
targeted consultations on the possibility to introduce reciprocal treatment in
light of some of the eligibility conditions associated with certain tax credits
under the U.S. Ination Reduction Act.
With respect to intra-provincial transmission, the government will consult on
the best means, whether through the tax system or in other ways, of supporting
and accelerating investments in projects that could be considered critical to
meeting the 2035 net zero objective.
Budget 2023 clean electricity measures would be able to support projects
across the North that support the transition away from diesel and in meeting
emissions goals, including the Atlin Hydro Expansion Project, the Taltston Hydro
Expansion Project, and the Kivalliq Hydro-Fibre Link.
The Clean Electricity Investment Tax Credit is expected to cost $6.3 billion over
four years starting in 2024-25, and an additional $19.4 billion from 2028-29 to
2034-35.
The Clean Technology Investment Tax Credit announced in the 2022 Fall
Economic Statement will complement the Clean Electricity Investment Tax Credit
by providing support to decarbonize industry.
A Clean Electricity Focus for the Canada
Infrastructure Bank
The expansion and transformation of Canada’s electricity system will require
major investments and enhanced partnerships between governments and the
private sector.
As of March 23, 2023, the Canada Infrastructure Bank has made investment
commitments of $8.6 billion in 37 projects, in support of its mandate.
Budget 2022 announced a deepened role for the Canada Infrastructure Bank
to invest in private sector-led infrastructure projects that accelerate Canada’s
eorts to reach net-zero. The Canada Infrastructure Bank is an active partner in
supporting these eorts, including by making investments in renewable energy,
energy storage, and transmission projects.
Building on this, Budget 2023 will position the Canada Infrastructure Bank to
play a leading role in electrifying Canada’s economy, supporting lower energy
bills for Canadians and businesses, and ensuring that cleaner, aordable
electricity is available from coast-to-coast-to-coast.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 81
Budget 2023 announces that the Canada Infrastructure Bank will invest
at least $10 billion through its Clean Power priority area, and at least
$10 billion through its Green Infrastructure priority area. This will allow
the Canada Infrastructure Bank to invest at least $20 billion to support
the building of major clean electricity and clean growth infrastructure
projects. These investments will be sourced from existing resources.
These investments will position the Canada Infrastructure Bank as the
government’s primary nancing tool for supporting clean electricity generation,
transmission, and storage projects, including for major projects such as the
Atlantic Loop.
Supporting Clean Electricity Projects
With Budget 2023 announcing new measures to support the building of a
more sustainable, secure, and aordable electricity grid, other targeted federal
programs will continue to play important roles in advancing individual projects
and building a stronger Canadian electricity industry.
Budget 2023 proposes to provide $3.0 billion over 13 years, starting in
2023-24, to Natural Resources Canada to:
- Recapitalize funding for the Smart Renewables and Electrication
Pathways Program to support critical regional priorities and
Indigenous-led projects, and add transmission projects to the
program’s eligibility;
- Renew the Smart Grid program to continue to support electricity grid
innovation; and,
- Create new investments in science-based activities to help capitalize
on Canada’s oshore wind potential, particularly o the coasts of
Nova Scotia and Newfoundland and Labrador.
The Atlantic Loop
The federal government is committed to advancing the Atlantic Loop—a series
of interprovincial transmission lines that will provide clean electricity between
Quebec, New Brunswick, and Nova Scotia—and is currently negotiating with
provinces and utilities to identify a clear path to deliver the project by 2030.
82 Chapter 3
3.2 A Growing, Clean Economy
More than US$100 trillion in private capital is projected to be spent between
now and 2050 to build the global clean economy.
Canada is currently competing with the United States, the European Union,
and countries around the world for our share of this investment. To secure our
share of this global investment, we must capitalize on Canada’s competitive
advantages, including our skilled and diverse workforce, and our abundance of
critical resources that the world needs.
The federal government has taken signicant action over the past seven years
to support Canada’s net-zero economic future. To build on this progress and
support the growth of Canada’s clean economy, Budget 2023 proposes a range
of measures that will encourage businesses to invest in Canada and create
good-paying jobs for Canadian workers.
This made-in-Canada plan follows the federal tiered structure to incent the
development of Canada’s clean economy and provide additional support for
projects that need it. This plan includes:
- Clear and predictable investment tax credits to provide foundational
support for clean technology manufacturing, clean hydrogen, zero-
emission technologies, and carbon capture and storage;
- The deployment of nancial instruments through the Canada Growth
Fund, such as contracts for dierence, to absorb certain risks and
encourage private sector investment in low-carbon projects, technologies,
businesses, and supply chains; and,
- Targeted clean technology and sector supports delivered by Innovation,
Science and Economic Development Canada to support battery
manufacturing and further advance the development, application, and
manufacturing of clean technologies.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 83
Canada’s Potential in Critical Minerals
As a global leader in mining, Canada is in a prime position to provide a stable
resource base for critical minerals that are central to major global industries such
as clean technology, auto manufacturing, health care, aerospace, and the digital
economy. For nickel and copper alone, the known reserves in Canada are more
than 10 million tonnes, with many other potential sources at the exploration stage.
The Buy North American provisions for critical minerals and electric vehicles in
the U.S. Ination Reduction Act will create opportunities for Canada. In particular,
U.S. acceleration of clean technology manufacturing will require robust supply
chains of critical minerals that Canada has in abundance. However, to fully unleash
Canada’s potential in critical minerals, we need to ensure a framework is in place to
accelerate private investment.
Budget 2022 committed $3.8 billion for Canada’s Critical Minerals Strategy to
provide foundational support to Canada’s mining sector to take advantage of
these new opportunities. The Strategy was published in December 2022.
On March 24, 2023, the government launched the Critical Minerals Infrastructure
Fund—a new fund announced in Budget 2022 that will allocate $1.5 billion towards
energy and transportation projects needed to unlock priority mineral deposits. The
new fund will complement other clean energy and transportation supports, such as
the Canada Infrastructure Bank and the National Trade Corridors Fund, as well as
other federal programs that invest in critical minerals projects, such as the Strategic
Innovation Fund.
The new Investment Tax Credit for Clean Technology Manufacturing proposed in
Budget 2023 will also provide a signicant incentive to boost private investment in
Canadian critical minerals projects and create new opportunities and middle class
jobs in communities across the country.
An Investment Tax Credit for Clean Technology
Manufacturing
Supporting Canadian companies in the manufacturing and processing of clean
technologies, and in the extraction and processing of critical minerals, will
create good middle class jobs for Canadians, ensure our businesses remain
competitive in major global industries, and support the supply chains of our
allies around the world.
While the Clean Technology Investment Tax Credit, rst announced in
Budget 2022, will provide support to Canadian companies adopting clean
technologies, the Clean Technology Manufacturing Investment Tax Credit will
provide support to Canadian companies that are manufacturing or processing
clean technologies and their precursors.
Budget 2023 proposes a refundable tax credit equal to 30 per cent
of the cost of investments in new machinery and equipment used to
manufacture or process key clean technologies, and extract, process, or
recycle key critical minerals, including:
84 Chapter 3
- Extraction, processing, or recycling of critical minerals essential for
clean technology supply chains, specically: lithium, cobalt, nickel,
graphite, copper, and rare earth elements;
- Manufacturing of renewable or nuclear energy equipment;
- Processing or recycling of nuclear fuels and heavy water;
- Manufacturing of grid-scale electrical energy storage equipment;
- Manufacturing of zero-emission vehicles; and,
- Manufacturing or processing of certain upstream components and
materials for the above activities, such as cathode materials and
batteries used in electric vehicles.
The investment tax credit is expected to cost $4.5 billion over ve years, starting
in 2023-24, and an additional $6.6 billion from 2028-29 to 2034-35. The credit
would apply to property that is acquired and becomes available for use on or
after January 1, 2024, and would no longer be in eect after 2034, subject to a
phase-out starting in 2032.
Securing Major Battery Manufacturing in Canada
Here in Canada and around the world, major automakers are pivoting to
building electric vehicles at historic speeds. Canada can capitalize on this shift
by securing our place in rapidly developing global supply chains for electric
vehicle manufacturing, including in battery manufacturing and the critical
minerals and high-value midstream components that play an essential role
in their production. Together, these segments of the electric vehicle supply
chain can create and secure more high-quality jobs for Canadian workers for a
generation to come.
Recognizing Canada’s potential to be a global leader in battery manufacturing,
Volkswagen announced on March 13, 2023, that its subsidiary, PowerCo, will
build its rst overseas ‘gigafactory’ in St. Thomas, Ontario.
This massive battery manufacturing facility will represent a signicant portion of
the North American battery manufacturing sector. It will cement Canada’s place
in the North American and global battery value chains, and create good middle
class jobs for Canadians, both at the facility itself and across Canada’s battery
and critical minerals sectors.
Projected costs of this agreement have been fully accounted for in Budget 2023.
Further details and announcements will follow in the coming weeks after
nalization of the agreement by Volkswagen.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 85
Securing Major Battery Manufacturing in Canada
As the North American automotive sector pivots to electric vehicle (EV) -based platforms,
battery manufacturing investments will be a critical component of the new value chains.
Investing in building this capacity in Canada will have signicant benets for Canadian
workers and the Canadian economy, both now and in the future, by:
Anchoring the future Canadian supply chain: Around 50 per cent of the battery’s
total value accrues in battery cell and pack production activities—anchoring a
signicant portion of value-added production in Canada.
Accelerating investment across the value chain: Battery manufacturing activities
generate important demand for Canadian critical minerals and can help attract
additional processing activities to Canada.
Promoting growth in the automotive sector of the future: Integration between
battery and automotive manufacturing activities can help make Canada an even more
attractive investment destination for future EV assembly and parts manufacturing.
Securing good jobs for Canadians: Battery ‘gigafactories’ typically employ
thousands of people, create valuable economic spin-o benets for local
communities, and support even more good jobs across their supply chains.
Supporting the shift to a net-zero economy: The shift to using batteries and EVs
is a vital part of Canada’s plan to reach net-zero by 2050, and will help to reduce
pollution across Canada.
Delivering the Canada Growth Fund
There are trillions of dollars in private capital waiting to be spent in building
the global clean economy. Canada is extremely well-positioned to attract a
competitive share of this capital. And doing so is essential in our work to ght
climate change, create middle class jobs now and into the future, and grow the
clean economy.
The Canada Growth Fund is a $15 billion arm’s length public investment vehicle
that will help attract private capital to build Canada’s clean economy by using
investment instruments that absorb certain risks in order to encourage private
investment in low carbon projects, technologies, businesses, and supply chains.
The 2022 Fall Economic Statement announced that the Canada Growth Fund
would be initially launched as a subsidiary of the Canada Development
Investment Corporation (CDEV), with a permanent, independent structure
to be put in place in the rst half of 2023. The Growth Fund was formally
incorporated as a subsidiary of CDEV in December 2022.
As a signicant part of the government’s plan to decarbonize and build
Canada’s clean economy, the Canada Growth Fund requires an experienced,
professional, independent investment team ready to make important
investments in support of Canada’s climate and economic goals.
86 Chapter 3
Budget 2023 announces that the government intends to introduce
legislative amendments to enable the Public Sector Pension Investment
Board (PSP Investments) to manage the assets of the Canada Growth
Fund to deliver on the Growth Fund’s mandate of attracting private
capital to invest in Canada’s clean economy.
Established as a federal Crown corporation, PSP Investments is one of
Canada’s largest pension investment managers with more than $225 billion in
assets under management. It operates at arm’s length from the government.
The Canada Growth Fund assets managed by PSP Investments will be separate
from and managed independently of the pension assets of PSP Investments.
PSP Investments will continue to successfully deliver on its pre-existing pension
management mandate.
By partnering with PSP Investments, the Canada Growth Fund will be able
to move quickly and begin making investments to support the growth of
Canada’s clean economy. As the government committed in the 2022 Fall
Economic Statement, the Canada Growth Fund will begin investing in the rst
half of 2023.
PSP Investments will provide an independent investment team with extensive
experience across the range of investment tools that the Growth Fund
will use to deliver on its mandate and attract new private investment to
Canada. PSP Investments will also establish an investment decision-making
committee, focused exclusively on the Growth Fund, to ensure that investment
decisions align with the Growth Fund’s objectives, investment principles, and
performance criteria.
While the Growth Fund will be independently managed by PSP Investments,
it will maintain the market-leading reporting framework for public transparency
and accountability that the government committed to in the 2022 Fall
Economic Statement.
To ensure that workers are represented in the governance of PSP Investments,
the government will consult unions this spring on adding two seats to the
PSP Investments Board of Directors for representatives of organized labour,
in keeping with the current recruitment rules for lling positions for board
members. The government aims to legislate this change in fall 2023.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 87
Contracts for Dierence
One of the investment tools the Canada Growth Fund will provide to support
clean growth projects is contracts for dierence. These contracts would
backstop the future price of, for example, carbon or hydrogen, providing
predictability that helps to de-risk major projects that cut Canada’s emissions.
Contracts for dierence allow companies to plan ahead, supporting the growth
of Canada’s clean economy by making clean projects more cost-eective than
more polluting projects.
Building on this, Budget 2023 announces that the government will
consult on the development of a broad-based approach to carbon
contracts for dierence that aims to make carbon pricing even more
predictable, while supporting the investments needed to build a
competitive clean economy and help meet Canada’s climate goals.
This would complement contracts for dierence oered by the Canada
Growth Fund.
Clean Fuels for the Clean Economy
While electricity is expected to be the dominant source of energy in the years
to come, clean fuels— namely hydrogen, biofuels, and biomass—will be critical
sources of energy where electricity would be inecient or impractical. They will
also be reliable sources of good middle class careers for Canadians right across
the country.
Clean hydrogen is rapidly becoming a leading candidate to fuel long-haul road,
marine, and aviation transport, as well as for heavy industries, such as iron and
steel production. Canada has the potential to become a global supplier of various
forms of clean hydrogen.
Globally, the pace of development in the production and use of hydrogen is
accelerating. However, it will require considerable investment before hydrogen
can scale to the point of becoming a critical source of energy—which is why
measures such as the Investment Tax Credit for Clean Hydrogen announced in
the 2022 Fall Economic Statement are so important.
Biofuels, such as renewable diesel and sustainable aviation fuel, generate fewer
emissions on a lifecycle basis compared to fossil fuels, and will also be critical to
the growth of Canada’s clean economy. With our abundant feedstocks, Canada is
well positioned to grow our biofuels industry.
Biomass, which is renewable organic material that comes from plants, includes
wood and wood processing waste, such as wood chips, lumber mill sawdust and
waste, and black liquor from pulp and paper mills. Biomass is often combusted
for heating and for industrial applications, notably in the pulp and paper industry.
Biomass heating also presents an opportunity for rural and remote Indigenous
communities in Canada to reduce their reliance on diesel fuel.
88 Chapter 3
An Investment Tax Credit for Clean Hydrogen
In the 2022 Fall Economic Statement, the federal government announced a
refundable investment tax credit for investments made in clean hydrogen
production based on the lifecycle carbon intensity of hydrogen.
This critical investment in a growing source of energy will help create good
middle class careers, ensure that Canadian companies can remain globally
competitive, and encourage the use of clean energy to reduce pollution.
Since the 2022 Fall Economic Statement, the government has consulted on how
best to implement the Clean Hydrogen Investment Tax Credit, and has used the
input received to inform its design.
Budget 2023 announces the details of the Clean Hydrogen Investment
Tax Credit with the following key design features:
- The levels of support will vary between 15 and 40 per cent of eligible
project costs, with the projects that produce the cleanest hydrogen
receiving the highest levels of support (Table 3.1).
- The Clean Hydrogen Investment Tax Credit will also extend a 15
per cent tax credit to equipment needed to convert hydrogen into
ammonia, in order to transport the hydrogen. The tax credit will only
be available to the extent the ammonia production is associated with
the production of clean hydrogen.
- Labour requirements will need to be met to receive the maximum
tax credit rates. If labour requirements are not met, credit rates will
be reduced by ten percentage points. These labour requirements will
come into eect on October 1, 2023.
Table 3.1
Proposed tax credit incentive structure for clean hydrogen production
Carbon
Intensity Tiers
1
Tax Credit Rate
2
(applied to eligible costs)
<0.75 kg 40%
0.75 kg to <2.0 kg 25%
2.0 kg to <4 kg 15%
4 kg or higher N.A.
1
Reects the expected life-cycle emissions of a project based on its carbon intensity (measured as kilograms (kg) of
carbon dioxide equivalent per kg of hydrogen produced).
2
Assumes labour requirements are met.
The proposed Clean Hydrogen Investment Tax Credit is expected to cost
$5.6 billion over ve years, beginning in 2023-24. Between 2028-29 and
2034-35, the Clean Hydrogen Investment Tax Credit is expected to cost an
additional $12.1 billion.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 89
Additional details can be found in the Budget Supplementary Information,
under “Investment Tax Credit for Clean Hydrogen" and “Labour Requirements
Related to Certain Investment Tax Credits”.
Growing Canada’s Biofuels Sector
With global demand for biofuels growing rapidly, the production of biofuels
oers economic opportunities for Canada’s energy sector, as well as for
Canada’s agricultural and forestry sectors, which provide essential feedstocks
used in these fuels. These include canola, pulping liquor, bio-charcoal, and
organic matter in municipal and industrial wastes.
In the months ahead, the federal government will engage with the
biofuels industry to explore opportunities to promote its growth in
Canada. This will include an examination of dierent support mechanisms
that could support the sector in meeting the growing demand for low-
emissions fuels.
Biofuels Opportunities Across Canada
British Columbia
British Columbia’s expansive forestry sector presents many opportunities
to produce biofuels from wood-based feedstocks. Canfor and Licella are
proceeding with the development of a low-carbon biofuel plant in Prince
George, British Columbia, that will convert forestry residues and wastes
into renewable biocrude, which can be further rened to low-carbon
transportation fuels.
Prairies
Canada’s prairies boast a strong agricultural sector that is able to supply
feedstocks, such as canola, for the production of biofuels. FCL recently
announced plans to build the largest renewable diesel facility in Canada in
Regina, Saskatchewan.
Ontario and Quebec
Ontario and Quebec boast high population centers that generate
considerable municipal waste, which can be utilized to produce biofuels.
The Varennes Carbon Recycling plant, currently under construction in
Varennes, Quebec, will convert non-recyclable waste and forest residues into
biofuels.
Atlantic Canada
Production of certain biofuels can be achieved by repurposing existing
petroleum reneries. The Braya Renewable Fuels renery in Come By
Chance, Newfoundland and Labrador is a repurposed petroleum renery
that is being converted into a renewable diesel and sustainable aviation fuel
production facility.
90 Chapter 3
Enhancing the Reduced Tax Rates for Zero-Emission
Technology Manufacturers
To build more zero-emission technologies in Canada, Budget 2021 reduced
corporate income tax rates by half for zero-emission technology manufacturers
to drive investment and create new jobs. These rates, of 4.5 per cent for small
businesses and 7.5 per cent for other businesses, are currently scheduled
to expire beginning in 2032, subject to a phase-out starting in 2029.
With new opportunities ahead, extending this support is important to ensure
businesses have the runway they need to innovate and produce zero-emission
technologies.
Budget 2023 proposes to extend the availability of these reduced rates
by another three years, such that the reduced tax rates would no longer
be in eect for taxation years starting after 2034, subject to a phase-out
starting in 2032.
Budget 2023 also proposes to extend eligibility for the reduced rates
to include the manufacturing of nuclear energy equipment and the
processing and recycling of nuclear fuels and heavy water, eective for
taxation years beginning after 2023.
These enhancements of the reduced tax rates are expected to cost $20 million
over ve years, starting in 2023-24, and an additional $1.3 billion from 2028-29
to 2034-35.
Supporting Clean Technology Projects
The Strategic Innovation Fund provides funding for large projects across sectors
that include emissions reduction, biomanufacturing, and natural resources.
Since 2018, the Strategic Innovation Fund has created or maintained more than
105,000 jobs, and used $6.9 billion in contributions to leverage $67 billion in
private investment across 107 projects. The federal government wants to ensure
that companies and innovators in Canada are well-positioned to capitalize on
the exciting opportunities to come as we build Canada’s clean economy.
Budget 2023 proposes to provide $500 million over ten years to the
Strategic Innovation Fund to support the development and application
of clean technologies in Canada. The Strategic Innovation Fund will
also direct up to $1.5 billion of its existing resources towards projects
in sectors including clean technologies, critical minerals, and industrial
transformation.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 91
The Strategic Innovation Fund
The Strategic Innovation Fund has invested in signicant clean technology
projects, including:
• Algoma Steel Inc., in Sault Ste. Marie, Ontario, with a $200 million
contribution, to reduce emissions by transitioning to electric steelmaking
processes;
• Svante Technologies Inc., in Burnaby, British Columbia, with a $25 million
contribution, to reduce emissions by heavy industrial emitters by supporting
the development of carbon capture technology;
• Moltex Energy Canada Inc., in Saint John, New Brunswick, with a $47.5 million
contribution, to support the production of non-emitting energy through
small modular reactor research and technology development.
Expanding Eligibility for the Clean Technology
Investment Tax Credit
The 2022 Fall Economic Statement announced the details of the Clean Technology
Investment Tax Credit, which will provide support to Canadian businesses in
adopting clean technology at a 30 per cent refundable rate. In Budget 2023,
the federal government is expanding the eligibility for the Clean Technology
Investment Tax Credit to further support the growth of Canada’s burgeoning
clean technology sector.
Budget 2023 proposes to expand eligibility for the Clean Technology
Investment Tax Credit to include geothermal energy systems that are
eligible for capital cost allowance Classes 43.1 and 43.2. The Clean
Technology Investment Tax Credit would be available to businesses
investing in such property that is acquired and becomes available for
use on or after the day of Budget 2023. Projects that will co-produce oil,
gas, or other fossil fuels would not be eligible for the Clean Technology
Investment Tax Credit.
Budget 2023 also proposes to modify the phase-out of the Clean
Technology Investment Tax Credit. Rather than starting the phase-out in
2032, the tax credit would now begin to phase out in 2034 and would not
be available after that year.
Including geothermal systems in this measure is expected to cost $185 million
from 2023-24 to 2027-28. This will bring the total expected cost of the Clean
Technology Investment Tax Credit to about $6.9 billion over the same period.
92 Chapter 3
Getting Major Projects Done
Building Canada’s clean economy will require signicant and sustained private
sector investment in clean electricity, critical minerals, and other major projects.
Ensuring the timely completion of these projects is essential—it should not take
12 years to open a critical minerals mine. As part of its clean growth strategy,
the government is making it a priority to expedite major project reviews while
maintaining strong regulatory standards.
In the past year, the federal government has taken action to fast-track the
assessment of mining, energy, and other major projects, and to make Canada’s
rigorous regulatory process more ecient. This includes:
$1.3 billion over six years, starting in 2022-23, and $55.4 million
ongoing, to the Impact Assessment Agency of Canada, the Canada
Energy Regulator, the Canadian Nuclear Safety Commission, and ten
other federal departments, to continue to improve the eciency of
assessments for major projects;
$10.6 million for Natural Resources Canada’s Centre of Excellence on
Critical Minerals to provide direct assistance to critical mineral developers in
navigating regulatory processes and government support measures; and,
$40 million to Crown-Indigenous Relations and Northern Aairs Canada
to support Northern regulatory processes.
The Impact Assessment Agency of Canada and other federal departments
are also working together to streamline regulatory assessment processes
and ensure timely decisions.
Clean growth projects also require provincial and territorial regulatory approvals,
and ensuring regulatory processes are ecient and eective is a shared
responsibility. Building on the success of the federal-provincial cooperation
agreement signed with British Columbia, the federal government stands ready
and willing to work with provinces and territories to deepen federal-provincial
cooperation to reach the goal of “one project, one assessment”.
Over the course of this year, the government will propose further steps to ensure
the eectiveness of Canada’s reviews of major projects, which will support the growth
of Canada’s clean economy while continuing to uphold the highest standards for
environmental and other impacts.
Budget 2023 announces that, by the end of 2023, the government will
outline a concrete plan to improve the eciency of the impact assessment
and permitting processes for major projects, which will include clarifying
and reducing timelines, mitigating ineciencies, and improving
engagement and partnerships.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 93
In addition, Budget 2023 proposes to provide $11.4 million over
three years, starting in 2023-24, to Crown-Indigenous Relations and
Northern Aairs Canada to engage with Indigenous communities
and to update the federal guidelines for federal ocials to full
the Crown’s duty to consult Indigenous peoples and accommodate
impacts on their rights. This will support the implementation of the
United Nations Declaration on the Rights of Indigenous Peoples Act and
provide more clarity on how the government will proceed to ensure an
eective and ecient whole-of-government approach to consultation
and accommodation.
As outlined in Chapter 4, Budget 2023 also announces investments in
improving Indigenous economic participation in major projects, as well as
increased support for the participation of Indigenous Peoples and other
Northerners in environmental and regulatory assessments of major projects
in the North.
Enhancing the Carbon Capture, Utilization, and
Storage Investment Tax Credit
Carbon capture, utilization, and storage (CCUS) is a suite of technologies
that captures carbon dioxide (CO
2
) emissions to either store the CO
2
or
to use in other industrial processes, such as permanent mineralization
in concrete.
In Budget 2022, the federal government announced design details of
the Investment Tax Credit for Carbon Capture, Utilization, and Storage—
an important tool for reducing emissions in high-emitting sectors and
helping to create good careers. In August 2022, a consultation on draft
legislation and additional design features was launched, which provided
the Department of Finance with submissions that have informed additional
design elements of the investment tax credit.
Budget 2023 proposes that the Investment Tax Credit for Carbon
Capture, Utilization, and Storage:
- Include dual use heat and/or power equipment and water use
equipment, with tax support prorated in proportion to the use of
energy or material in the carbon capture, utilization, and storage
process, subject to certain conditions;
- In addition to Saskatchewan and Alberta, be available to projects
that would store CO
2
using dedicated geological storage in
British Columbia;
- Require projects storing CO
2
in concrete to have their concrete
storage process validated by a third-party based on an ISO standard
prior to claiming the investment tax credit; and,
- Include a recovery calculation for the investment tax credit in respect
of refurbishment property.
94 Chapter 3
The proposed changes are expected to cost about $520 million over ve
years, beginning in 2023-24.
The government intends to apply labour requirements to the Investment
Tax Credit for Carbon Capture, Utilization, and Storage. Details will be
announced at a later date. These labour requirements will come into eect
on October 1, 2023.
A full package of legislative proposals will be released for consultation in
the coming months. Once legislated, the tax credit will be retroactively
available to businesses that have incurred eligible CCUS expenses, starting
in 2022.
3.3 Investing in Canadian Workers
Across all sectors of our economy—in blue collar jobs and in white collar
jobs—Canadian workers are the most talented and resourceful in the world.
The federal government’s plan to build Canada’s clean economy will build an
economy that is worker-driven; one that creates more good careers today,
where the unions that built the middle class can thrive, and where young
people don’t have to move across the country just to nd a job that pays them
well. This is a plan that will create good careers and opportunities for everyone,
anywhere in Canada.
There will be good jobs for: auto workers manufacturing electric vehicles:
construction workers and tradespeople retrotting energy ecient homes;
resource workers mining the critical minerals the world needs; mill and smelter
workers making the cleanest aluminum and steel in the world; aerospace workers
building the next generation of greener planes and helicopters; engineers
designing hydrogen plants and fuel cells; mechanics who keep zero-emission
vehicles running well; Indigenous Guardians, forest workers, shers, and marine
biologists working to protect our lands and waters and use the power of nature
to ght climate change; back-oce and support sta at thousands of growing
companies. And, of course, the next generation of small business entrepreneurs
dreaming up solutions to the new challenges of the 21
st
century.
Since 2019, the government has invested in a range of measures that are
empowering unions and equipping Canadian workers with the tools they will
need to work the good jobs of today and tomorrow. Budget 2023 builds on this
progress and proposes new steps to ensure that workers from coast-to-coast-
to-coast will share in Canada’s economic prosperity for generations to come.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 95
Investing in Skills for a Clean Economy
Investments since Budget 2017 in skills and labour mobility measures include:
Labour Market Transfer Agreements: Enabling provinces and territories
to deliver training and employment supports tailored to their unique labour
market needs, including with a $1.5 billion top-up in 2020 to get people back
to work in the sectors hit hardest by the pandemic. This builds o of the annual
investment of nearly $3 billion delivered to provinces and territories for training
and employment supports and a top-up of $2.7 billion over six years, starting in
2017-18, announced in Budget 2017.
Union-based training: Over $200 million to expand the Union Training and
Innovation Program to train more than 30,000 additional apprentices and
journeypersons.
Employer-led training: $250 million over three years for the Upskilling for
Industry Initiative to support more than 15,000 workers, and $125 million over
ve years to launch the Sustainable Jobs Training Centre.
In addition, Budget 2021 announced the Sectoral Workforce Solutions Program
to help key sectors of the economy implement solutions to address their current
and emerging workforce needs and the Apprenticeship Service to support
rst-year apprentices in construction and manufacturing trades by providing
employers with $5,000 for upfront costs like salary and training, or $10,000 for
members of underrepresented groups.
Apprenticeship Service: Launched the Apprenticeship Service to help rst year
apprentices in construction and manufacturing Red Seal trades connect with
opportunities at small and medium-sized employers.
Skills for Success: Helping Canadians at all skill levels improve their foundational
and transferable skills, like problem solving and digital skills, through free
training resources and online skills assessments.
Financial support for adult learners: $815 million over ve years for the Canada
Training Credit, which covers up to 50 per cent of eligible training fees.
Labour mobility improvements: $595 million over six years for the Labour
Mobility Deduction for Tradespeople to make it more aordable to travel to
where the jobs are.
96 Chapter 3
Fair Pay for Workers Who Build the Clean Economy
When the federal government provides support for businesses to grow, their
workers must also see the benet. For the rst time in Canadian history, the
2022 Fall Economic Statement announced that labour requirements would be
attached to investment tax credits. These tax credits, for investments in clean
technology and clean hydrogen equipment, have requirements that include paying
prevailing wages and ensuring that apprenticeship opportunities are being created.
Following consultations with unions and other stakeholders, Budget 2023
is announcing additional details on the labour requirements for the Clean
Technology and Clean Hydrogen Investment Tax Credits.
To be eligible for the highest tax credit rates, businesses must pay
a total compensation package that equates to the prevailing wage.
The denition of prevailing wage would be based on union
compensation, including benets and pension contributions from the
most recent, widely applicable multi-employer collective bargaining
agreement, or corresponding project labour agreements, in the
jurisdiction within which relevant labour is employed.
Additionally, at least ten per cent of the tradesperson hours worked must
be performed by registered apprentices in the Red Seal trades.
The government also intends to apply labour requirements related to the
prevailing wage and hours worked by registered apprentices to the Investment
Tax Credit for Carbon Capture, Utilization, and Storage, and the Investment Tax
Credit for Clean Electricity. Further details will be provided at a later date.
In all cases, the requirements would apply to labour that is performed on or
after October 1, 2023.
Ensuring Fairness for Canadian Workers with Federal
Reciprocal Procurement
The federal government is committed to having procurement policies that treat
Canadian workers and businesses fairly—and this should include ensuring the
government buys goods and services from countries that also grant Canadian
businesses a similar level of access to their government procurement markets.
In doing so, we will ensure that federal procurement dollars benet Canadian
workers and businesses, and support the development of mutually-benecial,
reciprocal, and resilient supply chains.
To deliver these benets, Budget 2023 announces the government
will undertake targeted engagement with provinces and territories,
industry stakeholders, and workers and unions on concrete reciprocal
procurement measures, so they can be implemented in the near term.
The proposed measures will include placing conditions on foreign
suppliers’ participation in federally-funded infrastructure projects,
applying strict reciprocity to federal procurement, and creating a
preference program for Canadian small businesses.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 97
The federal government will also engage with provinces and territories to
explore extending this reciprocal treatment to all sub-national procurement
opportunities.
Beyond government procurement policies, in light of some of the restrictive
eligibility conditions associated with new measures within the U.S. Ination
Reduction Act, the government will initiate targeted consultations on the
possibility to introduce new reciprocal treatment for the measures in the
government’s plan to build a clean economy.
Doubling the Tradespeople’s Tool Deduction
Our economy depends on skilled tradespeople. From electricians, to painters,
to plumbers, supporting Canada’s skilled tradespeople is essential to attracting
more Canadians to the trades, and ensuring that Canada has the skilled
workforce required to build Canada’s clean economy and double the number of
new homes that will be built in Canada by 2032.
To help tradespeople invest in the equipment they need, Budget 2023
proposes to double the maximum employment deduction for
tradespeople’s tool expenses from $500 to $1,000.
This change would take eect for the 2023 taxation year and would reduce
federal revenues by $11 million over six years, starting in 2022-23.
98 Chapter 3
Strengthening Internal Trade
Reducing barriers to interprovincial and territorial trade and improving
labour mobility would create more opportunities for Canadian businesses to
grow, make it easier for Canadians to get help from medical professionals,
and bring down costs for Canadians through increased competition and
consumer choice.
In December 2022, the Minister of Intergovernmental Aairs, Infrastructure
and Communities launched a new Federal Action Plan to Strengthen Internal
Trade, which seeks to accelerate eorts to remove barriers to trade and labour
mobility across Canada. This includes:
Funding work to identify barriers to trade, and solution-driven analysis
on how to eliminate them;
The creation of an Internal Trade Data and Information Hub; and,
Identifying opportunities to enhance the capacity of the Internal Trade
Secretariat and the Regulatory Reconciliation and Cooperation Table.
This builds on the work the government has undertaken to improve labour
mobility, including:
Providing $115 million over ve years, with $30 million ongoing,
through Budget 2022 to expand the Foreign Credential Recognition
Program, which makes it easier for newcomer workers to have their
credentials recognized in Canada. This is expected to help up to
11,000 internationally trained health care professionals per year get
their credentials recognized; and,
Launching the Labour Mobility Deduction for Tradespeople, which
makes it more aordable for skilled tradespeople to travel to the
worksite, wherever in Canada it is.
To continue making progress on strengthening internal trade in 2023,
including eorts to eliminate exemptions to the Canadian Free Trade
Agreement, the government, led by the Minister of Intergovernmental Aairs,
Infrastructure and Communities, will lead and advance federal, provincial, and
territorial eorts to explore mutual recognition of regulatory standards, which
will ensure goods and services are able to move more freely.
This includes the development of a Federal Framework on Mutual
Recognition, which will set out the federal government’s coordinated policy
approach towards mutual recognition, helping to advance engagement with
provincial and territorial partners.
These critical steps to strengthen internal trade in Canada will be discussed
at federal, provincial, and territorial meetings in 2023, in order to establish a
clear roadmap to reach an agreement in a timely way that has quantiable
and veriable targets.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 99
Supporting Employee Ownership Trusts
Employee Ownership Trusts enable employees to share in the success of their
work. They support participation in business decisions and allow workers to
receive their share of prots. With more than 75 per cent of small business
owners planning to retire in the next decade, Employee Ownership Trusts
can also give business owners an alternative succession option. Budget 2022
announced the government’s commitment to create these trusts while
consulting with stakeholders to address remaining barriers.
Budget 2023 proposes to introduce tax changes to facilitate the creation
of Employee Ownership Trusts. Selling the business to employees would
become a more attractive proposition for owners looking to exit, and
employee-owned businesses would be able to re-invest more of their
prots in growth.
The government welcomes stakeholder feedback on how best to enhance
employee rights and participation in the governance of Employee Ownership Trusts.
These changes would take eect for the 2024 tax year, and would reduce
federal revenues by $20 million over ve years, starting in 2023-24.
Investing in Canada’s Labour Market Transfer
Agreements
Every year, the federal government invests nearly $3 billion in Canada’s Labour
Market Development Agreements and Workforce Development Agreements with
provinces and territories. This funds a range of supports, including skills training,
on-site work experience, career counselling, and job search assistance that helps
one million Canadians each year to upgrade their skills or nd new jobs.
Budget 2023 proposes to invest an additional $625 million in 2023-24 in
the Labour Market Transfer Agreements to ensure Canadians continue to
have access to the supports they need to get their next job.
Continuing to Support Seasonal EI Claimants
Many seasonal workers—including in shing and tourism sectors—rely on
Employment Insurance for the support they need between work seasons.
To address gaps in Employment Insurance support between seasons, the
government introduced temporary rules in 2018 to provide up to ve
additional weeks—for a maximum of 45 weeks—for eligible seasonal workers in
13 economic regions. This support is set to expire in October 2023.
Budget 2023 proposes to extend this support for seasonal workers until
October 2024. The cost of this measure is estimated at $147 million over
three years, starting in 2023-24.
100 Chapter 3
Protecting Federally Regulated Gig Workers
When workers are engaged in a typical employer-employee relationship, but
are misclassied as something other than employees, they miss out on the
same labour rights, protections, and entitlements as traditional employees.
For those in the gig economy, such as those who rely on an app or digital
platform for their source of work, this can have a real impact on the stability
and security of their livelihoods. As a rst step in addressing this, in 2021, the
federal government made illegal the intentional misclassication of employees
in the federally regulated private sector.
Budget 2023 proposes to amend the Canada Labour Code to improve
job protections for federally regulated gig workers by strengthening
prohibitions against employee misclassication. This will help ensure
all federally regulated workers receive the protections and employer
contributions to which they are entitled, including Employment Insurance
and the Canada Pension Plan.
Protecting Jobs with Timely Access to Work-Sharing
Agreements
When businesses struggle, it can be dicult for them to keep sta on payroll.
The Work-Sharing Program helps avoid layos during temporary decreases
in business activity by providing income support through the Employment
Insurance program to eligible employees who work a reduced week while their
employer recovers. This means that employees can keep their jobs and continue
earning income, while their employer retains skilled workers without having to
hire someone new when business picks up.
Budget 2023 proposes to provide $5.4 million over three years, starting
in 2023-24, to Employment and Social Development Canada to ensure
that the Work-Sharing Program continues to provide timely support to
Canadian workers and businesses.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 101
Continuing Support for the Student Work Placement
Program
Work-integrated learning programs such as co-ops and internships play a
critical role in helping students transition from post-secondary institutions
to the workforce. The federal government recognizes the need to continue
supporting students to develop work-ready skills, particularly in the context of
an increasingly complex and evolving labour market.
Budget 2023 proposes to provide $197.7 million in 2024-25 to the
Student Work Placement Program to continue creating quality work-
integrated learning opportunities for students through partnerships
between employers and post-secondary education institutions.
These measures will ensure that students can gain the necessary skills,
education, and real-life work experience to transition successfully into the
workforce.
Prohibiting the Use of Replacement Workers
The ability to form a union, bargain collectively, and strike is essential to
a healthy democracy. These important rights can be undermined when
an employer brings in replacement workers to temporarily do the work of
unionized workers during a strike or lockout.
Budget 2023 proposes to table amendments to the Canada Labour Code,
before the end of 2023, that would prohibit the use of replacement
workers during a strike or lockout, and improve the process to review
activities that must be maintained to ensure the health and safety of the
public during a work stoppage.
3.4 Reliable Transportation and Resilient Infrastructure
Canadians expect and deserve a transportation and supply chain system that
reliably delivers goods and people to our cities and towns, provides businesses
with access to global markets, and safely and eciently connects our
communities. Our economy depends on it, too.
In Budget 2023, the federal government proposes new investments to ensure
that Canada’s transportation and supply chain systems are resilient and reliable
for Canadians and Canadian businesses.
102 Chapter 3
Strengthening Canada’s Trade Corridors
Canada’s trade corridors keep our economy moving. From ports, to airports, to
railways and highways, they are the backbone of the supply chains that bring
goods to our communities and enable our businesses to export their products
around the world.
Since 2017, the federal government has announced more than $2.7 billion
for projects to increase Canada’s trade corridor capacity under the
National Trade Corridors Fund. To date, this has meant support for more than
120 transportation supply chain projects across the country, including bridges,
roads, airports, railways, and ports.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 103
Figure 3.2
Supporting Transportation Supply Chain Projects Through the National
Trade Corridors Fund
British Columbia (BC):
Increased Rail Capacity
$60 million to the
Prince Rupert Port Authority
to increase rail capacity.
This investment will support
the region’s economy and
support trade diversification
through increased exports
to markets in Asia.
Nunavut (NU):
New Deep-Water Port
$40 million to Nunavut for
the construction of a new
deep-water port in Qikiqtarjuaq.
The port will create jobs and
economic opportunity by
strengthening the territory’s
connection to regional and
global markets.
Quebec (QC):
Air Freight Infrastructure
$50 million to the Montreal
Airport Authority to improve
air freight logistics at the
Montreal-Mirabel International
Airport. New cargo, warehouse,
and aircraft storage facilities
will expand capacity to export
Canadian goods.
Alberta (AB):
Airport Cargo Facilities
$100 million to the Edmonton
International Airport for the
construction of a new
2,000-acre cargo hub.
The new facility will help
businesses in Western Canada
reach international markets
and strengthen distribution
capacity to the rest of Canada,
the U.S., and Mexico.
Ontario (ON):
Port Infrastructure
$13.8 million to the Hamilton
Oshawa Port Authority for new
infrastructure investments.
The expansion project will
increase grain exports and
remove an estimated 12,000
long-distance heavy truck trips
from local highways.
Nova Scotia (NS):
Highway 104 Twinning
$90 million to Nova Scotia for
the twinning of Highway 104.
This will ease congestion and
improve the eciency of one of
the region’s most important
trade corridors.
YK
BC
AB
SK
NWT
NU
MB
ON
QC
NL
NB
NS
PEI
104 Chapter 3
Recent events, including the pandemic and ooding in British Columbia, which
cut o the supply of goods to and from the west coast, have demonstrated
the economic challenges for Canadians and businesses that come with supply
chain disruptions.
To further strengthen Canada’s transportation systems and supply chain
infrastructure, Budget 2023 proposes to:
- Provide $27.2 million over ve years, starting in 2023-24, to Transport
Canada to establish a Transportation Supply Chain Oce to work
with industry and other orders of government to respond to
disruptions and better coordinate action to increase the capacity,
eciency, and reliability of Canada’s transportation supply chain
infrastructure;
- Collaborate with industry, provinces, territories, and Indigenous
Peoples to develop a long-term roadmap for Canada’s transportation
infrastructure to better plan and coordinate investments required to
support future trade growth;
- Provide $25 million over ve years, starting in 2023-24, to Transport
Canada to work with Statistics Canada to develop transportation
supply chain data that will help reduce congestion, make our supply
chains more ecient, and inform future infrastructure planning. This
measure will be advanced using existing Transport Canada resources;
- Introduce amendments to the Canada Transportation Act to provide
the Minister of Transport with the authority to compel data sharing
by shippers accessing federally regulated transportation services;
- Introduce amendments to the Canada Transportation Act for a
temporary extension, on a pilot basis, of the interswitching limit in
the prairie provinces to strengthen rail competition; and,
- Launch a review of the Shipping Conferences Exemption Act to
improve marine shipping competition.
These measures are a down payment on Canada’s National Supply Chain
Strategy, which will be released in the coming months and will be informed by
the recommendations of the National Supply Chain Task Force report.
Delivering Canada’s Infrastructure Funding
Through the Investing in Canada Infrastructure Program (ICIP), the federal
government is providing more than $33 billion in funding for public
infrastructure across the country—projects that municipalities rely on to make
our communities stronger. Under this program, provinces and territories
prioritize and submit projects to Infrastructure Canada for review.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 105
To date, the program has approved $24.2 billion for 5,400 projects.
These projects have improved access to safe drinking water by building
or rehabilitating over 1,000 water and wastewater systems, strengthened
communities with 800 projects to improve cultural and recreational spaces, and
enhanced public transit systems by acquiring over 4,200 public transit vehicles
like buses, subway cars and light rail transit trains.
ICIP is supporting several transformational infrastructure projects, such as the
extension of Montreal Metro’s Blue Line, the St. John’s 2025 Canada Summer
Games Track and Field Facility, the Winnipeg North End Sewage Treatment Plant
Upgrades, the Eastern Ontario Regional Network Cellular Gap Project, and the
Port Saint John West Side Terminals Modernization Project.
To help build more infrastructure sooner, Budget 2022 signalled the
government’s intent to accelerate the deadline for provinces to commit their
remaining funding to March 31, 2023, with any uncommitted funds after this
date to be reallocated to other priorities. The government is working closely
with the provinces to support them in allocating their remaining funding and
expects that all remaining funding will be committed by the deadline.
Table 3.2
Funding Remaining, by Province, in the Investing in Canada Infrastructure
Program
1
Province Remaining Project Funding
(October 19, 2022)
Remaining Project Funding
(March 23, 2023)
($ millions)
Percentage of total
project funding
envelope ($ millions)
Percentage of
total
project funding
envelope
Alberta
$50.5 1% $0.0 0%
British Columbia
$661.3 17% $0.0 0%
Manitoba
$13.6 1% $0.0 0%
New Brunswick
$113.3 17% $57.8 9%
Newfoundland
and Labrador
$212.8 38% $0.0 0%
Nova Scotia
$258.9 31% $0.0 0%
Ontario
$457.1 4% $11.9 0%
Prince Edward
Island
$56.9 16% $0.0 0%
Quebec
$2,754.1 37% $724.9² 10%
Saskatchewan
$248.5 28% $4.7 1%
Source: Infrastructure Canada
1
Remaining project funding includes funding for projects that provinces have signaled to the federal government but
not yet submitted for approval.
² The Government of Canada is expecting Quebec to allocate approximately $695 million of its remaining project funding
to the Montreal Blue line project and the balance of these funds to other priority projects before March 31, 2023.
106 Chapter 3
Whether it is building public transit, supporting the resilience of communities,
or funding community infrastructure, the government knows our partners rely
on a long-term approach to infrastructure. Following the success of ICIP, the
government is actively reviewing Canada’s continued infrastructure needs as it
charts a course for future federal infrastructure programming. The government
will provide an update on this work later this year, including the next steps on
permanent public transit funding.
Supporting Resilient Infrastructure Through Innovation
The Smart Cities Challenge was launched in 2017 to encourage cities to adopt
new and innovative approaches to improve the quality of life for their residents.
The rst round of the Challenge resulted in $75 million in prizes across four
winning applicants: Montreal, Quebec; Guelph, Ontario; communities of
Nunavut; and Bridgewater, Nova Scotia.
New and innovative solutions are required to help communities reduce the risks
and impacts posed by weather-related events and disasters triggered by climate
change. To help address this issue, the government will be launching a new round
of the Smart Cities Challenge later this year, which will focus on using connected
technologies, data, and innovative approaches to improve climate resiliency.
Investing in VIA Rail Trains and Services
VIA Rail trains help to connect communities across Canada, including rural,
remote, and Indigenous communities where other transportation options
may be limited or unavailable, such as those between Winnipeg and Churchill,
Prince Rupert and Jasper, or Montreal and Senneterre. However, many of
VIA Rail’s trains require signicant investments to ensure they can provide the
service that Canadians deserve.
Budget 2023 proposes to provide $210.0 million over ve years, starting
in 2023-24, with $117.4 million in remaining amortization, to VIA Rail to
conduct maintenance on its trains on routes outside the Québec City–
Windsor Corridor and to maintain levels of service across its network.
This funding is in addition to the $42.8 million over four years, starting
in 2023-24, with $169.4 million in remaining amortization, provided in
Budget 2022 to construct, maintain, and upgrade stations and maintenance
centres in the Québec City–Windsor Corridor.
Investing in the Canadian Coast Guard
To carry out its critical activities, such as search and rescue and icebreaking
operations, the Canadian Coast Guard operates 117 vessels and 22 helicopters.
As the Coast Guard plans to expand its eet of ships in the coming decades,
new investments in people and infrastructure are needed today to prepare for
these new vessels.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 107
Budget 2023 proposes to provide $119.6 million over ve years,
starting in 2023–24, with $102.1 million in remaining amortization and
$17.4 million ongoing, to Fisheries and Oceans Canada to reinforce the
integrity of its helicopter eet and ensure the Canadian Coast Guard
has the necessary infrastructure and support to hire and train the sta
to operate its future marine vessel eet. Of this amount, $27.8 million
over ve years and $4.3 million ongoing would be sourced from existing
departmental resources.
Safe and Reliable Ferry Services in Eastern Canada
The federal government provides nancial support for interprovincial
ferry routes between Saint John, New Brunswick and Digby, Nova Scotia;
Wood Islands, Prince Edward Island and Caribou, Nova Scotia; and Îles-de-la-
Madeleine, Quebec and Souris, Prince Edward Island. These ferry services are
essential transportation links for communities, businesses, and tourism, and
contribute an estimated $141 million annually to the regional economy.
Budget 2023 proposes to provide $29.9 million over two years, starting
in 2023-24, to Transport Canada for the Ferry Services Contribution
Program to support the continued safe and reliable operation of ferry
services in Eastern Canada. This will include the chartering of a second
vessel for the Wood Islands-Caribou route.
Redeveloping the Bonaventure Expressway and
Supporting Transportation Infrastructure in Montreal
For nearly 20 years, converting the Bonaventure Expressway into an urban
boulevard has been part of the vision for the redevelopment and revitalization
of Montreal’s shoreline. The federal portion of the expressway will soon require
replacement, which provides an opportunity to modernize the roadway in line
with this vision and restore public access to the area.
Budget 2023 proposes to provide $47.8 million over nine years, starting
in 2023-24, with $225.5 million in remaining amortization, to the Jacques
Cartier and Champlain Bridges Incorporated for the redevelopment of the
federal portion of the Bonaventure Expressway into an urban boulevard.
Budget 2023 also proposes to provide $576.1 million over ve years,
starting in 2023-24, with $192.3 million in remaining amortization, to
the Jacques Cartier and Champlain Bridges Incorporated to operate,
maintain, and repair its infrastructure in the Greater Montreal Area.
108 Chapter 3
Delivering the Lac-Mégantic Rail Bypass Project
Canadians will always remember the 47 victims of the tragic train derailment
in Lac-Mégantic, Quebec in July 2013. The completion of the Lac-Mégantic rail
bypass project remains a priority for the federal government as the community
continues to recover from this tragedy.
The government continues to take important steps to move the project forward,
including working in close partnership with the Government of Quebec to make
the project a reality. In December 2022, the Prime Minister and the Premier of
Quebec committed to fund the project in the same ratios as initially announced
in 2018.
3.5 Investing in Tomorrow’s Technology
With the best-educated workforce on earth, world-class academic and research
institutions, and robust start-up ecosystems across the country, Canada’s
economy is fast becoming a global technology leader – building on its
strengths in areas like articial intelligence. Canada is already home to some
of the top markets for high-tech careers in North America, including the three
fastest growing markets between 2016 and 2021: Vancouver, Toronto, and
Quebec City.
However, more can be done to help the Canadian economy reach its full
potential. Reversing a longstanding trend of underinvestment in research and
development by Canadian business is essential our long-term economic growth.
Budget 2023 proposes new measures to encourage business innovation in
Canada, as well as new investments in college research and the forestry industry
that will help to build a stronger and more innovative Canadian economy.
Attracting High-Tech Investment to Canada
In recent months, Canada has attracted several new digital and high-tech
projects that will support our innovative economy, including:
Nokia: a $340 million project that will strengthen Canada’s position as a
leader in 5G and digital innovation;
Xanadu Quantum Technologies: a $178 million project that will support
Canada’s leadership in quantum computing;
Sanctuary Cognitive Systems Corporation: a $121 million project that
will boost Canada’s leadership in the global Articial Intelligence market;
and,
EXFO: a $77 million project to create a 5G Centre of Excellence that aims
to develop one of the world’s rst Articial Intelligence-based automated
network solutions.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 109
Review of the Scientic Research and Experimental
Development Tax Incentive Program
The Scientic Research and Experimental Development (SR&ED) tax incentive
program continues to be a cornerstone of Canada’s innovation strategy by
supporting research and development with the goal of encouraging Canadian
businesses of all sizes to invest in innovation that drives economic growth.
In Budget 2022, the federal government announced its intention to review the
SR&ED program to ensure it is providing adequate support and improving
the development, retention, and commercialization of intellectual property,
including the consideration of adopting a patent box regime. The Department
of Finance will continue to engage with stakeholders on the next steps in the
coming months.
110 Chapter 3
Modernizing Canada’s Research Ecosystem
Canada’s research community and world-class researchers solve some of the
world’s toughest problems, and Canada’s spending on higher education research
and development, as a share of GDP, has exceeded all other G7 countries.
Since 2016, the federal government has committed more than $16 billion of
additional funding to support research and science across Canada. This includes:
Nearly $4 billion in Budget 2018 for Canada’s research system,
including $2.4 billion for the Canada Foundation for Innovation and
the granting councils—the Natural Sciences and Engineering Research
Council of Canada, the Social Sciences and Humanities Research
Council of Canada and the Canadian Institutes of Health Research;
More than $500 million in Budget 2019 in total additional support
to third-party research and science organizations, in addition to the
creation of the Strategic Science Fund, which will announce successful
recipients later this year;
$1.2 billion in Budget 2021 for Pan-Canadian Genomics and Articial
Intelligence Strategies, and a National Quantum Strategy;
$1 billion in Budget 2021 to the granting councils and the Canada
Foundation for Innovation for life sciences researchers and
infrastructure; and,
The January 2023 announcement of Canada’s intention to become
a full member in the Square Kilometre Array Observatory, which will
provide Canadian astronomers with access to its ground-breaking
data. The government is providing up to $269.3 million to support this
collaboration.
In order to maintain Canada’s research strength—and the knowledge,
innovations, and talent it fosters—our systems to support science and
research must evolve. The government has been consulting with stakeholders,
including through the independent Advisory Panel on the Federal Research
Support System, to seek advice from research leaders on how to further
strengthen Canada’s research support system.
The government is carefully considering the Advisory Panel’s advice, with more
detail to follow in the coming months on further eorts to modernize the system.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 111
Using College Research to Help Businesses Grow
Canada’s colleges, CEGEPs, and polytechnic institutes use their facilities,
equipment, and expertise to solve applied research problems every day.
Students at these institutions are developing the skills they need to start good
careers when they leave school, and by partnering with these institutions,
businesses can access the talent and the tools they need to innovate and grow.
To help more Canadian businesses access the expertise and research
and development facilities they need, Budget 2023 proposes to provide
$108.6 million over three years, starting in 2023-24, to expand the
College and Community Innovation Program, administered by the
Natural Sciences and Engineering Research Council.
Supporting Canadian Leadership in Space
For decades, Canada’s participation in the International Space Station has
helped to fuel important scientic advances, and showcased Canada’s ability to
create leading-edge space technologies, such as Canadarm2. Canadian space
technologies have inspired advances in other elds, such as the NeuroArm,
the world’s rst robot capable of operating inside an MRI, making previously
impossible surgeries possible.
Budget 2023 proposes to provide $1.1 billion over 14 years, starting in
2023-24, on a cash basis, to the Canadian Space Agency to continue
Canada’s participation in the International Space Station until 2030.
Looking forward, humanity is returning to the moon. Canada intends to
join these eorts by contributing a robotic lunar utility vehicle to perform
key activities in support of human lunar exploration. Canadian participation
in the NASA-led Lunar Gateway station—a space station that will orbit the
moon—also presents new opportunities for innovative advances in science
and technology. Canada is providing Canadarm3 to the Lunar Gateway, and a
Canadian astronaut will join Artemis II, the rst crewed mission to the moon
since 1972. In Budget 2023, the government is providing further support to
assist these missions.
Budget 2023 proposes to provide $1.2 billion over 13 years, starting in
2024-25, to the Canadian Space Agency to develop and contribute a
lunar utility vehicle to assist astronauts on the moon.
Budget 2023 proposes to provide $150 million over ve years, starting in
2023-24, to the Canadian Space Agency for the next phase of the Lunar
Exploration Accelerator Program to support the Canada’s world-class
space industry and help accelerate the development of new technologies.
Budget 2023 also proposes to provide $76.5 million over eight years,
starting in 2023-24, on a cash basis, to the Canadian Space Agency in
support of Canadian science on the Lunar Gateway station.
112 Chapter 3
Investing in Canada’s Forest Economy
The forestry sector plays an important role in Canada’s natural resource
economy, and is a source of good careers in many rural communities across
Canada, including Indigenous communities. As global demand for sustainable
forest products grows, continued support for Canada’s forestry sector will help
it innovate, grow, and support good middle class jobs for Canadians.
Budget 2023 proposes to provide $368.4 million over three years, starting
in 2023-24, with $3.1 million in remaining amortization, to Natural
Resources Canada to renew and update forest sector support, including
for research and development, Indigenous and international leadership,
and data. Of this amount, $30.1 million would be sourced from existing
departmental resources.
Establishing the Dairy Innovation and Investment Fund
The dairy sector is facing a growing surplus of solids non-fat (SNF), a by-
product of dairy processing. Limited processing capacity for SNF results in lost
opportunities for dairy processors and farmers.
Budget 2023 proposes to provide $333 million over ten years, starting in
2023-24, for Agriculture and Agri-Food Canada to support investments
in research and development of new products based on SNF, market
development for these products, and processing capacity for SNF-based
products more broadly.
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 113
Supporting Farmers for Diversifying Away from
Russian Fertilizers
Russia’s illegal invasion of Ukraine has resulted in higher prices for nitrogen
fertilizers, which has had a notable impact on Eastern Canadian farmers who
rely heavily on imported fertilizer.
Budget 2023 proposes to provide $34.1 million over three years, starting
in 2023-24, to Agriculture and Agri-Food Canada’s On-Farm Climate
Action Fund to support adoption of nitrogen management practices by
Eastern Canadian farmers, that will help optimize the use and reduce the
need for fertilizer.
Providing Interest Relief for Agricultural Producers
Farm production costs have increased in Canada and around the world,
including as a result Russia’s illegal invasion of Ukraine and global supply chain
disruptions. It is important that Canada’s agricultural producers have access to
the cash ow they need to cover these costs until they sell their products.
Budget 2023 proposes to provide $13 million in 2023-24 to Agriculture
and Agri-Food Canada to increase the interest-free limit for loans under
the Advance Payments Program from $250,000 to $350,000 for the 2023
program year.
Additionally, the government will consult with provincial and territorial
counterparts to explore ways to extend help to small agricultural producers who
demonstrate urgent nancial need.
Maintaining Livestock Sector Exports with a Foot-
and-Mouth Disease Vaccine Bank
Foot-and-Mouth Disease (FMD) is a highly transmissible illness that can aect
cattle, pigs, and other cloven-hoofed animals. Recent outbreaks in Asia and
Africa have increased the risk of global spread, and a FMD outbreak in Canada
would cut o exports for all livestock sectors, with major economic implications.
However, the impact of a potential outbreak would be signicantly reduced
with the early vaccination of livestock.
Budget 2023 proposes to provide $57.5 million over ve years, starting
in 2023-24, with $5.6 million ongoing, to the Canadian Food Inspection
Agency to establish a FMD vaccine bank for Canada, and to develop FMD
response plans. The government will seek a cost-sharing arrangement
with provinces and territories.
114 Chapter 3
Chapter 3
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean
Economy
millions of dollars
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
3.1. Investing in Clean
Electricity 0 8 1,081 1,683 2,146 2,443 7,361
An Investment Tax Credit for
Clean Electricity 0 0 800 1,400 1,900 2,200 6,300
Supporting Clean Electricity
Projects 0 10 288 289 252 249 1,088
Less: Funds Sourced
From Existing Departmental
Resources 0 -3 -7 -6 -6 -6 -27
3.2. A Growing, Clean
Economy 0 173 1,464 2,331 3,499 3,632 11,099
An Investment Tax Credit
for Clean Technology
Manufacturing 0 35 1,015 1,020 1,170 1,270 4,510
An Investment Tax Credit for
Clean Hydrogen 0 90 330 1,150 2,050 1,940 5,560
Enhancing the Reduced Tax
Rates for Zero-Emission
Technology Manufacturers 0 0 5 5 5 5 20
Supporting Clean Technology
Projects 0 0 8 42 94 151 294
Expanding Eligibility for the
Clean Technology Investment
Tax Credit 0 0 20 25 45 95 185
Updating Federal Duty to
Consult Guidelines 0 3 6 3 0 0 11
Enhancing the Carbon Capture,
Utilization, and Storage
Investment Tax Credit 0 45 80 86 135 170 516
Administrative Costs 0 1 1 1 1 1 5
Less: Funds Sourced
From Existing Departmental
Resources 0 0 0 0 0 0 -2
3.3. Investing in Canadian
Workers 1 566
84 -132 -204 -208 107
Doubling the Tradespeople’s
Tool Deduction 1 2 2 2 2 2 11
Supporting Employee
Ownership Trusts 0 0 2 3 5 10 20
Investing in Canada’s Labour
Market Transfer Agreements 0 625 0 0 0 0 625
Continuing to Support
Seasonal EI Claimants 0 5 77 65 0 0 147
Protecting Jobs with Timely
Access to Work-Sharing
Agreements 0 2 2 2 0 0 5
Continuing Support for the
Student Work Placement
Program 0 0 198 0 0 0 198
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 115
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Employment Insurance
Revenues for Measures Included
in Budget 2023
1
0 -68 -197 -203 -211 -220 -899
3.4. Reliable Transportation
and Resilient Infrastructure -16 195 157 153 209 224 921
Strengthening Canada’s Trade
Corridors 0 5 12 13 13 9 52
Less: Funds Sourced
From Existing Departmental
Resources 0 -3 -9 -8 -8 -8 -35
Investing in VIA Rail Trains and
Services 0 117 5 10 39 39 210
Investing in the Canadian Coast
Guard 0 23 26 23 23 24 120
Less: Funds Sourced
From Existing Departmental
Resources 0 -6 -6 -5 -5 -5 -28
Safe and Reliable Ferry Services
in Eastern Canada 0 15 15 0 0 0 30
Redeveloping the Bonaventure
Expressway and Supporting
Transportation Infrastructure in
Montreal 0 42 114 120 146 164 587
Less: Year-Over-Year
Reallocation of Funding -16 0 0 0 1 1 -15
3.5. Investing in Tomorrow’s
Technology -24 53 129 196 210 196 759
Using College Research to Help
Businesses Grow 0 39 36 33 0 0 109
Supporting Canadian
Leadership in Space 0 17 53 119 174 146 508
Less: Funds Sourced
From Existing Departmental
Resources 0 0 -1 -40 -49 -48 -138
Investing in Canada's Forest
Economy 0 85 130 153 0 0 368
Less: Funds Sourced
From Existing Departmental
Resources 0
-10 -10 -10 0 0 -30
Establishing the Dairy
Innovation and Investment
Fund
2
0 0 1 21 81 94 196
Less: Funds Previously
Provisioned in the Fiscal
Framework -24 -100 -100 -100 0 0 -324
Supporting Farmers for
Diversifying Away from Russian
Fertilizers 0 5 14 14 0 0 34
Less: Funds Previously
Provisioned in the Fiscal
Framework 0 -7 -7 -7 -7 -7 -34
116 Chapter 3
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Providing Interest Relief for
Agricultural Producers 0 13 0 0 0 0 13
Maintaining Livestock Sector
Exports with a Foot-and-Mouth
Disease Vaccine Bank 0 12 12 12 12 12 58
Additional Investments –
A Made-In-Canada Plan:
Aordable Energy, Good
Jobs, and a Growing Clean
Economy 0 218 200 184 50 35 686
Flow-Through Shares and
Critical Mineral Exploration Tax
Credit - Lithium From Brines 0 3 3 3 3 2 14
Budget 2023 proposes to allow producers of lithium from brines to issue ow-through shares and to
expand the eligibility of the Critical Mineral Exploration Tax Credit to lithium from brines.
Supporting Advanced
Transportation Technologies 0 37 49 53 0 0 138
Funding proposed for TC and RCMP to assess, certify, and regulate advanced transportation
technologies, including connected and autonomous vehicles and aerial drones, and to support their
safe use.
Supporting the Accessibility
and Safety of Canada’s
Transportation System 0 84 85 86 0 0 255
Less: Costs to be Recovered 0 -1 -2 -2 0 0 -5
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -1 -1 0 0 -3
Funding proposed for TC to support rail safety improvement projects, and to continue to fulll
its responsibilities under the Canadian Navigable Waters Act, the Railway Safety Act, and the
Transportation of Dangerous Goods Act.
Building Up Capacity at the
Transportation Safety Board of
Canada 0 5 4 4 4 4 20
Funding proposed for the TSB to ensure it is adequately resourced to deliver on its mandate.
Funding for the Explosives
Detection Dog and Handler
Teams Program 0 4 6 6 7 7 30
Funding proposed for TC to strengthen air cargo security by expanding the Explosives Detection Dog
and Handler Teams program.
Renewal of Funding for the
Regional Economic Growth
through Innovation program 0 50 0 0 0 0 50
Funding proposed for Canada’s Regional Development Agencies to support economic development
and diversication across the country.
Renewal of Funding for the
Inclusive Diversication and
Economic Advancement in the
North Program 0 0 15
15 15 0 44
Funding proposed for CanNor to continue to advance inclusive economic development and
diversication in the territories.
CFIA Market Access and Food
Safety Programming 0 38 38 16 16 16 126
A Made-In-Canada Plan: Aordable Energy, Good Jobs, and a Growing Clean Economy 117
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Funding proposed for the CFIA to continue to ensure the safety of domestic and imported food, as
well as to maintain and grow market access for Canadian food exporters.
AAFC Laboratory Asset
Renewal 0 0 1 3 4 5 13
Less: Funds Sourced
From Existing Departmental
Resources 0 0 0 0 0 0 -1
Funding proposed for AAFC to help restore aging research facilities in urgent need of repair.
Future Arctic Oshore Oil and
Gas Development 0 1 2 2 1 1 7
Less: Funds Sourced
From Existing Departmental
Resources 0 0 0 0 0 0 -2
Funding proposed for CIRNAC to begin ve-year climate and marine science-based assessments in
Canada's Arctic waters for 2022-2027, and to support the administration and management of the
Western Arctic - Tariuq (Oshore) Accord.
Chapter 3 - Net Fiscal Impact -39 1,213 3,114 4,415 5,910 6,322 20,934
Note: Numbers may not add due to rounding. A glossary of abbreviations used in this table can be found at the end of
Annex 1
1
Includes Employment Insurance revenue for Employment and Social Development Canada Rent Price Adjustment in
table A1.12.
2
$9 million to be sourced from a reprole of unclaimed Dairy Direct Payment Program funding for 2022-23.
2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
Chapter 4
Advancing Reconciliation and Building a
Canada That Works for Everyone
Key Ongoing Actions ........................................................................................................... 121
Investments in Indigenous Priorities .............................................................................122
4.1 Self-Determination and Prosperity for Indigenous Peoples .........................125
Supporting Indigenous Governance, Capacity, and Participation
in Decision-Making ......................................................................................................125
Building an Economy That Works for Indigenous Peoples .........................127
4.2 Investing in Indigenous Communities ..................................................................129
Supporting Indigenous Health Priorities ............................................................129
Supporting Safe and Aordable Housing in Indigenous Communities..130
Implementing the National Action Plan to End the Tragedy of Missing
and Murdered Indigenous Women and Girls .................................................... 130
Supporting First Nations Children .........................................................................131
Gottfriedson Band Class Settlement Agreement ............................................132
4.3 Clean Air and Clean Water .........................................................................................132
Protecting Our Freshwater ........................................................................................134
Protecting Canada’s Whales ..................................................................................... 135
Cleaner and Healthier Ports ...................................................................................... 135
Protecting Species at Risk ........................................................................................135
Supporting Natural Disaster Resilience................................................................136
4.4 Stronger and More Inclusive Communities ........................................................137
Supporting Our Ocial Languages ......................................................................137
Investing in Employment Assistance Services for Ocial Language
Minority Communities ............................................................................................... 139
Supporting the Canadian Screen Sector ............................................................140
Supporting the Growth of Canada’s Tourism Sector ..................................... 140
Fighting Systemic Racism, Discrimination, and Hate ...................................... 141
Supporting Black Canadian Communities .........................................................142
Supporting a More Equitable, Diverse, and Inclusive Public Service ......143
Advancing Public Safety Research ........................................................................ 143
Addressing Wrongful Convictions .........................................................................144
Advancing Gender Equality in Canada ................................................................. 144
A Safe and Accountable Sport System ................................................................144
Helping Canadians Stay Active ..............................................................................145
Local Food Infrastructure Fund Top-Up ..............................................................145
Making Life More Aordable for Persons With Disabilities ........................145
Advancing Inclusion of Canadians with Disabilities ....................................... 146
Building Communities Through Arts and Heritage ......................................... 148
Creating a New Leave for Pregnancy Loss ........................................................148
Improving Access to Leave Related to the Death or Disappearance
of a Child .........................................................................................................................148
4.5 A Stronger Immigration System .............................................................................149
Safe and Ecient Citizenship Applications .......................................................149
Supporting Travel to Canada ..................................................................................150
Supporting Legal Aid for Asylum Seekers .........................................................150
Advancing Reconciliation and Building a Canada That Works for Everyone 121
Chapter 4
Advancing Reconciliation and Building a
Canada That Works for Everyone
Building a Canada that works for everyone requires a commitment to
addressing past wrongs and working to support a brighter future for all
Canadians from coast to coast to coast.
In Budget 2023, the federal government is continuing to build on the
progress we have made together since 2015 on walking the path of truth and
reconciliation with Indigenous Peoples, building strong, diverse communities,
and protecting the environment and ghting climate change. We will continue
building a country where everyone can reach their potential.
With new measures and important investments, Budget 2023 will help everyone
share in the opportunities and prosperity that Canada provides.
Key Ongoing Actions
Investments made in and since Budget 2022 to advance reconciliation, protect
the environment, and build stronger and more inclusive communities across
Canada include:
$4.9 billion to enhance and reform services for Indigenous children,
expand Indigenous-led mental wellness services, and support
communities as they respond to and heal from the ongoing impact of
residential schools;
$4.3 billion over seven years to build and repair housing in Indigenous
communities, including those who are self-governing and modern
treaty holders;
$1.6 billion over six years and $315 million ongoing to welcome 500,000
new permanent residents each year by 2025, as well as an additional
$50 million to address immigration application backlogs;
$1.6 billion over ve years, starting in 2023-24, to implement Canada’s
rst National Adaptation Strategy, which is currently being nalized with
input from provinces, territories, National Indigenous Organizations, and
other stakeholders;
$1.1 billion over seven years, starting in 2023-24, to conserve and protect
nature in Canada and around the world, including $800 million to
support up to four Indigenous-led conservation initiatives; and,
$100 million since 2020 to increase the federal contribution to legal
aid services.
122 Chapter 4
Investments in Indigenous Priorities
Since 2015, the federal government has worked with Indigenous partners
to advance meaningful reconciliation with First Nations, Inuit, and Métis
communities. Real progress has been made to improve the quality of life
in Indigenous communities and close gaps between Indigenous and non-
Indigenous people. But there is more work to do.
Among the most signicant measures, the government has invested more
than $5.7 billion since 2015 to build and repair at least 123 new water and
wastewater treatment plants, repair or upgrade 658 others, and support the
eective management and maintenance of water systems. Through these
investments, First Nations have lifted 138 long-term drinking water advisories
and prevented 244 short-term drinking water advisories from becoming long-
term on public systems on reserves as of February 3, 2023, and plans are in
place to lift the remaining 32.
Chart 4.1
Progress on Lifting Long-Term Drinking Water Advisories on Public
Systems on Reserves
Project to address advisory
complete, lift pending
9%
Project under construction
7%
Project in design phase
2%
Feasibility study being
conducted to address
advisory
1%
Advisory Lifted
81%
Source: Indigenous Services Canada, as of February 3, 2023
Since 2015, the federal government has made signicant distinctions-based
investments to respond to the unique histories, interests, and priorities
of First Nations, Inuit, and Métis communities. Through Budget 2023, the
government will continue to advance reconciliation by supporting healthy
communities and investing in self-determined solutions.
Advancing Reconciliation and Building a Canada That Works for Everyone 123
Key Investments in First Nations Priorities Since 2015
$29 billion for child welfare services, including funding to implement An
Act respecting First Nations, Inuit and Métis children, youth and families,
to maintain and enhance the First Nations Child and Family Services
program, and to support ongoing negotiations towards additional
program reforms;
Nearly $6.4 billion to meet the needs of First Nations children through
Jordan’s Principle;
$6.7 billion to support primary care and public health on reserve,
distinctions-based mental health care, and non-insured health
benets. This also includes $1.2 billion in infrastructure funding, which
has already supported 248 health-related projects in First Nations
communities;
Over $5.9 billion for elementary and secondary education to help First
Nations children living on reserve receive high-quality schooling. This
also includes $1.8 billion in infrastructure funding, which has already
supported 261 school facility projects;
Over $5.7 billion to address critical infrastructure gaps related to water
and wastewater, and accelerate progress to end long-term and short-
term drinking water advisories in First Nations communities on reserve;
Over $4 billion to support First Nations housing on reserve;
Almost $2.5 billion to support community infrastructure on reserve;
Nearly $2.5 billion in funding to build an early learning and child care
system that meets the needs of First Nations families;
$991 million for First Nations and Inuit policing and police facilities to
provide access to local and culturally sensitive police services that make
communities safer; and,
$417 million targeted for First Nations post-secondary education.
Key Investments in Inuit Priorities Since 2015
$25 million to implement the Inuit Nunangat Policy, which was co-
developed with Inuit and will guide the federal government in design,
development, and delivery of new and renewed federal programming,
policies, and initiatives;
Over $1.3 billion to support housing in Inuit communities;
$5.1 billion to reduce tuberculosis, provide non-insured health benets,
and support distinctions-based mental health care;
124 Chapter 4
More than $230 million for Inuit communities to build an early learning
and child care system that meets the needs of Inuit families;
$70 million to support the National Inuit Suicide Prevention Strategy;
$991 million for First Nations and Inuit policing and police facilities to
provide access to local and culturally sensitive police services that make
communities safer; and,
More than $125 million targeted for Inuit post-secondary education.
Key Investments in Métis Priorities Since 2015
More than $860 million for Métis communities to build an early learning
and child care system that meets the needs of Métis families;
$690 million to support housing in Métis communities;
More than $400 million towards Métis communities skills and
employment training, economic development, and to support the startup
and expansion of Métis small and medium-sized businesses;
$867 million to support distinctions-based mental health care and the
monitoring and treatment of chronic diseases; and,
More than $360 million targeted for Métis post-secondary education.
Chart 4.2
5
10
15
20
25
30
35
2015-16 2023-24
Budget 2023
Historic
spending on
Indigenous
Priorities
Historic
spending on
Indigenous
Priorities
Investments from
Budget 2016
to
2022 Fall
Economic
Statement
More than $29 billion
Over $11 billion
Previously planned
funding increases
$billions
Investments in Indigenous Priorities
Source: Public Accounts of Canada; Department of Finance Canada
Through Budget 2023, the government will continue to advance reconciliation
by supporting healthy communities and self-determined solutions.
Advancing Reconciliation and Building a Canada That Works for Everyone 125
4.1 Self-Determination and Prosperity for
Indigenous Peoples
Advancing Indigenous self-determination is critical to Canada’s future. It
strengthens nation-to-nation, government-to-government, and Inuit-Crown
relationships, accelerates decolonization, moves us all forward on reconciliation,
and ultimately creates more vibrant and prosperous Indigenous communities.
Indigenous governments must be able to set and implement priorities
respecting their communities, lands, and resources. Indigenous Peoples,
businesses, and communities must have the opportunity to fully participate in
the economy, and build opportunities for themselves and future generations in
the ways they see t, consistent with their constitutionally protected rights.
Budget 2023 is investing in measures that will continue to advance service
transfer to Indigenous governments and institutions, and unlock opportunities
to advance economic reconciliation for Indigenous Peoples across Canada.
Supporting Indigenous Governance, Capacity, and
Participation in Decision-Making
Supporting Indigenous Governance and Capacity
First Nations governments need resources to meet the needs of their communities
and deliver the services and programs their communities rely on. Supporting First
Nations governments is an essential part of supporting self-determination.
Budget 2023 proposes to provide $76.3 million in 2023-24 to Indigenous
Services Canada to continue to support the administrative capacity of
First Nations governments and tribal councils delivering critical programs
and services to their members.
Increasing Indigenous Participation in Northern
Environmental Decision-Making
Indigenous participation in northern environmental decision-making processes
is an example of self-determination in action. Major resource and infrastructure
projects can oer Indigenous communities and other Northerners good jobs,
revenue, and business development opportunities.
Support for Indigenous and public participation in environmental assessments
of these projects helps Indigenous Peoples inform decisions that aect their
lands, communities, and futures. This also helps ensure approved projects
respect Indigenous rights and that local communities—many of them rural and
remote—experience their benets.
126 Chapter 4
Budget 2023 proposes to provide $19.4 million over ve years, starting in
2023-24, to Crown-Indigenous Relations and Northern Aairs Canada for
the Northern Participant Funding Program to increase the participation
of Indigenous Peoples and other Northerners in environmental and
regulatory assessments of major projects.
Budget 2023 also proposes to provide $1.6 million over two years, starting
in 2023-24, to the Canadian Northern Economic Development Agency
for the Northern Projects Management Oce to increase capacity for
federal participation in environmental assessments and consultation with
Indigenous communities on major projects in the territories.
Advancing Self-Determination of Métis Communities
Advancing self-determination requires a distinctions-based approach to
ensure that the unique rights and interests of First Nations, Inuit, and Métis
communities are armed and implemented. The federal government is proud
of the signicant progress being made towards renewed government-to-
government relationships with Métis communities, based on the recognition of
rights, respect, co-operation, and partnership.
In February 2023, the Minister of Crown-Indigenous Relations signed updated
Self-Government Recognition and Implementation Agreements with the Métis
Nation of Alberta, the Métis Nation–Saskatchewan, and the Métis Nation
of Ontario. These historic agreements came after more than a century of
Métis ancestors ghting for recognition. These agreements, in addition to an
agreement signed with the Manitoba Métis Federation in July 2021, formally
recognize each Métis partner as the representative government of the Métis
Nation in their respective provinces, with jurisdiction over core governance and
other internal matters.
The government will continue its collaborative work with these governments
to conclude self-government treaties, guiding implementation of their unique
visions for Métis self-determination.
Tax Arrangements With Indigenous Governments
Mutually benecial tax arrangements with interested Indigenous governments build
strong scal relationships and support self-determination through revenues that
Indigenous governments can invest in what matters most to their communities.
The federal government remains committed to negotiating mutually benecial
tax agreements with interested Indigenous governments, including implementing
the First Nations Goods and Services Tax within their settlement lands or reserves
and, with interested self-governing Indigenous governments, to enable the
implementation of personal income taxes within their settlement lands.
Advancing Reconciliation and Building a Canada That Works for Everyone 127
The federal government is also making progress with Indigenous communities
and organizations on a voluntary fuel, alcohol, cannabis, and tobacco (FACT)
sales tax framework. The FACT framework would provide a new, exible option
for interested Indigenous governments to exercise tax jurisdiction within their
reserves or settlement lands. Since fall 2022, productive discussions have taken
place with Indigenous partners, and Indigenous communities have expressed
interest in moving forward collaboratively.
The federal government also continues to encourage, and will help facilitate,
taxation arrangements between interested provincial or territorial and
Indigenous governments.
The government will also continue to explore the potential role of additional
tools, including tax arrangements, to enable Indigenous communities to
meaningfully benet from resource development.
Building an Economy That Works for Indigenous
Peoples
Creating Prosperity With Indigenous Peoples
Economic reconciliation is critical to Indigenous self-determination. To move
forward and build prosperity, systemic barriers must be removed and supports
put in place for Indigenous communities to fully participate in the economy in
line with their constitutionally protected rights.
Budget 2023 proposes to provide $5 million in 2023-24 to Indigenous
Services Canada to support the co-development of an Economic
Reconciliation Framework with Indigenous partners that will increase
economic opportunities for Indigenous Peoples, communities,
and businesses.
Building on the strong foundation set out in recent Indigenous-led initiatives,
such as the National Indigenous Economic Strategy and the First Nations
Financial Management Board’s RoadMap project, the Framework will help to
dene the role of federal and Indigenous organizations in advancing economic
reconciliation through measures that reect the unique needs, perspectives, and
interests of Indigenous Peoples.
128 Chapter 4
Supporting Indigenous Economic Participation in
Major Projects
The federal government is committed to further improving the quality and
consistency of benets that Indigenous communities derive from major projects
in their territories, including through advancing opportunities for Indigenous
communities to participate as partners in major projects.
Budget 2023 proposes to provide $8.7 million in 2023-24 to
Natural Resources Canada to support deeper engagements with
Indigenous partners, including Indigenous rights-holders, towards the
development of the National Benets-Sharing Framework.
Budget 2023 announces that the Canada Infrastructure Bank will provide
loans to Indigenous communities to support them in purchasing equity
stakes in infrastructure projects in which the Bank is also investing. These
loans will be sourced from the Canada Infrastructure Bank’s existing
funding envelope.
The government will also continue to explore, through engagement on the
National Benets-Sharing Framework, additional federal supports to increase
access to capital for Indigenous groups to invest in major resource projects.
Advancing Economic Reconciliation by Unlocking the
Potential of First Nations Lands
The federal government is committed to supporting initiatives that return
control and decision-making over the use of First Nations lands back to First
Nations communities. This supports economic growth and self-determination
for First Nations, and moves us further along the path of reconciliation.
Budget 2023 proposes to provide $30 million over ve years, starting in
202324, to Indigenous Services Canada to enhance the Reserve Land and
Environment Management Program, ensuring First Nations can develop
capacity to exercise increased responsibility over their lands, resources,
and environment.
Through Budget 2023, the government rearms its commitment to
negotiate a renewed operating funding formula with the Lands Advisory
Board to ensure the continued growth and success of First Nation Land
Management.
Budget 2023 also proposes to provide $35.3 million over three years,
starting in 2023-24, to Crown-Indigenous Relations and Northern Aairs
Canada and Natural Resources Canada to co-develop, with the Lands
Advisory Board, a new First Nations-led National Land Registry that
will provide communities in First Nation Land Management with more
opportunities to realize the economic benets arising from local control
over their lands.
Advancing Reconciliation and Building a Canada That Works for Everyone 129
In December 2022, the Framework Agreement on First Nation Land
Management Act received Royal Assent, building on the Framework Agreement
on First Nation Land Management’s 25-year record of empowering First
Nations to exercise their jurisdiction by opting out of Indian Act provisions
related to land management.
4.2 Investing in Indigenous Communities
Supporting strong, healthy Indigenous communities means confronting the
harms of the past—and the challenges facing First Nations, Inuit, and Métis
communities today—with forward-looking, Indigenous-led solutions.
Budget 2023 includes new investments to strengthen accessible, culturally
appropriate health care, to support Indigenous communities where everyone,
including the most vulnerable, feels safe and supported, and to support
community-led eorts to revitalize language, culture, and traditions.
Supporting Indigenous Health Priorities
Indigenous Peoples deserve access to high-quality and culturally safe health
care services, no matter where they live. The federal government is working with
Indigenous partners, provinces, and territories to co-develop distinctions-based
Indigenous health legislation.
On February 7, 2023, the federal government announced major new investments
in public health care, and is working with provinces and territories on delivering
improvements that people in Canada—including Indigenous Peoples—expect
and deserve. A key principle in bilateral agreements with provinces and territories
is that Indigenous Peoples everywhere in Canada have the right to fair and equal
access to health services, free from racism and discrimination.
As part of the federal government’s plan to strengthen Canada’s universal
public health care system, the government is investing $2 billion in new,
additional funding over ten years for a distinctions-based Indigenous Health
Equity Fund. This fund will address the unique challenges Indigenous Peoples
face when accessing health care services, and support immediate and long-term
Indigenous health priorities. Building on this investment, Budget 2023 proposes
additional new measures to maintain essential health care services. Budget 2023
proposes to provide:
$810.6 million over ve years, beginning in 2023-24, to support medical
travel and to maintain medically necessary services through the
NonInsured Health Benets Program, including mental health services,
dental and vision care, and medications.
$16.2 million over three years, beginning in 2023-24, for interventions to
reduce rates of tuberculosis in Inuit communities.
130 Chapter 4
Supporting Safe and Aordable Housing in
Indigenous Communities
When people have access to safe and aordable housing, they are more
economically secure, healthier, and see brighter futures for themselves and
their families. Since 2015, the federal government has committed $6.7 billion
to support First Nations, Inuit, and Métis housing, including in self-governing
and modern treaty communities, $4 billion of which was announced in
Budget 2022. The funding so far has supported over 13,000 housing-related
projects and home improvement and repairs, and more than 4,600 new homes
in Indigenous communities.
Budget 2022 also provided $300 million to support housing in urban, rural, and
northern Indigenous communities. As outlined in Chapter 1, Budget 2023 is
proposing to build on this initial work with a signicant investment of $4 billion
over seven years, starting in 2024-25, to implement an Urban, Rural, and
Northern Indigenous Housing Strategy, currently under co-development with
Indigenous partners.
Implementing the National Action Plan to End
the Tragedy of Missing and Murdered Indigenous
Women and Girls
Together with Indigenous partners, the federal government is accelerating the
implementation of the Federal Pathway to Address Missing and Murdered Indigenous
Women, Girls and 2SLGBTQQIA+ People. Building on the $2.2 billion provided in
Budget 2021, Budget 2023 proposes investments that acknowledge the leadership
of families and survivors in this process, and the need to increase accountability and
ensure that progress is made. Budget 2023 proposes to provide:
$20 million over four years, starting in 2022-23, to support Indigenous-
led projects for safer communities through the Pathways to Safe
Indigenous Communities Initiative.
$95.8 million over ve years, starting in 2023-24, and $20.4 million
ongoing to help Indigenous families access information about their
missing and murdered loved ones, and to enhance victim services
to support their healing journeys. This funding would renew existing
programming and expand it to include support for families of 2SLGBTQI+
Indigenous victims who are men.
$2.6 million over three years, starting in 2023-24, to support the National
Family and Survivors Circle in keeping families and survivors at the centre of
the implementation of the National Action Plan and the Federal Pathway.
$2.2 million over ve years, starting in 2023-24, to establish an oversight
mechanism to monitor and report on the progress of implementation.
Advancing Reconciliation and Building a Canada That Works for Everyone 131
$1.6 million over two years, starting in 202324, to support the Ministerial
Special Representative appointed to provide advice and recommendations
on the creation of an Indigenous and Human Rights Ombudsperson.
$2.5 million over ve years, starting in 2023-24, to facilitate and
coordinate work on advancing the National Action Plan by establishing a
standing Federal-Provincial-Territorial-Indigenous table on Missing and
Murdered Indigenous Women, Girls and 2SLGBTQI+ People. This table
will provide a specic forum to take action on areas of shared roles and
responsibilities regarding Missing and Murdered Indigenous, Women,
Girls, and 2SLGBTQI+ People, including prioritizing discussion on how
to launch a “Red Dress Alert” to notify the public when an Indigenous
woman or two-spirit person goes missing.
Supporting First Nations Children
The federal government is committed to ensuring that First Nations children
have the supports they need to ourish, and that communities are supported in
their eorts to keep families together.
Through the implementation of Jordan’s Principle, First Nations children are
able to access the health, social, and educational supports they need, when they
need them. The government continues to work with First Nations partners to
advance long-term reforms to ensure that First Nations children will continue to
receive timely, high-quality services.
The government also continues to work with First Nations partners on long-
term reforms for child welfare, and to support community-led solutions to
reduce the number of children in care and keep children and youth connected
to their families, their communities, and their culture. In addition, the
government is supporting First Nations in developing their own child and family
services that reect their values and traditions under An Act respecting First
Nations, Inuit and Métis children, youth and families.
Budget 2023 proposes to provide $171 million in 2022-23 to Indigenous
Services Canada to ensure First Nations children continue to receive the
support they need through Jordan’s Principle.
With funding announced in the 2022 Fall Economic Statement,
Budget 2023 also provides $444.2 million over three years, starting
in 2022-23, to support Peguis First Nation in Manitoba and Louis Bull
Tribe First Nation in Alberta to exercise jurisdiction over their child
welfare systems and make decisions about what is best for their children
and families.
132 Chapter 4
Gottfriedson Band Class Settlement Agreement
The residential school system attempted to assimilate Indigenous children,
forcing them to abandon their languages, cultures, spiritualities, traditions, and
identities. The painful legacy of the residential school system lives on today.
The federal government is committed to addressing the harms that continue to
aect First Nations, Inuit, and Métis children and their families. On January 18, 2023,
the federal government signed an agreement to compensate 325 bands that opted
in to the Gottfriedson Band Class litigation to address the collective harms caused
by the loss of language, culture, and heritage through the residential school system.
The settlement has since been approved by the Federal Court.
Budget 2023 provides $2.8 billion as part of the Band Class settlement,
to establish a trust to support healing, wellness, education, heritage,
language, and commemoration activities. The government will also
propose legislative amendments to exclude the income and gains of the
trust from taxation.
4.3 Clean Air and Clean Water
We live in the most beautiful country in the world. From the red sand beaches
of Prince Edward Island to sweeping Yukon vistas and the mountains of
British Columbia, Canadians love our natural environment. We depend on it for
our jobs, for clean air and clean water, and for a sense of place in the world.
However, the risks to our environment have never been greater. Climate change
threatens nature, our communities, and our economy. Pollution and
development continue to harm Canada’s remarkable biodiversity.
Building on the signicant progress we have made since 2015, Budget 2023
announces new measures to protect our natural environment, ght climate change,
and make Canada more resilient to the threats posed by extreme weather.
Advancing Reconciliation and Building a Canada That Works for Everyone 133
Fighting Climate Change and Protecting Nature
Since 2015, the federal government has taken signicant action to protect the
environment, conserve nature and biodiversity, and respond to the threat of
climate change. This includes:
Establishing a federal pollution pricing system that puts money back in
the pockets of Canadians;
Putting Canada on track to conserve 25 per cent of Canada’s lands and
waters by 2025, and to conserve 30 per cent by 2030;
Designing an Emissions Reduction Plan that serves as Canada’s
roadmap to a 40 per cent reduction in emissions by 2030;
Providing more than $3.6 billion to protect nature and species at risk,
and more than $1 billion to protect marine and coastal areas;
Putting Canada on a path to planting two billion trees;
Protecting Canada’s coasts and waterways by providing more than
$3.5 billion to the Oceans Protection Plan;
Helping Canadians purchase or lease close to 200,000 zero-emission
vehicles since 2019 through purchase incentives of up to $5,000;
Keeping people and communities safe from the impacts of climate
change, with more than $1.6 billion to support Canada’s National
Adaptation Strategy;
Lowering energy bills and making homes more energy ecient
with grants of up to $5,000 for home retrots and up to $40,000 for
deep retrots;
Providing more than $600 million to preserve wild Pacic salmon;
Supporting the recovery of the Southern Resident Killer Whale, the
North Atlantic Right Whale, and the St. Lawrence Estuary Beluga; and,
Banning the manufacturing of harmful single-use plastics, and working
with provinces and territories towards a goal of zero plastic waste
by 2030.
134 Chapter 4
Progress on Biodiversity
Montreal recently hosted the Fifteenth Conference of the Parties (COP15) to the
United Nations Convention on Biological Diversity, which led to a new Post-2020
Global Biodiversity Framework. During COP15, Canada announced new funding
for biodiversity and conservation measures at home and abroad that will support
the implementation of the Global Biodiversity Framework, including $800 million
to support Indigenous-led conservation within Canada through the innovative
Project Finance for Permanence model.
Chart 4.3
Canada Has Made Signicant Progress to Conserve Land and
Water Since 2015
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2,200,000
2,400,000
2015 2016 2017 2018 2019 2020 2021
km
2
Total area conserved has increased
by 78.5% since 2015
Source: Environment and Climate Change Canada (2021) Canadian Protected and Conserved Areas Database.
Protecting Our Freshwater
Canada is home to 20 per cent of the world’s freshwater supply. Healthy lakes
and rivers are essential to Canadians, communities, and businesses across the
country. Recognizing the threat to freshwater caused by climate change and
pollution, the federal government is moving forward to establish a new Canada
Water Agency and make major investments in a strengthened Freshwater
Action Plan.
Budget 2023 proposes to provide $650 million over ten years, starting
in 2023-24, to support monitoring, assessment, and restoration work
in the Great Lakes, Lake Winnipeg, Lake of the Woods, St. Lawrence
River, Fraser River, Saint John River, Mackenzie River, and Lake Simcoe.
Budget 2023 also proposes to provide $22.6 million over three years,
starting in 2023-24, to support better coordination of eorts to protect
freshwater across Canada.
Advancing Reconciliation and Building a Canada That Works for Everyone 135
Budget 2023 also proposes to provide $85.1 million over ve years,
starting in 2023-24, with $0.4 million in remaining amortization and
$21 million ongoing thereafter to support the creation of the Canada
Water Agency, which will be headquartered in Winnipeg. By the end
of 2023, the government will introduce legislation that will fully establish
the Canada Water Agency as a standalone entity.
Protecting Canada’s Whales
Canada’s oceans are home to more than 30 species of whales, which play
a critical role in the health of our oceans and carry important cultural
signicance for many Indigenous and coastal communities. In Budget 2023,
the federal government is proposing further funding to protect whales,
including the North Atlantic Right Whale, the St. Lawrence Estuary Beluga,
and British Columbia’s Southern Resident Killer Whale, all of whom are vital to
Canada’s marine ecosystems.
Budget 2023 proposes to provide $151.9 million over three years on
a cash basis, starting in 2023-24, to Fisheries and Oceans Canada,
Transport Canada, Environment and Climate Change Canada, and Parks
Canada to continue to protect endangered whales and their habitats.
Cleaner and Healthier Ports
Canada’s ports are at the heart of our supply chains, delivering goods to
Canadians and allowing our businesses to reach global markets. As rising
shipping levels enable and create economic growth and good jobs, the
federal government is taking action to protect Canada’s coastal ecosystems
and communities.
Budget 2023 proposes to provide $165.4 million over seven years, starting
in 2023-24, to Transport Canada to establish a Green Shipping Corridor
Program to reduce the impact of marine shipping on surrounding
communities and ecosystems. The program will help spur the launch of
the next generation of clean ships, invest in shore power technology, and
prioritize low-emission and low-noise vessels at ports.
Protecting Species at Risk
The federal government is continuing to work with provincial and territorial
governments, in partnership with Indigenous communities and other
stakeholders across Canada, to protect species at risk. As a result of actions
taken to fulll its obligations under the Species at Risk Act, Canada has helped
to improve the status of several species.
Budget 2023 proposes to provide $184 million over three years, starting
in 2023-24, to Environment and Climate Change Canada, Parks Canada,
Fisheries and Oceans Canada, and Natural Resources Canada to continue
monitoring, protecting, and promoting the recovery of species at risk to
help restore their populations.
136 Chapter 4
Supporting Natural Disaster Resilience
Improving Disaster Insurance
As a result of climate change, extreme weather is on the rise. When extreme
weather strikes, it often leaves behind a wake of severe damage to homes and
communities. People need to be able to access aordable property insurance
so that natural disasters don’t lead to unnecessary nancial disasters. However,
the unique realities of natural disasters make them dicult to insure, leaving
some Canadians nancially vulnerable. Working with the insurance industry,
more needs to be done to protect Canadians from the costs that come with
recovering from disasters and make insurance aordable.
Budget 2023 announces the federal government’s intention to launch,
in partnership with provinces and territories, a new approach to address
gaps in natural disaster protection and help Canadians access aordable
insurance.
As a rst step, Budget 2023 proposes to provide $31.7 million over three
years, starting in 2023-24, to Public Safety Canada and the Canada
Mortgage and Housing Corporation to work with the Department of
Finance Canada to stand-up a low-cost ood insurance program, aimed
at protecting households at high risk of ooding and without access to
adequate insurance. This would include oering reinsurance through a
federal Crown corporation and a separate insurance subsidy program.
The government will engage provinces and territories on the development and
implementation of the program, as well as the requirements for its long-term
scal sustainability, including cost-sharing and risk mitigation. In parallel, the
Department of Finance and Public Safety Canada will engage with industry on
solutions to earthquake insurance and other evolving climate-related insurance
market challenges.
Raising Awareness of Flood Risks
As climate change makes ooding more frequent and severe, many Canadians
are unaware of the risks their home may face from ooding. This is, in many
cases, due to a lack of publicly available information. For many at the greatest
risk, this limits their ability to take action to protect themselves and their home,
and hinders communities’ ability to mitigate the eects of ooding.
Budget 2023 proposes to provide $15.3 million over three years,
starting in 2023-24, to Public Safety Canada to create a publicly
accessible online portal where Canadians can access information on their
exposure to ooding.
Advancing Reconciliation and Building a Canada That Works for Everyone 137
Modernizing Federal Disaster Assistance
The Disaster Financial Assistance Arrangements cover up to 90 per cent
of provincial and territorial response and recovery costs after a disaster.
Since 1970, the federal government has provided approximately $7.6 billion
in support under the program—two thirds of which has been delivered in the
past ten years. As climate change makes natural disasters more frequent, the
program must be modernized to increase its focus on prevention and resilience.
Budget 2023 proposes to provide $48.1 million over ve years, starting
in 2023-24, and $3.1 million ongoing to Public Safety Canada to
identify high-risk ood areas and implement a modernized Disaster
Financial Assistance Arrangements program, which would incentivize
mitigation eorts.
4.4 Stronger and More Inclusive Communities
No matter the colour of your skin, or who you love, or what language you
speak, or where you were born, you deserve to share in the opportunities that
Canada provides.
Investing in our communities means tackling the systemic discrimination and
hate that too many racialized Canadians, Indigenous Peoples, persons with
disabilities, women, and 2SLGBTQI+ Canadians still face. It means building
communities where everyone is able to be who they are and do what they love.
Budget 2023 introduces new measures that will build stronger communities and
a more equitable and inclusive Canada—for everyone.
Supporting Our Ocial Languages
Canada’s two ocial languages unite us. English and French are at the heart of
our history and who we are.
However, in a changing and interconnected world, our two ocial languages
are not on equal footing. The relative size of Francophone minority communities
has been declining, and Canada’s rate of ocial language bilingualism is static.
Even in Quebec, the demographic weight of Francophones is declining.
To meet the challenges facing linguistic duality in Canada—and to ensure its
future—the federal government recognizes its responsibility to protect and
promote our two ocial languages. This includes protecting and promoting
French in Quebec, language rights of Francophone minorities across Canada,
including Acadians, Franco-Ontarians, and Franco-Manitobans, as well as the
Anglophone minority in Quebec.
138 Chapter 4
Since 2015, the federal government has taken action to support our ocial
languages with historic investments. This has included introducing an Action
Plan for Ocial Languages; the development of a national strategy to increase
Francophone immigration; the release of a white paper entitled English and
French: Towards a substantive equality of ocial languages in Canada; the
introduction of Bill C-13 to modernize the Ocial Languages Act for the rst
time in a generation; and achieving a record 4.4 per cent French-speaking
immigrants outside of Quebec.
Investing in Our Ocial Languages
To strengthen the vitality of ocial languages across Canada, the federal
government has also provided signicant funding since 2015, including:
$2.7 billion over ve years, starting in 2018-19, to fund the Action Plan
for Ocial Languages, 2018-23, which included funding for the training
and recruiting of teachers to meet the growing needs of Francophone
minority schools and immersion classes;
$450 million over ve years, starting in 2019-20, to support minority-
language education, including at the post-secondary level; second-
language learning; and minority-language community and educational
spaces; and,
$21.6 million over ve years, starting in 2020-21, to support legislative
amendments for increased access to family justice, including divorce, in
the ocial language of one’s choice.
The Action Plan for Ocial Languages, 2023-28 will implement the federal
government's commitments to ensure the equality of English and French, help
to increase the demographic weight of Francophones and restore the size of
Francophone communities, increase the rate of bilingualism, and better support
ocial language minority communities.
Budget 2023 proposes to provide $373.7 million over ve years, starting
in 2023-24, in additional funding to support new and enhanced federal
initiatives under the Action Plan for Ocial Languages, 2023-28. These
investments will be guided by the four pillars of the Action Plan:
- Francophone immigration: $123.2 million to boost Francophone
immigration in Canada, including support for Canadian employers to
recruit French-speaking foreign workers, and increased support for
these immigrants once they arrive in Canada;
- Ocial languages as a tool for economic development: $117 million
to ensure the prosperity of ocial language minority communities,
including increased support for the non-prot organizations that
serve these communities, for the training of bilingual nurses and
personal support care workers, and for the promotion of French-
language research;
Advancing Reconciliation and Building a Canada That Works for Everyone 139
- Ocial languages at the heart of Canadian identity: $111.4 million
to bolster bilingualism in our justice system, including through the
translation of judgments of national interest, and to support cultural
and educational activities, including the training of early childhood
educators in minority-language communities outside Quebec; and,
- Government of Canada leadership: $22.1 million for a centre of
expertise to ensure federal institutions fulll their duty, under the
Ocial Languages Act, to enhance the vitality of ocial language
minority communities, and to support data and research on
the number of children who have a right to be educated in the
minority language.
Budget 2023 proposes to provide $24.5 million over ve years, starting
in 2023-24, for the Department Canadian Heritage to double funding
for the Court Challenges Program. This program is administered
independently and provides support for legal cases of national
signicance that clarify and assert ocial language rights and human
rights.
Budget 2023 also proposes to provide $679.2 million over ve years,
starting in 2023-24, for the Department of Canadian Heritage to support
equal access to services of equal quality in education by working with
provinces and territories to make high-quality minority-language
education, opportunities for second-language learning, and bilingual
government services more readily available across Canada.
These new investments of more than $1 billion would bring total funding for the
Action Plan for Ocial Languages, 2023-28 to over $3.8 billion over ve years.
Investing in Employment Assistance Services for
Ocial Language Minority Communities
For workers across Canada, access to employment assistance services—such as
employment counselling, resume writing, interview techniques, job search skills,
and job placement services—in the ocial language of their choice is critical.
Budget 2023 proposes to provide $208 million over ve years, starting
in 2023-24, and $54 million ongoing to Employment and Social
Development Canada to expand the Enabling Fund for Ocial Language
Minority Communities to support local ocial language minority
community organizations to deliver employment assistance services.
140 Chapter 4
Supporting the Canadian Screen Sector
The Canada Media Fund is a non-prot organization that supports artists,
storytellers, and producers in bringing Canadian content to audiences at home
and around the world. However, in recent years, changing viewing habits have
resulted in declining revenues for the Canada Media Fund, making it harder for
them to support homegrown talent.
Budget 2023 proposes to provide $40 million over two years, starting in
2023-24, to the Department of Canadian Heritage for the Canada Media
Fund to make funding more open to traditionally underrepresented
voices, and to increase funding for French-language screen content.
This approach ensures support for the production of Canadian content
while the government continues to review and modernize its support for
the Canadian screen sector.
Supporting the Growth of Canada’s Tourism Sector
The COVID-19 pandemic had a signicant impact on Canada’s tourism
sector. During the pandemic, the federal government provided $23 billion in
emergency support to help the industry recover, and with travel resuming and
the industry beginning to turn the corner, there is an opportunity to invest in
Canada’s tourism sector and ensure it can continue to be a driver of good jobs
and vibrant communities across Canada.
Following consultations with the tourism industry, provincial and territorial
counterparts, and Indigenous tourism operators, the government will
present a new Federal Tourism Growth Strategy to chart a course for growth,
investment, and stability in Canada’s tourism sector. As key components of the
upcoming Strategy:
Budget 2023 proposes to provide $108 million over 3 years, on a cash
basis, starting in 2023-24, to the Regional Development Agencies to
support communities, small businesses, and non-prot organizations in
developing local projects and events.
Budget 2023 also proposes to provide $50 million over 3 years, on a
cash basis, starting in 2023-24, to Destination Canada to attract major
international conventions, conferences, and events to Canada.
Advancing Reconciliation and Building a Canada That Works for Everyone 141
Atlantic Growth Strategy
The Atlantic Growth Strategy was launched in 2016 to pave the way for a
stronger economy in Atlantic Canada. Through the Atlantic Growth Strategy,
the federal government and provincial governments in Atlantic Canada
are working together to create good middle class jobs, strengthen local
communities, encourage immigration, and grow innovative companies across
the region.
In July 2022, the federal and provincial governments rearmed their
commitment to work together and build on the initiatives that are benetting
Atlantic Canadians through the Atlantic Growth Strategy. Renewed areas of
focus will include infrastructure, trade and investment, broadband, innovation,
labour and skills, and clean technology.
Fighting Systemic Racism, Discrimination, and Hate
Canada’s commitment to embracing diversity is an example to the world and a
pillar of our national character—one in three people in Canada is a member of
a racialized or religious minority community. We work together, support each
other, and learn and prosper by living alongside each other.
However, many racialized and religious minority communities in Canada
continue to experience barriers and discrimination. In response, the federal
government has taken signicant steps to ght systemic racism, discrimination,
and hate in Canada. This includes:
$85 million over four years to launch Canada’s new Anti-Racism Strategy;
$100 million over ve years to launch the Federal 2SLGBTQI+ Action Plan;
$200 million to establish the Black-led Philanthropic Endowment
Fund, and create a sustainable source of funding to support
Black communities;
Up to $265 million over four years for the Black Entrepreneurship Program;
$18 million over two years to support the Canadian Race Relations
Foundation in delivering grants for community-level interventions to
combat racism in Canada, including the rise of anti-Asian racism during
the pandemic;
$21.5 million to enhance legal supports for racialized communities; and,
Implemented the “nothing without us” Accessible Canada Act to realize
a barrier-free Canada for persons with disabilities by 2040.
142 Chapter 4
Canada’s New Action Plan to Combat Hate
Hate has no place in Canada. However, police-reported hate crimes have
increased by 72 per cent between 2019 and 2021. Hateful rhetoric is on the rise,
and misinformation and disinformation, both online and in our communities,
is increasingly aecting the safety and well-being of Canadians.
To confront hate in all its forms, including hate faced by 2SLGBTQI+
communities, the federal government plans to introduce a new Action Plan
to Combat Hate later this year. This new Action Plan will include measures to
combat hateful rhetoric and acts, building on measures being taken in Budget
2023 to build safer, more inclusive communities.
Budget 2023 proposes to provide $49.5 million over ve years, starting
in 2023-24, to Public Safety Canada to enhance and expand the
Communities at Risk: Security Infrastructure Program and allow it to be
more responsive to the evolving security needs of communities.
Building on Canada’s Anti-Racism Strategy
In Budget 2022, the federal government renewed Canada’s Anti-Racism
Strategy to ght racism and ensure that our society continues to be
strengthened by Canada’s remarkable cultural, ethnic, and linguistic diversity.
Budget 2023 proposes to provide an additional $25.4 million over ve
years, starting in 2023-24, and $0.6 million ongoing, to the Department
of Canadian Heritage to continue to support Canada’s Anti-Racism
Strategy and ght all forms of racism, including but not limited to anti-
Indigenous racism, anti-Black racism, anti-Asian racism, antisemitism,
Islamophobia.
Budget 2023 proposes to provide $1.5 million over two years, starting
in 2023-24, to the Privy Council Oce to create a new Anti-Racism,
Equity and Inclusion Secretariat to ensure that considerations of anti-
racism, equity and inclusion are applied in the development of federal
government policies.
Supporting Black Canadian Communities
Research indicates that Black Canadians continue to experience persistent
inequities in income and employment while also facing a higher likelihood
of discrimination. The government remains committed to addressing these
barriers and inequities.
Budget 2023 proposes to provide $25 million, in 2024-25, to
Employment and Social Development Canada for the Supporting Black
Canadian Communities Initiative, to continue empowering Black-led
and Black-serving community organizations and the work they do to
promote inclusiveness.
Advancing Reconciliation and Building a Canada That Works for Everyone 143
Supporting a More Equitable, Diverse, and Inclusive
Public Service
An Action Plan for Black Employees in the Public Service
Systemic racism has been a reality for Black Canadians for far too long. All
too often, Black public servants face barriers to career advancement and lack
adequate support for the challenges they face—particularly for their mental
health. The federal government is committed to ensuring that Black public
servants can work in a safe and healthy environment that is equitable, diverse,
and inclusive.
Budget 2023 proposes to provide $45.9 million over three years, starting
in 2023-24, to the Treasury Board of Canada Secretariat to create a
Mental Health Fund for Black public servants and establish dedicated
career development programs, including to prepare Black public service
leaders for executive positions.
Addressing Workplace Harassment, Discrimination,
and Violence
Canadians need a federal public service that represents our diverse
communities and draws from the full capacity of Canada’s smart and capable
workforce. To do this, federal workplaces must be welcoming and supportive,
and free of harassment and discrimination.
Budget 2023 proposes to provide $6.9 million over two years, starting
in 2023-24, to the Treasury Board of Canada Secretariat to advance a
restorative engagement program to empower employees who have
suered harassment and discrimination, and to drive cultural change in
the public service. Of this amount, $1.7 million would be sourced from
existing departmental resources. Funding will also support a review
of the processes for addressing current and historical complaints of
harassment, violence, and discrimination.
Advancing Public Safety Research
Public safety ocers help keep us safe, but their jobs can frequently expose
them to traumatic events and increase their risk of post-traumatic stress
injuries. Over the past ve years, the Canadian Institute for Public Safety
Research and Treatment, based out of the University of Regina, has made
important contributions to advance knowledge in this area and address injuries
among ocers.
Budget 2023 proposes to provide $16.7 million over ve years, starting in
2023-24, to Public Safety Canada to continue to support this important work
through the Canadian Institute for Public Safety Research and Treatment.
144 Chapter 4
Addressing Wrongful Convictions
The federal government fundamentally believes that a fair and equitable
criminal justice system must guard against potential miscarriages of justice.
Under the current system, it can be too dicult, and take too long, for people
who believe they have been wrongfully convicted to have their cases reviewed.
On February 16, 2023, the Minister of Justice introduced legislation to establish
an independent Miscarriage of Justice Review Commission to replace the
current ministerial review process and make the process more ecient
and accessible.
Budget 2023 proposes to provide $83.9 million over ve years, starting
in 2023-24, and $18.7 million ongoing to Justice Canada for the
independent Miscarriage of Justice Review Commission.
Advancing Gender Equality in Canada
Women in Canada face unique barriers. Since 2015, the federal government has
made record investments to support women and gender diverse people, with
Budget 2023 delivering new support to build on the important progress that
has been made.
Budget 2023 proposes to provide $160 million over three years,
starting in 2023-24, for the Women’s Program to provide funding
to organizations in Canada that serve women. The government is
committed to maintaining historic funding levels for Canadian women's
organizations and equity-deserving groups, with a particular focus on
Indigenous women, women with disabilities, members of the 2SLGBTQI+
communities, and newcomer, Black, racialized, and migrant women.
A Safe and Accountable Sport System
From beginners to Olympians, every athlete in Canada should be safe from
abuse, harassment, and mistreatment. Ensuring that our sporting institutions
across the country are accountable for the treatment of their athletes is
essential to building a sport system that promotes the safety and well-being of
Canadian athletes.
Budget 2023 proposes to provide $13.8 million over three years, starting in
2022-23, to the Department of Canadian Heritage to enhance accountability
and support eorts to build a safe and accountable sport system.
Advancing Reconciliation and Building a Canada That Works for Everyone 145
Helping Canadians Stay Active
Supporting people to be more active has signicant benets for their physical
and mental health, as well as for our communities, the environment, and the
economy. However, in 2018-19, less than half of adults, children, and youth
met the minimum national physical activity guidelines. To help encourage more
Canadians to get moving:
Budget 2023 proposes to provide $10 million over two years, starting in
2023-24, towards ParticipACTION’s Let’s Get Moving Initiative, which will
continue supporting national programming that aims to increase daily
physical activity among Canadians.
Local Food Infrastructure Fund Top-Up
Northern, Indigenous, and remote communities face unique challenges when it
comes to food security. Through the Local Food Infrastructure Fund, the federal
government is supporting community-led eorts to address food insecurity
by helping invest in the infrastructure needed to produce, store, and deliver
locally-sourced food in a sustainable manner.
Budget 2023 proposes to provide $10 million in 2023-24 to top up the
Local Food Infrastructure Fund to strengthen food security in Northern,
rural, and Indigenous communities across Canada.
Making Life More Aordable for Persons
With Disabilities
Persons with disabilities can face additional costs related to medical care,
retrots, and medical devices. In fact, they are almost twice as likely to be
low-income as people without a disability. Registered Disability Savings Plans
(RDSPs) are there to support the long-term nancial security of people with
disabilities who are eligible for the Disability Tax Credit. Since their creation
in 2008, total assets within RDSPs have grown to approximately $8.8 billion,
with close to 260,000 RDSPs supporting persons with disabilities with the cost
of living in their later years.
The federal government has expanded access to RDSPs by allowing a qualifying
family member—such as a parent, a spouse, or a common-law partner—
to open an RDSP and be the plan holder for an adult with mental disabilities
whose ability to enter into an RDSP contract is in doubt, and who does not have
a legal representative. The provision has helped many families access an RDSP,
but it is currently set to expire.
Budget 2023 announces the government’s intention to extend the
Qualifying Family Member provision until December 31, 2026.
To further increase access to RDSPs, the government also intends to
expand the provision to include adult siblings of an RDSP beneciary.
These measures are expected to cost $13 million over ve years, starting
in 2023-24, and $3 million ongoing.
146 Chapter 4
Since the introduction of the Qualifying Family Member provision in 2012, the
federal government has maintained that this provision is intended as a stopgap
for provinces and territories to develop more appropriate, long-term solutions
to address RDSP legal representation issues for persons with disabilities. While
most provinces and territories have made signicant progress, others have not.
The government continues to encourage provinces and territories that have
not already done so to address issues surrounding guardianship for persons
with disabilities.
Advancing Inclusion of Canadians with Disabilities
In October 2022, the government launched the Disability Inclusion Action
Plan, a comprehensive, whole-of-government approach to disability inclusion.
Community engagement is a key aspect—the government needs to get views
from Canadians with disabilities in matters that aect them. To further enhance
disability inclusion in Canada:
Budget 2023 proposes to provide $10 million over two years, beginning
in 2023-24, to Employment and Social Development Canada to help
address the unique needs and ongoing barriers faced by persons with
disabilities by investing in capacity building and the community-level
work of Canada’s disability organizations.
Budget 2023 proposes to provide $21.5 million in 2023-24 to
Employment and Social Development Canada to continue work on the
future delivery of the Canada Disability Benet, including engagement
with the disability community and provinces and territories on the
regulatory process.
The government remains committed to the launch of a Canada Disability Benet
as part of the Disability Inclusion Action Plan, including engagement with the
disability community and provinces and territories on the regulatory process.
Investments in Budget 2023 continue to lay the necessary groundwork for the
Canada Disability Benet, building o of the government’s reintroduction of the
Canada Disability Benet Act in June 2022.
Advancing Reconciliation and Building a Canada That Works for Everyone 147
Supporting Canadians With Disabilities
The federal government provides signicant support to Canadians with
disabilities. This includes:
More than $1.6 billion per year to support persons with severe and
prolonged mental and physical impairments through the Disability Tax
Credit;
Over $1 billion per year through Canada Disability Savings Grants and
Bonds, as well as exempting from tax investment income earned in
Registered Disability Savings Plans, which supports the nancial security
of persons with disabilities;
Providing $922 million to provinces and territories through the Workforce
Development Agreements in 2023-24, approximately 30 per cent of which
is targeted to help persons with disabilities get training, develop their
skills, and gain work experience;
Over $650 million annually through more generous Canada Student
Grants, interest-free Canada Student Loans, and easier-to-access
repayment assistance—including loan forgiveness for those with severe
permanent disabilities—to support persons with disabilities with the
additional costs of post-secondary education, such as those that come
with supportive services and devices;
$105 million in 2023-24 to support the implementation of an
employment strategy for persons with disabilities through the
Opportunities Fund. This included funding to the Ready, Willing and
Able Program to support persons with Autism Spectrum Disorder or
intellectual disabilties in nding employment; and
Over $460 million per year through the Child Disability Benet provided
as a supplement to the Canada Child Benet for parents of children with
severe and prolonged disabilities, providing an average of approximately
$2,700 in annual support.
Along with the proposed Canada Disability Benet Act, these measures form
part of the government’s Disability Inclusion Action Plan, which aims to
improve the quality of life for persons with disabilities.
148 Chapter 4
Building Communities Through Arts and Heritage
Through the Building Communities Through Arts and Heritage program,
the federal government supports opportunities for local artists, artisans,
and heritage performers through festivals, events, and projects.
This includes Indigenous cultural celebrations and the celebration of
2SLGBTQI+ communities.
Budget 2023 proposes to provide $14.0 million over two years, starting
in 2024-25, for the Department of Canadian Heritage to support the
Building Communities Through Arts and Heritage program.
Creating a New Leave for Pregnancy Loss
Pregnancy loss is a profoundly personal event in someone’s life. Approximately
15 to 25 per cent of pregnancies end in miscarriage, and one per cent end in
stillbirth. Without time to rest and recover, those who lose a child are at higher
risk of developing physical and mental health challenges.
Budget 2023 proposes to make amendments to the Canada Labour Code
to create a new stand-alone leave for workers in federally regulated
sectors who experience a pregnancy loss. This will support thousands of
Canadians, including women and working parents, as they recover, both
physically and emotionally, from a tragic moment in their life.
This new leave will also apply to parents planning to have a child through
adoption or surrogacy.
Improving Access to Leave Related to the Death or
Disappearance of a Child
The death or disappearance of a child is a tragic and devastating moment
and can leave parents unable to work. Ensuring parents have the support they
need to navigate a devastating period in their lives is critical to their emotional,
mental, and physical well-being.
Budget 2023 proposes to introduce amendments to the Canada
Labour Code to improve eligibility for leave related to the death or
disappearance of a child for workers in federally regulated sectors.
Advancing Reconciliation and Building a Canada That Works for Everyone 149
4.5 A Stronger Immigration System
Canada is a country that has been shaped by immigration. Our communities
and our economy are made stronger every day by people who chose to move
to Canada and start a new life.
By 2025, Canada will welcome 500,000 new permanent residents each year—
the majority of whom will be skilled workers who will help address the labour
shortages that so many Canadian businesses are experiencing today.
In the years to come, Canada’s proud history of immigration must be matched
with a modern, ecient immigration system that welcomes people from around
the world, strengthens our communities, and supports Canada’s continued
economic growth.
Safe and Ecient Citizenship Applications
As Canada welcomes record numbers of newcomers, a safe and ecient
immigration system is essential. Applications for citizenship currently rely on name-
based searches for screening, rather than biometric tools, such as ngerprints, that
are used in visa and permanent residence applications. Name-based searches are
slower and less accurate, and lead to increased processing times.
Budget 2023 proposes to provide $10 million over ve years, starting in
2023-24, with $14.6 million in remaining amortization for Immigration,
Refugees and Citizenship Canada and the Royal Canadian Mounted
Police to implement biometrics, which will help expedite the processing
of citizenship applications.
This funding will build on important progress made in 2022, including the
processing of 5.2 million applications for permanent residence, temporary
residence, and citizenship. Additionally, further steps have already been
taken to move key immigration services online, including the conrmation of
permanent residence status and the introduction of online citizenship testing
and ceremonies.
150 Chapter 4
Supporting Travel to Canada
Visitors to Canada generate billions of dollars in revenue for the Canadian
economy, strengthen our commercial and social ties with other countries,
and support Canadian businesses. As air travel continues to recover from the
pandemic, the federal government is committed to simplifying and expediting
the application process for those seeking to visit Canada, while prioritizing
national security.
Budget 2023 proposes to expand eligibility for the Electronic Travel
Authorization Program to low-risk, trusted travellers from additional visa-
required countries—a service which is currently available only in Brazil.
This will help make Canada a more attractive destination for trusted
travellers, while allowing the government to focus resources where it
matters most, such as on screening higher-risk travellers. The cost of this
measure is $50.8 million over four years in forgone revenue. Details on
eligible countries will be announced in the coming weeks.
Supporting Legal Aid for Asylum Seekers
Access to legal representation, information, and advice ensures that Canada’s
asylum process is fair for everyone, and makes the process more ecient. For
asylum seekers who are unable to pay for legal support, the federal government
helps fund legal aid services in partnership with provinces and territories.
Budget 2023 proposes to provide $43.5 million in 2023-24 to
Justice Canada to maintain federal support for immigration and refugee
legal aid services.
Advancing Reconciliation and Building a Canada That Works for Everyone 151
Supporting Vibrant Rural Communities
Canada’s rural communities are a driver of economic growth, and home
to a wide range of industries including agriculture, mining, and tourism.
In Budget 2023, the government is proposing a series of measures that
will help to support Canadians living and working in rural and remote
communities, including:
- $45.9 million to expand the reach of the Canada Student Loan
Forgiveness program for eligible doctors and nurses who choose to
practice in rural and remote communities;
- $368.4 million to renew and update forest sector programs, which will
support jobs in the forestry sector in rural and remote communities;
- Signicant investment tax credits and funding for clean electricity to
build Canada’s clean economy, which will support major projects that
will create good jobs in rural and remote communities, and will help
expand Canada’s electrical grid to more rural and remote communities;
- $4 billion to implement a co-developed Urban, Rural and Northern
Indigenous Housing Strategy;
- $250 million for an Oral Health Access Fund, which will complement
the Canadian Dental Care Plan by reducing barriers to accessing care,
including in rural and remote communities;
- $333 million over ten years to establish the Dairy Innovation and
Investment Fund, which will help reduce the amount of solids non-
fat that is sold for animal feed or disposed of, and ultimately increase
revenues for dairy farmers;
- $108 million over 3 years to the Regional Development Agencies for
projects and local events to increase local tourism opportunities for
businesses and communities;
- $57.5 million over ve years, with $5.6 million ongoing, to the CFIA
to establish a Foot-and-Mouth disease Vaccine Bank to ensure early
vaccination of livestock, reduce border closures and protect the
livelihoods of livestock farmers in the event of an outbreak;
- $34.1 million over three years for a top-up to the On-Farm Climate
Action Fund to support Eastern Canadian farmers adopt nitrogen
management practices that reduce fertilizer use and ultimately result in
cost savings for these farmers;
- $13 million in 2023-24 to increase the interest-free limit of loans under
the Advance Payments Program to provide additional cash ow to
farmers in need; and,
- $10 million in 2023-24 to top up the Local Food Infrastructure Fund
to strengthen food security in rural and Indigenous communities
across Canada.
152 Chapter 4
Chapter 4
Advancing Reconciliation and Building a Canada That Works for Everyone
millions of dollars
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
4.1. Self-Determination and
Prosperity for Indigenous
Peoples 0 111 22 21 10 10 173
Supporting Indigenous
Governance and Capacity 0 76 0 0 0 0 76
Increasing Indigenous
Participation in Northern
Environmental Decision Making 0 5 4 4 4 4 21
Creating Prosperity With
Indigenous Peoples 0 5 0 0 0 0 5
Supporting Indigenous
Economic Participation in
Major Projects 0 9 0 0 0 0 9
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 0 0 0 0 -1
Advancing Economic
Reconciliation by Unlocking the
Potential of First Nations Lands 0 17 18 18 6 6 65
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -1 -1 0 0 -2
4.2. Investing in Indigenous
Communities 2,973 556 107 104 91 91 3,923
Supporting Indigenous Health
Priorities 0 534 76 76 70 70 827
Implementing the National
Action Plan to End the Tragedy
of Missing and Murdered
Indigenous Women and Girls 2 21 31 28 21 21 125
Supporting First Nations
Children – Jordan’s Principle 171 0 0 0 0 0 171
Gottfriedson Band Class
Settlement Agreement 2,800 0 0 0 0 0 2,800
4.3. Clean Air and Clean
Water 0 168 231 237 106 62
804
Protecting Our Freshwater 0 82 92 91 84 84 433
Less: Funds Sourced
From Existing Departmental
Resources 0 -42 -42 -42 -34 -34 -194
Protecting Canada's Whales 0 37 53 53 0 0 144
Cleaner and Healthier Ports 0 5 39 60 51 7 162
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -1 -1 -1 -1 -3
Advancing Reconciliation and Building a Canada That Works for Everyone 153
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Protecting Species at Risk 0 61 61 61 0 0 184
Improving Disaster Insurance 0 14 14 3 0 0 32
Raising Awareness of Flood
Risks 0 4 6 6 0 0 15
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -1 -1 0 0 -4
Modernizing Federal Disaster
Assistance 0 11 13 8 8 8 48
Less: Funds Sourced
From Existing Departmental
Resources 0 -3 -3 -2 -2 -2 -12
4.4. Stronger and More
Inclusive Communities 2 265 512 473 331 331 1,914
Supporting Our Ocial
Languages - Federal Initiatives 0 63 75 79 78 79 374
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -1 -1 -1 -1 -5
Supporting Our Ocial
Languages - Intergovernmental
Collaboration 0 56 156 156 156 156 679
Supporting Our Ocial
Languages - Court Challenges
Program 0 3 5 5 5 5 25
Investing in Employment
Assistance Services for
Ocial Language Minority
Communities 0 11 35 54 54 55 208
Supporting the Canadian
Screen Sector 0 20 20 0 0 0 40
Supporting the Growth of
Canada’s Tourism Sector 0 18 38 38 0 0 93
Less: Funds Sourced
From Existing Departmental
Resources 0 0 -1 0 0 0 -1
Canada’s New Action Plan to
Combat Hate 0 5 11 11 11 11 50
Building on Canada’s Anti-
Racism Strategy 0 8 8 8 2 1 25
Anti-Racism, Equity and
Inclusion Secretariat 0 1 1 0 0 0 2
Supporting Black Canadian
Communities 0 0 25 0 0 0 25
An Action Plan for Black
Employees in the Public Service 0 15 15 15 0 0 46
154 Chapter 4
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Addressing Workplace
Harassment, Discrimination,
and Violence 0 4 3 0 0 0 7
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -1 0 0 0 -2
Advancing Public Safety
Research 0 1 1 5 5 5 17
Addressing Wrongful
Convictions 0 7 20 19 19 19 84
Less: Funds Sourced
From Existing Departmental
Resources 0 0 -1 -1 -1 -1 -4
Advancing Gender Equality in
Canada 0 7 76 76 0 0 160
A Safe and Accountable Sport
System 2 6 5 0 0 0 14
Helping Canadians Stay Active 0 5 5 0 0 0 10
Local Food Infrastructure Fund
Top-Up 0 10 0 0 0 0 10
Making Life More Aordable
for Persons with Disabilities 0 1 3 3 3 3 13
Advancing Inclusion of
Canadians with Disabilities 0 27 5 0 0 0 32
Building Communities Through
Arts and Heritage 0 0 7 7 0 0 14
4.5. A Stronger Immigration
System 0 55 17 15 16 2 104
Safe and Ecient Citizenship
Applications 0 0 4 2 2 2 10
Supporting Travel to Canada 0 11 12 13
14 15 66
Less: Reduction in reference
levels 0 0 0 0 0 -15 -15
Supporting Legal Aid for
Asylum Seekers 0 44 0 0 0 0 44
Additional Investments –
Advancing Reconciliation
and Building a Canada That
Works for Everyone 156 1,352 365 126 68 68 2,135
Natural Resources Canada's
Explosives Program 0 3 7 9 0 0 19
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -2 -2 0 0 -5
Funding proposed for NRCan to reinforce its oversight of the Canadian explosives sector, including
in the mining industry, under the Explosives Act.
Fish and Fish Habitat
Protection Program 0 63 72 0 0 0 135
Advancing Reconciliation and Building a Canada That Works for Everyone 155
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Funding proposed for DFO to continue to meet the requirements of the Fisheries Act, as updated in
2019, to protect sh and sh habitat.
Fisheries and Aquaculture
Clean Technology Adoption
Program 0 5 0 0 0 0 5
Funding proposed for DFO to continue to assist sheries, aquaculture, and sh processing operators
to adopt sustainable and clean technologies in their operations.
Renewal of the Marine Spatial
Planning Program 0 14 0 0 0 0 14
Funding proposed for DFO, ECCC, and TC to continue to develop and implement marine spatial plans
to help guide activities aecting Canada’s marine waters.
Hydro-Meteorological Services 0 194 199 200 199 199 991
Less: Funds Sourced
From Existing Departmental
Resources 0 -148 -143 -143 -143 -143 -721
Funding proposed for ECCC’s Meteorological Service of Canada to renew weather support services,
forecast modelling capabilities, and monitoring systems.
Additional Resources for
National Security and
Intelligence Reviews 0 22 30 0 0 0 53
Less: Funds Sourced
From Existing Departmental
Resources 0 -4 -5 0 0 0 -10
Funding proposed for PCO, CBSA, DFO, CSE, CSIS, DND, GAC, IRCC, JUS, PHAC, PS, RCMP, and
TC, which have security and intelligence mandates, so that they continue to fulll the review
requirements of the NSIRA and the NSICOP.
Supporting the National Film
Board 0 5 5 0 0 0 9
Funding proposed for the NFB to continue to produce and share Canadian content with the world.
Supporting the
TV5MONDEplus Platform 0 0 2 2 0 0 4
Funding proposed for PCH to purchase Canadian content for the TV5MONDEplus platform.
Supporting the National Arts
Centre 0 13 15 0 0 0 28
Funding proposed for Canada’s home for the performing arts, the National Arts Centre
Supporting Canada’s National
Museums and the National
Battleelds Commission 0 23 30 0 0 0 53
Funding proposed for Canada’s six national museums (the Canadian Museum of Nature, the
Canadian Museum of History, the Canadian Museum for Human Rights, the National Gallery of
Canada, the National Museum of Science and Technology, and the Canadian Museum of Immigration
at Pier 21) and the National Battleelds Commission, to support immediate building maintenance.
Nation Rebuilding Program 0 10 0 0 0 0 10
Funding proposed for CIRNAC to extend the Nation Rebuilding Program and support Indigenous-led
activities to facilitate their own path to reconstituting their nations.
Improving the Temporary
Foreign Worker Program
Employer Compliance Regime 0 15 33 0 0 0 48
156 Chapter 4
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Funding proposed for ESDC to improve the employer compliance regime under the Temporary
Foreign Worker Program, including more program inspectors and the maintenance of the worker
protection tip line.
Enabling Accessibility Fund 0 0 5 5 0 0 10
Funding proposed for Employment and Social Development Canada for the Enabling Accessibility
Fund to reduce waitlists for critical services and supports for persons with disabilities.
Implementing the United
Nations Declaration on the
Rights of Indigenous Peoples 0 3 0 0 0 0 3
Funding proposed for CIRNAC to coordinate activities to implement the United Nations Declaration
on the Rights of Indigenous Peoples Act.
Negotiating and Implementing
Indigenous Rights 0 4 5 5 5 5 22
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -1 -1 -1 -1 -3
Funding proposed for ECCC to negotiate and implement rights-based agreements with Indigenous
communities related to the environment.
Healthcare Support for Asylum
Claimants and Refugees 0 469 0 0 0 0 469
Funding proposed for IRCC to support the Interim Federal Health Program, which provides
temporary healthcare coverage to asylum claimants and refugees who are not yet eligible for
provincial or territorial health insurance.
Modernizing Intelligence
Operations 0 17 21 22 0 0 60
Funding proposed for CSIS to maintain and update its information technology systems.
Maintaining Eective Oversight
of Canada’s Correctional
System 0 1 2 2 2 2 10
Funding proposed for the OCI to strengthen its capacity to investigate inmate complaints, violent
incidents, and systemic issues in federal prisons.
Supporting Federal
Correctional Institutions 0 85 70 16 0 0 171
Funding proposed for CSC to address health and safety issues within federal correctional facilities,
support remote work and court appearances, and stabilize core operations.
Reimbursing Partners for Costs
Related to Illegal Blockades
and Occupations in 2022
1
91 7 0 0 0 0 98
Funding proposed for PS to reimburse municipalities for security operations related to illegal Convoy
blockades and occupations, and for the Royal Canadian Mounted Police for related activities.
Providing Security Measures
for the July 2022 Papal Visit 56 0 0 0 0 0 56
Funding proposed for the RCMP and PS to address security-related costs from the July 2022 Papal
Visit.
Providing Repayment Flexibility
to Contract Policing Partners 5 0 0 0 0 0 5
Funding proposed for the RCMP to provide an extended repayment period for jurisdictions that
contract policing services to pay their share of costs for retroactive salary increases.
Advancing Reconciliation and Building a Canada That Works for Everyone 157
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Investing in Firearms IT
Infrastructure 0 18 8 1 1 1 29
Funding proposed for Public Safety Canada and the RCMP to implement an IM/IT solution to
compensate rearms owners and businesses and safely remove assault-style rearms from Canadian
communities.
Temporary Lodgings for
Asylum Seekers in Need of
Shelter 0 530 0 0 0 0 530
Funding proposed for IRCC to provide short-term accommodations to asylum seekers unable to
shelter elsewhere. This is in addition to funding already provided since the 2022 Fall Economic
Statement.
Support for James Smith Cree
Nation 5 6 12 11 5 5 43
Funding proposed to support mental wellness and healing for James Smith Cree Nation, including
through the building of a new wellness centre in the community and repurposing the existing
Sakwatamo Lodge.
Northern Abandoned Mine
Reclamation Program 0 0 0 0 0 0 0
Funding proposed for CIRNA’s Northern Abandoned Mine Reclamation Program to continue to
support environmental remediation activities related to eight large and complex abandoned mine sites
in the Northwest Territories and Yukon; $6.9 billion over 12 years on a cash-basis is proposed to meet
federal obligations.
Chapter 4 - Net Fiscal Impact 3,131 2,507 1,253 976 621 565 9,053
Note: Numbers may not add due to rounding. A glossary of abbreviations used in this table can be found at the end of
Annex 1.
1
$5.7 million of this amount was announced on December 29, 2022.
2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
Chapter 5
Canada’s Leadership in the World
Key Ongoing Actions ........................................................................................................... 162
5.1 Defending Canada .........................................................................................................162
Defence Policy Update ...............................................................................................163
Establishing the NATO Climate Change and Security Centre of Excellence
in Montreal ...................................................................................................................... 164
Securing Our Economy ............................................................................................... 165
Protecting Diaspora Communities and All Canadians From Foreign
Interference, Threats, and Covert Activities ........................................................ 165
5.2 Supporting Ukraine ....................................................................................................... 166
Financial Assistance to Ukraine in 2023 ............................................................... 168
Bolstering the Defence of Ukraine ........................................................................168
Humanitarian, Development, and Security and Stabilization Assistance
for Ukraine ....................................................................................................................... 169
A Safe Haven for Ukrainians ..................................................................................... 169
Indenite Withdrawal of Most-Favoured-Nation Status From Russia
and Belarus ...................................................................................................................... 169
5.3 Standing Up for Canadian Values ............................................................................170
Supporting the Economic Growth of Developing Countries ....................... 170
Eradicating Forced Labour from Canadian Supply Chains ...........................171
5.4 Combatting Financial Crime ......................................................................................171
Combatting Money Laundering and Terrorist Financing ..............................172
Strengthening Eorts Against Money Laundering and Terrorist Financing ....173
Implementing a Publicly Accessible Federal Benecial Ownership
Registry .............................................................................................................................173
Modernizing Financial Sector Oversight to Address Emerging Risks ......174
Canada Financial Crimes Agency ............................................................................175
Protecting Canadians from the Risks of Crypto-Assets ................................175
Canada’s Leadership in the World 161
Chapter 5
Canada’s Leadership in the World
As a member of the G7, G20, the Commonwealth, and La Francophonie,
an important contributor to NATO, and a global supporter of democracy,
equality, and human rights, Canada is a steadfast defender of the rules-based
international order in an increasingly dangerous and competitive world.
Russia’s illegal and barbaric invasion of Ukraine is the most signicant threat
to the rules-based international order since its creation following the Second
World War. Thousands of Ukrainians have been murdered, and many millions
more have been displaced. The conict has accelerated longstanding issues of
poverty, income inequality, and food insecurity in the Global South.
In response, Canada has provided critical nancial and military assistance to
Ukraine, worked to implement unprecedented sanctions on Vladimir Putin,
his henchmen, and the Russian economy, stepped up to support vulnerable
people around the world who are feeling the eects of Putin’s barbaric invasion,
and welcomed tens of thousands of Ukrainians to Canada.
With democracy under threat from countries like China and Russia, with global
progress towards the Sustainable Development Goals slowing, and with climate
change contributing to instability around the world, Canada must continue to
take action on pressing humanitarian, development, and security challenges—
both here at home and around the world.
Over the past year this has meant responding to the hunger crisis in the Horn of
Africa, providing critical humanitarian and disaster assistance in Pakistan,
Türkiye, and Syria, supporting women in Iran ghting for political and human
rights, and providing assistance to restore security for the Haitian people.
Budget 2023 reinforces the government’s commitment to keeping Canadians
safe, defending the rules-based international order and contributing to global
security, supporting the world’s poorest and most vulnerable, and standing up
for Canadian values around the world.
162 Chapter 5
Key Ongoing Actions
In the past year, the federal government has announced a series of investments
that have enhanced Canada’s security and our leadership around the world.
These include:
$38.6 billion over 20 years to invest in the defence of North America and
the modernization of NORAD;
More than $5.4 billion in assistance for Ukraine, including critical
nancial, military, and humanitarian support;
More than $545 million in emergency food and nutrition assistance in
2022-23 to help address the global food security crisis and respond to
urgent hunger and nutrition needs;
$2.3 billion over the next ve years to launch Canada’s Indo-Pacic
Strategy, including the further global capitalization of FinDev Canada,
which will deepen Canada’s engagement with our partners, support
economic growth and regional security, and strengthen our ties with
people in the Indo-Pacic;
$350 million over three years in international biodiversity nancing,
in addition to Canada’s commitment to provide $5.3 billion in climate
nancing over ve years, to support developing countries’ eorts to
protect nature;
$875 million over ve years, and $238 million ongoing, to enhance
Canada’s cybersecurity capabilities;
Delivering on a commitment to spend $1.4 billion each year on global
health, of which $700 million will be dedicated to sexual and reproductive
health and rights for women and girls; and,
Channeling almost 30 per cent of Canada’s newly allocated International
Monetary Fund (IMF) Special Drawing Rights to support low-income and
vulnerable countries, surpassing the G7’s 20 per cent target.
5.1 Defending Canada
Whether defending Canada from global threats or working with our allies
around the world, the Canadian Armed Forces play an essential role in keeping
Canadians safe and supporting global security.
To ensure those who serve our country in uniform continue to have the
resources they need, Budget 2022 took signicant action to reinforce the
Canadian Armed Forces. Budget 2023 lays out the next steps to invest in and
strengthen the Canadian Armed Forces.
Budget 2023 also takes decisive action to defend Canada and our public
institutions from foreign threats and interference.
Canada’s Leadership in the World 163
Stable, Predictable, and Increasing Defence Spending
Canada’s defence policy, Strong, Secure, Engaged, committed to ensuring the
Department of National Defence (DND) has stable, predictable funding. The
government has delivered on this commitment. As a result of Strong, Secure,
Engaged and subsequent funding increases, including funding for NORAD
modernization and continental defence announced in June 2022, DND’s annual
budget is expected to more than double over ten years, from $18.6 billion in
2016-17 to $39.7 billion in 2026-27 on a cash basis.
Defence Policy Update
In response to a changed global security environment following Russia’s illegal
invasion of Ukraine, the federal government committed in Budget 2022 to a
Defence Policy Update that would update Canada’s existing defence policy,
Strong, Secure, Engaged.
This review, including public consultations, is ongoing, and is focused on the
roles, responsibilities, and capabilities of the Canadian Armed Forces. The
Department of National Defence will return with a Defence Policy Update that
will ensure the Canadian Armed Forces remain strong at home, secure in North
America, and engaged around the world.
With this review ongoing, the Canadian Armed Forces have continued to
protect Canada’s sovereignty in the Arctic, support our NATO allies in Eastern
Europe, and contribute to operations in the Indo-Pacic.
In the past year, the government has made signicant, foundational
investments in Canada’s national defence, which total more than $55 billion
over 20 years. These include:
$38.6 billion over 20 years to strengthen the defence of North America,
reinforce Canada’s support of our partnership with the United States under
NORAD, and protect our sovereignty in the North;
$2.1 billion over seven years, starting in 2022-23, and $706.0 million
ongoing for Canada’s contribution to increasing NATO’s common budget;
$1.4 billion over 14 years, starting in 2023-24, to acquire new critical
weapons systems needed to protect the Canadian Armed Forces in case
of high intensity conict, including air defence, anti-tank, and anti-drone
capabilities;
$605.8 million over ve years, starting in 2023-24, with $2.6 million in
remaining amortization, to replenish the Canadian Armed Forces’ stocks of
ammunition and explosives, and to replace materiel donated to Ukraine;
$562.2 million over six years, starting in 2022-23, with $112.0 million in
remaining amortization, and $69 million ongoing to improve the digital
systems of the Canadian Armed Forces;
164 Chapter 5
Up to $90.4 million over ve years, starting in 2022-23, to further support
initiatives to increase the capabilities of the Canadian Armed Forces; and,
$30.1 million over four years, starting in 2023-24, and $10.4 million ongoing
to establish the new North American regional oce in Halifax for NATO’s
Defence Innovation Accelerator for the North Atlantic.
In addition, the government is providing $1.4 billion to upgrade the facilities
of Joint Task Force 2, Canada’s elite counterterrorism unit.
A New Generation of Canadian Fighter Aircraft
With the largest investment in the Royal Canadian Air Force in 30 years,
the government is acquiring 88 F-35 ghter aircraft, at a cost of $19 billion.
The rst of these modern aircraft is scheduled for delivery by 2026.
Canada’s new eet of F-35s will play an essential role in defending Canada’s
sovereignty, protecting North America, and supporting our allies around
the world.
The government will also invest $7.3 billion to modernize, replace, and build
new infrastructure to support the arrival of the new F-35s. This is the rst
project approved under Canada’s plan to modernize NORAD.
Establishing the NATO Climate Change and
Security Centre of Excellence in Montreal
Climate change has repercussions for people, economic security, public safety,
and critical infrastructure around the world. It also poses a signicant threat to
global security, and in 2022, NATO’s new Strategic Concept recognized climate
change for the rst time as a major security challenge for the Alliance.
At the 2022 NATO Summit in Madrid, Montreal was announced as the host city
for NATO’s new Climate Change and Security Centre of Excellence, which will
bring together NATO allies to mitigate the impact of climate change on military
activities and analyze new climate change-driven security challenges, such as
the implications for Canada’s Arctic.
Budget 2023 proposes to provide $40.4 million over ve years, starting
in 2023-24, with $0.3 million in remaining amortization and $7 million
ongoing, to Global Aairs Canada and the Department of National
Defence to establish the NATO Climate Change and Security Centre
of Excellence.
Canada’s Leadership in the World 165
Securing Our Economy
Depending on dictatorships for key goods and resources is a major strategic
and economic vulnerability. The world has seen this over the past year with
Russia’s attempts to break European resolve by cutting o natural gas supplies.
Our allies are moving quickly to protect themselves from economic extortion,
which includes friendshoring their economies by building their critical supply
chains through other democracies.
Canada is doing the same, and by working together with our allies and partners,
we will ensure that our supply chains are not vulnerable to exploitation, and that
hostile foreign powers cannot buy up Canadian industries and natural resources.
As this process continues across the world’s democracies, it can make our
economies more resilient, our supply chains true to our values, and it can
protect our workers from unfair competition created by coercive states and
race-to-the-bottom business practices.
Here in Canada, it can also create economic opportunities for Canadian workers
and communities. Canada has the talented workforce and the resources needed
to become a reliable supplier of the critical goods and resources that our allies
need. Budget 2023 investments in building Canada’s clean economy will also
ensure Canadian workers benet as we support our allies in friendshoring
their economies.
Protecting Diaspora Communities and All Canadians
From Foreign Interference, Threats, and
Covert Activities
As an advanced economy and a free and diverse democracy, Canada’s strengths
also make us a target for hostile states seeking to acquire information and
technology, intelligence, and inuence to advance their own interests.
This can include foreign actors working to steal information from Canadian
companies to benet their domestic industries, hostile proxies intimidating
diaspora communities in Canada because of their beliefs and values, or
intelligence ocers seeking to inltrate Canada’s public and research institutions.
Authoritarian regimes, such as Russia, China, and Iran, believe they can act with
impunity and meddle in the aairs of democracies—and democracies must act
to defend ourselves. No one in Canada should ever be threatened by foreign
actors, and Canadian businesses and Canada’s public institutions must be free
of foreign interference.
Budget 2023 proposes to provide $48.9 million over three years on a
cash basis, starting in 2023-24, to the Royal Canadian Mounted Police
to protect Canadians from harassment and intimidation, increase its
investigative capacity, and more proactively engage with communities at
greater risk of being targeted.
166 Chapter 5
Budget 2023 proposes to provide $13.5 million over ve years, starting in
2023-24, and $3.1 million ongoing to Public Safety Canada to establish a
National Counter-Foreign Interference Oce.
5.2 Supporting Ukraine
Since Russia’s illegal full-scale invasion of Ukraine, Canada has supported the
people of Ukraine as they ght for their sovereignty and democracy—and for
democracy around the world. Canada will stand with them for as long as it takes.
With more than $5.4 billion in total aid, Canada has provided essential nancial
assistance to the government of Ukraine and delivered signicant military support.
In helping to lead a global eort to inict crushing economic sanctions on
Russia, Canada has also played an important role in reducing Putin’s war chest
and holding his henchmen accountable.
Canada’s nancial assistance to Ukraine includes:
$2.45 billion in loans to the Government of Ukraine to help deliver essential
services to Ukrainians, including proceeds from the world-rst $500 million
Ukraine Sovereignty Bond, which allowed Canadians to support Ukraine directly;
Leading the creation of the IMF Administered Account for Ukraine, which
has facilitated more than $3.8 billion in nancial assistance from Canada
and our international partners;
A €36.5 million (approximately $50 million) loan guarantee through the
European Bank for Reconstruction and Development to facilitate support to
Ukraine’s state-owned energy company, Naftogaz; and,
$115 million in grant assistance to repair Kyiv’s power grid.
Canada’s military contributions to support the Armed Forces of Ukraine include:
More than $1 billion committed in military aid and equipment donations,
including for armoured vehicles; a National Advanced Surface-to-Air Missile
System; 39 armoured combat support vehicles; four M777 howitzers; anti-
tank weapons and small arms; and,
The continuation of the Canadian Armed Forces’ Operation UNIFIER, which has
trained more than 35,000 members of Ukraine’s security forces since 2015.
Other Canadian support for Ukraine has included:
$320 million in humanitarian assistance;
$96 million in development assistance, which has supported the resilience
of Ukraine’s government institutions and civil society organizations, and
provided grain storage solutions for farmers;
More than $81 million in support for demining operations, securing Ukraine’s
nuclear storage facilities, and other peace and stability initiatives; and,
Temporarily waiving all duties on Ukrainian imports.
Canada’s Leadership in the World 167
Canada is also playing a leading role in eorts to cut Russia o from the global
economy and hold Putin and his hangers-on accountable for their illegal war on
Ukraine. Canada’s sanctions eorts include:
Sanctioning more than 1,800 individuals and entities since February 2022;
Working with our partners in the Russian Elites, Proxies, and Oligarchs
(REPO) Task Force to block or freeze more than $58 billion worth of assets
from sanctioned individuals and entities;
Playing a key role in the development of price caps on Russian oil and
petroleum products to deprive the Kremlin of revenues to fund its illegal
war;
Becoming the rst country to revoke Russia’s and Belarus's Most-Favoured-
Nation status, which reduced imports from these two countries by more
than 97 per cent;
Implementing a new, world-leading regime to enable the federal
government to pursue the forfeiture and sale of sanctioned Russian assets
in Canada;
Playing a leading role in international eorts to ban Russian banks from the
global SWIFT nancial transaction processing system;
Prohibiting the importation of aluminum and steel products and other key
goods from Russia; and,
Banning the exportation of a broad range of products to Russia and Belarus,
including goods that could be used in the manufacture of weapons.
168 Chapter 5
Chart 5.1
Financial Support to Ukraine
(per capita, USD)
Sources: Trebesch et al. (2023) "The Ukraine Support Tracker” Kiel WP; Department of Finance Canada calculations.
Notes: Includes commitments to Ukraine from January 24, 2022 to January 15, 2023, plus US$5.5 billion announced
by Japan in February 2023, US$0.5 billion announced by the United Kingdom in March 2023, and $2.4 billion
announced by Canada. Financial support for Germany, France, and Italy includes share of support from the European
Union, which includes contributions by the European Commission and European Council.
Financial Assistance to Ukraine in 2023
Canada’s nancial support for Ukraine has helped its government continue to
operate in the face of Russia's illegal invasion, including by paying pensions and
delivering essential government services to Ukrainians, purchasing fuel to get
through the winter, and restoring damaged energy infrastructure.
Budget 2023 provides Ukraine with an additional loan of $2.4 billion
for 2023, which will be provided via the IMF Administered Account for
Ukraine.
Bolstering the Defence of Ukraine
Canada is steadfast in our commitment to help Ukraine defend its sovereignty,
territorial integrity, and democracy, and Budget 2023 commits additional funds
for military aid to Ukraine.
Budget 2023 proposes to provide $200 million in 2022-23 to the
Department of National Defence for donations of existing Canadian
Armed Forces military equipment to Ukraine, including eight previously
announced Leopard 2 main battle tanks.
Canada’s Leadership in the World 169
Humanitarian, Development, and Security and
Stabilization Assistance for Ukraine
As Ukraine bravely ghts back against Putin’s illegal invasion, Canada will
continue to provide further assistance to the people of Ukraine.
Budget 2023 announces that $84.8 million in 2023-24 will be allocated
by Global Aairs Canada to provide targeted support to Ukraine for
humanitarian assistance, mental health support, demining, agriculture,
and other priority areas. All funds would be sourced from existing
departmental resources.
To support Ukraine’s ultimate recovery and reconstruction, Canada will also
work to assist Ukraine in ensuring its ability to access private capital in the
years to come.
A Safe Haven for Ukrainians
Since January 2022, and particularly since the beginning of Russia’s full-scale
illegal invasion of Ukraine, Canada has become a safe haven for nearly 200,000
Ukrainian citizens and returning Canadian permanent residents of Ukrainian
origin, including through the temporary Canada-Ukraine authorization for
emergency travel.
On March 22, 2023, the federal government announced that it was extending
this pathway by allowing Ukrainians to apply until July 15, 2023, and arrive in
Canada until March 31, 2024.
To support this extension, the government has committed an additional
$171.4 million over three years, starting in 2022-23.
Indenite Withdrawal of Most-Favoured-Nation
Status From Russia and Belarus
On March 2, 2022, Canada became the rst country to revoke Russian and
Belarusian eligibility for Most-Favoured-Nation status, placing Russia and
Belarus in the same category as North Korea. This applied the 35 per cent
General Tari to virtually all Russian and Belarusian imports. Similar measures
were subsequently implemented by the United States, the United Kingdom, and
other major trading partners.
Budget 2023 proposes to amend the Customs Tari to indenitely extend
the withdrawal of Most-Favoured-Nation preferential tari treatment for
Russian and Belarusian imports.
170 Chapter 5
5.3 Standing Up for Canadian Values
With human rights and the rule of law under threat from authoritarian regimes
around the world, Canada has an important role to play in ghting for the
values we cherish. Indeed, as a democracy, Canada has an obligation to take
steps to protect the most vulnerable and help to build a safer and more
prosperous world for people everywhere.
Canada is committed to improving the lives of women, girls, and vulnerable
populations around the world, and to increasing international development
assistance every year towards 2030. Through our Feminist International
Assistance Policy, Canada has delivered high levels of international assistance.
Building on this progress, Budget 2023 continues to take action to stand up for
Canadian values around the world.
Chart 5.2
Projected International Assistance Envelope Spending, 2023-24
(millions, cash basis)
Note: Figures are forecasts and do not include expiring elements that have not yet been renewed.
Supporting the Economic Growth of Developing
Countries
Since the 1970s, Canada has oered preferential tari programs to developing
countries, which support these countries in growing their economies through
the export of goods to Canada.
Budget 2023 proposes to update and renew the General Preferential
Tari and the Least Developed Country Tari until 2034, and create a
new General Preferential Tari Plus. This new program will build on
Canada’s progressive trade agenda and incentivize countries to adhere
to international standards on human rights, labour conditions, gender
equality, and climate change.
This is estimated to reduce federal tari revenues by $130 million over six years.
Strategic Priorities Fund:
$200
Crisis Pool: $200
International Financial
Institutions: $801
Peace & Security: $448
International
Humanitarian
Assistance: $609
Core Development:
$4,630
Canada’s Leadership in the World 171
Eradicating Forced Labour from Canadian Supply Chains
Canada is gravely concerned by the ongoing human rights violations against
Uyghurs and Muslim minorities in China, as well as by the use of forced labour
around the world. Given these concerns, it is important that importers address
their supply chain vulnerabilities and ensure their production promotes our
shared Canadian values around the world.
Budget 2023 announces the federal government’s intention to introduce
legislation by 2024 to eradicate forced labour from Canadian supply chains
to strengthen the import ban on goods produced using forced labour.
The government will also work to ensure existing legislation ts within the
government’s overall framework to safeguard our supply chains.
5.4 Combatting Financial Crime
Serious nancial crimes, such as money laundering, terrorist nancing, and the
evasion of nancial sanctions, threaten the safety of Canadians and the integrity
of our nancial system. Canada requires a comprehensive, responsive, and
modern system to counter these sophisticated and rapidly evolving threats.
Canada must not be a nancial haven for oligarchs or the kleptocratic
apparatchiks of authoritarian, corrupt, or theocratic regimes—such as those of
Russia, China, Iran, and Haiti. We will not allow our world-renowned nancial
system to be used to clandestinely and illegally move money to fund foreign
interference inside Canada.
Since 2019, the federal government has modernized Canada's Anti-Money
Laundering and Anti-Terrorist Financing (AML/ATF) Regime to address risks
posed by new technologies and sectors, and made investments to strengthen
Canada’s nancial intelligence, information sharing, and investigative capacity.
Canada’s AML/ATF Regime must continue to be strengthened in order to
combat the complex and evolving threats our democracy faces, and to ensure
that Canada is never a haven for illicit nancial ows or ill-gotten gains.
In Budget 2023, the government is proposing further important measures to
deter, detect, and prosecute nancial crimes, protect nancial institutions from
foreign interference, and protect Canadians from the emerging risks associated
with crypto-assets.
172 Chapter 5
Combatting Money Laundering and Terrorist Financing
Money laundering and terrorist nancing can threaten the integrity of the
Canadian economy, and put Canadians at risk by supporting terrorist activity,
drug and human tracking, and other criminal activities. Taking stronger action
to tackle these threats is essential to protecting Canada’s economic security.
In June 2022, the Government of British Columbia released the nal report of
the Commission of Inquiry into Money Laundering in British Columbia, also
known as the Cullen Commission. This report highlighted major gaps in the
current AML/ATF Regime, as well as areas for deepened federal-provincial
collaboration. Between measures previously introduced and those proposed
in Budget 2023, as well as through consultations that the government has
committed to launching, the federal government will have responded to all of
the recommendations within its jurisdiction in the Cullen Commission report.
In Budget 2023, the federal government is taking action to address gaps in Canada’s
AML/ATF Regime, and strengthen cooperation between orders of government.
Budget 2023 announces the government’s intention to introduce
legislative amendments to the Criminal Code and the Proceeds of Crime
(Money Laundering) and Terrorist Financing Act (PCMLTFA) to strengthen
the investigative, enforcement, and information sharing tools of Canada’s
AML/ATF Regime.
These legislative changes will:
- Give law enforcement the ability to freeze and seize virtual assets with
suspected links to crime;
- Improve nancial intelligence information sharing between law
enforcement and the Canada Revenue Agency (CRA), and law
enforcement and the Financial Transactions and Reports Analysis
Centre of Canada (FINTRAC);
- Introduce a new oence for structuring nancial transactions to avoid
FINTRAC reporting;
- Strengthen the registration framework, including through criminal
record checks, for currency dealers and other money services
businesses to prevent their abuse;
- Criminalize the operation of unregistered money services businesses;
- Establish powers for FINTRAC to disseminate strategic analysis related
to the nancing of threats to the safety of Canada;
- Provide whistleblowing protections for employees who report
information to FINTRAC;
- Broaden the use of non-compliance reports by FINTRAC in criminal
investigations; and,
- Set up obligations for the nancial sector to report sanctions-related
information to FINTRAC.
Canada’s Leadership in the World 173
Strengthening Eorts Against Money Laundering and
Terrorist Financing
In keeping with the requirements of the Proceeds of Crime (Money Laundering)
and Terrorist Financing Act (PCMLTFA), the federal government will launch a
parliamentary review of this act this year.
This review will include a public consultation that will examine ways to improve
Canada’s Anti-Money Laundering and Terrorist Financing (AML/ATF) Regime,
as well as examine how dierent orders of government can collaborate more
closely. This will include how governments can better use existing tools to
seize the proceeds of crime, and the potential need for new measures, such as
unexplained wealth orders. Other topics of consultation will include, but will not
be limited to, measures to support investigations and prosecutions, enhance
information sharing, close regulatory gaps, examine the role of the AML/ATF
Regime in protecting national and economic security, as well as the remaining
recommendations from the Cullen Commission.
Budget 2023 announces that the government will bring forward further
legislative amendments, to be informed by these consultations, to give the
government more tools to ght money laundering and terrorist nancing.
Canada is also leading the global ght against illicit nancial ows, having
been chosen to serve for two years, eective July 2023, as Vice President of the
Financial Action Task Force (from which Russia has been suspended indenitely),
as well as co-Chair of the Asia/Pacic Group on Money Laundering for two
years, beginning in July 2022.
Implementing a Publicly Accessible Federal Benecial
Ownership Registry
The use of anonymous Canadian shell companies can conceal the true
ownership of property, businesses, and other valuable assets. When authorities
don’t have the tools to determine their true ownership, these shell companies
can become tools of those seeking to launder money, avoid taxes, evade
sanctions, or interfere in our democracy.
To address this, the federal government committed in Budget 2022 to
implementing a public, searchable benecial ownership registry of federal
corporations by the end of 2023.
This registry will cover corporations governed under the Canada Business
Corporations Act, and will be scalable to allow access to the benecial
ownership data held by provinces and territories that agree to participate in a
national registry.
While an initial round of amendments to the Canada Business Corporations
Act received Royal Assent in June 2022, further amendments are needed to
implement a benecial ownership registry.
174 Chapter 5
The government is introducing further amendments to the Canada Business
Corporations Act and other laws, including the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act and the Income Tax Act, to implement
a publicly accessible benecial ownership registry through Bill C-42. This
represents a major blow to money laundering operations and will be a powerful
tool to strengthen the security and integrity of Canada’s economy.
The federal government will continue calling upon provincial and territorial
governments to advance a national approach to benecial ownership
transparency to strengthen the ght against money laundering, tax evasion, and
terrorist nancing.
Modernizing Financial Sector Oversight to Address
Emerging Risks
Canadians must be condent that federally regulated nancial institutions
and their owners act with integrity, and that Canada’s nancial institutions are
protected, including from foreign interference.
Budget 2023 announces the government’s intention to amend the Bank
Act, the Insurance Companies Act, the Trust and Loan Companies Act, the
Oce of the Superintendent of Financial Institutions Act, and the Proceeds
of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to
modernize the federal nancial framework to address emerging risks to
Canada’s nancial sector.
These legislative changes will:
- Expand the mandate of the Oce of the Superintendent of Financial
Institutions (OSFI) to include supervising federally regulated nancial
institutions (FRFIs) in order to determine whether they have adequate
policies and procedures to protect themselves against threats to their
integrity and security, including protection against foreign interference;
- Expand the range of circumstances where OSFI can take control of an
FRFI to include where the integrity and security of that FRFI is at risk,
where all shareholders have been precluded from exercising their voting
rights, or where there are national security risks;
- Expand the existing authority for the Superintendent to issue a direction
of compliance to include an act that threatens the integrity and security
of an FRFI;
- Provide new powers under the PCMLTFA to allow the Minister of Finance
to impose enhanced due diligence requirements to protect Canada’s
nancial system from the nancing of national security threats, and allow
the Director of FINTRAC to share intelligence analysis with the Minister of
Finance to help assess national security or nancial integrity risks posed
by nancial entities;
- Improve the sharing of compliance information between FINTRAC, OSFI,
and the Minister of Finance; and,
Canada’s Leadership in the World 175
- Designate OSFI as a recipient of FINTRAC disclosures pertaining to threats
to the security of Canada, where relevant to OSFI’s responsibilities.
The government will also review the mandate of FINTRAC to determine whether
it should be expanded to counter sanctions evasion and will provide an update in
the 2023 fall economic and scal update. In addition, the government will review
whether FINTRAC’s mandate should evolve to include the nancing of threats to
Canada’s national and economic security as part of the parliamentary review.
These actions will continue the strong oversight of the nancial sector that
underpins a sound and stable Canadian economy.
Canada Financial Crimes Agency
To strengthen Canada’s ability to respond to complex cases of nancial crime,
Budget 2022 announced the government’s intent to establish a new Canada
Financial Crimes Agency (CFCA), and provided $2 million to Public Safety
Canada to undertake this work.
The CFCA will become Canada’s lead enforcement agency against nancial
crime. It will bring together expertise necessary to increase money laundering
charges, prosecutions and convictions, and asset forfeiture results in Canada.
These actions will address the key operational challenges identied in both
domestic and international reviews of Canada’s AML/ATF Regime.
Public Safety Canada is developing options for the design of the CFCA, working in
conjunction with federal, provincial and territorial partners and external experts, as
well as engaging extensively with stakeholders. Further details on the structure and
mandate of the CFCA will be provided by the 2023 fall economic and scal update.
Protecting Canadians from the Risks of Crypto-Assets
Ongoing turbulence in crypto-asset markets, and the recent high-prole failures
of crypto trading platform FTX, and of Signature Bank, have demonstrated that
crypto-assets can threaten the nancial well-being of people, national security,
and the stability and integrity of the global nancial system.
To protect Canadians from the risks that come with crypto-assets, there is
a clear need for dierent orders of government to take an active role in
addressing consumer protection gaps and risks to our nancial system.
The federal government is working closely with regulators and provincial and
territorial partners to protect Canadians’ hard-earned savings and pensions, and
Budget 2023 proposes new measures to protect Canadians.
To help protect Canadians’ savings and the security of our nancial sector,
Budget 2023 announces that the Oce of the Superintendent of Financial
Institutions (OSFI) will consult federally regulated nancial institutions on
guidelines for publicly disclosing their exposure to crypto-assets.
176 Chapter 5
Secure pension plans are the cornerstone of a dignied retirement. While pension
plan administrators are required to prudently manage their investments, the
unique nature and evolving risks of crypto-assets and related activities require
continued monitoring.
To help protect Canadians’ retirements, Budget 2023 announces that
the government will require federally regulated pension funds to
disclose their crypto-asset exposures to OSFI. The government will also
work with provinces and territories to discuss crypto-asset or related
activities disclosures by Canada’s largest pension plans, which would
ensure Canadians are aware of their pension plan’s potential exposure
to crypto-assets.
The federal government launched targeted consultations on crypto-assets as
part of the review on the digitalization of money announced in Budget 2022.
Moving forward, the government will continue to work closely with partners
to advance the review, will bring forward proposals to protect Canadians from
the risks of crypto-asset markets, and will provide further details in the 2023 fall
economic and scal update.
Canada’s Leadership in the World 177
Chapter 5
Canada’s Leadership in the World
millions of dollars
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
5.1. Defending Canada 0 15 27 26 9 10 86
Increasing NATO’s Common
Budget 70 116 235 298 374 465 1,558
Less: Funds Previously
Provisioned in the Fiscal
Framework -70 -116 -235 -298 -374 -465 -1,558
Acquiring New Critical
Weapons Systems 0 112 127 101 101 101 542
Less: Funds Previously
Provisioned in the Fiscal
Framework 0 -112 -127 -101 -101 -101 -542
Replenishing the Canadian
Armed Forces’ Stocks 0 135 121 119 100 130 606
Less: Funds Previously
Provisioned in the Fiscal
Framework 0 -135 -121 -119 -100 -130 -606
Improving the Digital Systems
of the Canadian Armed Forces 32 161 161 69 69 69 562
Less: Funds Previously
Provisioned in the Fiscal
Framework -32 -161 -161 -69 -69 -69 -562
Further Support Initiatives to
Increase the Capabilities of the
Canadian Armed Forces 2 30 28 16 15 0 90
Less: Funds Previously
Provisioned in the Fiscal
Framework -2 -30 -28 -16 -15 0 -90
Establishing a Regional Oce
for NATO’s Defence Innovation
Accelerator for the North
Atlantic 0 4 6 10 10 10 41
Less: Funds Previously
Provisioned in the Fiscal
Framework 0 -4 -6 -10 -10 -10 -41
Establishing the NATO Climate
Change and Security Centre of
Excellence in Montreal 0 11 8 7 7
7 40
Less: Funds Sourced
From Existing Departmental
Resources 0 -3 -2 -2 -2 -2 -10
Protecting Diaspora
Communities and All
Canadians from Foreign
Interference, Threats and
Covert Activities 0 8 21 20 4 4 56
178 Chapter 5
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
5.2. Supporting Ukraine 98 212 61 0 0 0 371
Bolstering the Defence of
Ukraine 200 0 0 0 0 0 200
Humanitarian, Development
and Security and Stabilization
Assistance for Ukraine 0 85 0 0 0 0 85
Less: Funds Sourced
From Existing Departmental
Resources 0 -85 0 0 0 0 -85
A Safe Haven for Ukrainians
1
0 212 61 0 0 0 273
Less: Funds Previously
Provisioned in the Fiscal
Framework -102 0 0 0 0 0 -102
5.3. Standing Up for
Canadian Values 0 0 10 40 40 40 130
Supporting the Economic
Growth of Developing
Countries 0 0 10 41 41 41 132
Less: Projected Revenues 0 0 0 -1 -1 -1 -2
Additional Investments –
Canada’s Leadership in the
World 0 13 27 36 31 32 140
Establishing a Cyber Security
Certication Program for
Defence Procurement 0 6 9 9 0 0 25
Less: Funds Sourced
From Existing Departmental
Resources 0 -3 -4 -4 0 0 -11
Funding proposed for PSPC, DND, and the SCC-CCN to establish a cyber security certication
program to protect Canada’s defence supply chain. Cost recovery options will be explored for the
program’s administration.
Canada's Extended Continental
Shelf (UNCLOS) Program 0 6 13 31 31 32 113
Funding proposed for NRCan to prepare a revised submission to secure Canada’s rights over
its extended continental shelf in the Arctic Ocean, and to protect Canadian sovereignty in this
increasingly contested area.
Enabling Humanitarian
Assistance 0 5 11
0 0 0 16
Less: Funds Sourced
From Existing Departmental
Resources 0 -1 -2 0 0 0 -3
Funding proposed for PS, the RCMP, GAC, and CSE to support the delivery of a mechanism
under proposed amendments to the Criminal Code, to permit humanitarian assistance and other
activities (e.g., to support refugee resettlement), in areas controlled by terrorist entities.
Chapter 5 - Net Fiscal Impact 98 241 125 102 80 81 728
Note: Numbers may not add due to rounding. A glossary of abbreviations used in this table can be found at the end of
Annex 1.
1
Announced March 22, 2023.
2023
Budget
TAX MEASURES:
SUPPLEMENTARY
INFORMATION
Chapter 6
Eective Government and a Fair Tax
System
Key Ongoing Actions ........................................................................................................... 182
6.1 Eective Government ................................................................................................... 183
Refocusing Government Spending to Deliver for Canadians ....................183
Realigning Previously Announced Spending ..................................................... 184
Eective Government Programs .............................................................................184
6.2 Improving Services for Canadians ........................................................................... 185
Protecting Passenger Rights .....................................................................................185
Improving Airport Operations and Passenger Screening ............................ 186
Faster Passport Processing and Improved Immigration Services ............. 186
Faster Services for Veterans ......................................................................................187
Improving Canada.ca and 1 800 O-Canada .......................................................187
Old Age Security IT Modernization .......................................................................187
Ensuring the Integrity of Emergency COVID19 Benets ..............................188
Renewing Equalization and Territorial Formula Financing ..........................188
6.3. A Fair Tax System ...........................................................................................................188
Ensuring the Wealthiest Canadians Pay Their Fair Share .............................188
International Tax Reform ...........................................................................................189
A Tax on Share Buybacks ...........................................................................................190
Fair Taxation of Dividends Received by Financial Institutions .................... 191
Strengthening the General Anti-Avoidance Rule ............................................ 191
Eective Government and a Fair Tax System 181
Chapter 6
Eective Government and a Fair Tax
System
Millions of Canadians depend on government services every day. Whether
they are renewing passports or receiving important benets, Canadians rightly
expect these services to be ecient and eective.
The federal government is continuing to invest in improving the services that
Canadians count on and is taking new steps in Budget 2023 to ensure that
government spending is sustainable, ecient, and focused on the priorities that
matter most to Canadians.
Budget 2023 also introduces new measures to ensure that the wealthiest pay
their fair share of tax, and that our tax system is one in which everyone plays by
the same set of rules.
182 Chapter 6
Key Ongoing Actions
Recent investments to improve services for Canadians include:
Accelerating claims processing and reducing backlogs for Employment
Insurance (EI) and Old Age Security (OAS) with $1.02 billion to Service Canada;
Reducing call centre wait times with $574 million for Service Canada and
$400 million for the Canada Revenue Agency;
Improving services at the border with a $137 million investment in the
Canada Border Services Agency;
Speeding up immigration application processing by hiring 1,250 new
sta and investing in more ecient technology; and,
Providing faster services to veterans through $115 million for
Veterans Aairs Canada to reduce backlogs and retain case managers.
Previous measures to ensure a fair tax system include:
Raising taxes on the wealthiest one per cent to cut taxes for the middle
class;
Permanently increasing the corporate income tax rate of the largest, most
protable banks and insurance companies in Canada;
Introducing a one-time, 15 per cent tax on the taxable income above
$1 billion of banking and life insurer groups to help pay for the
COVID recovery;
Introducing a new luxury tax on private jets, yachts, and luxury vehicles;
Increasing to $15,000 the amount of income that Canadians can earn
before paying any federal income tax;
Preventing wealthy Canadians from using foreign shell companies to
avoid paying Canadian tax; and,
Limiting excessive interest deductions to ensure that large companies pay
their fair share.
Eective Government and a Fair Tax System 183
6.1 Eective Government
The ecient use of Canadians’ tax dollars is essential to delivering on the
priorities that matter most to Canadians. Budget 2023 delivers a refocusing of
government spending to continue to serve Canadians most eectively.
Refocusing Government Spending to Deliver
for Canadians
From the creation of the Canada Child Benet, to infrastructure investments in
our communities, to supporting Canadians through the pandemic, the federal
government has proudly invested in Canadians and the Canadian economy
since 2015.
These investments have lifted millions of Canadians out of poverty, built more
vibrant communities across the country, grown our economy, and helped
weather a once-in-a-century pandemic. Ensuring the federal government can
continue to invest in Canadians for years to come is essential.
After two years of emergency pandemic spending, the government committed
in Budget 2022 to begin normalizing the overall level of program spending, and
announced that the government would examine previous spending plans with a
view to reducing COVID-19-related spending by up to $3 billion over four years.
In the 2022 Fall Economic Statement, the government delivered on this
commitment with reduced spending of $3.8 billion, owing to lower-than-
expected need for COVID-19 supports in 2021-22.
Moving forward, Budget 2023 will continue these eorts to bring the pace and
scale of the growth of government spending back to a pre-pandemic path, in
order to ensure that Canadians’ tax dollars are being used eciently and being
invested in the priorities that matter most to them.
Further savings in Budget 2023 will meet the commitments laid out in last year’s
Budget—and will help pay for the strengthening of Canada’s public health
care system, the delivery of the Canadian Dental Care Plan, and the building of
Canada’s clean economy.
Budget 2023 proposes to reduce spending on consulting, other
professional services, and travel by roughly 15 per cent of planned
2023-24 discretionary spending in these areas. This will result in savings
of $7.1 billion over ve years, starting in 2023-24, and $1.7 billion
ongoing. The government will focus on targeting these reductions on
professional services, particularly management consulting.
Budget 2023 proposes to phase in a roughly 3 per cent reduction of
eligible spending by departments and agencies by 2026-27. This will reduce
government spending by $7.0 billion over four years, starting in 2024-25,
and $2.4 billion ongoing. Reductions will not impact direct benets and
service delivery to Canadians; direct transfers to other orders of government
and Indigenous communities; and the Canadian Armed Forces.
184 Chapter 6
The government will also work with federal Crown corporations to ensure
they achieve comparable spending reductions, which would account for
an estimated $1.3 billion over four years starting in 2024-25, and $450
million ongoing.
In total, these proposals represent savings of $15.4 billion over the next ve years.
Realigning Previously Announced Spending
As part of the government’s commitment to responsibly manage Canadians’
tax dollars, it is also continuing to assess the pace and scale of previously
announced spending that has yet to occur. Where implementation is slower
than originally planned, when take-up is lower, or when circumstances have
changed, it makes sense to ensure government resources are still allocated to
their best purpose.
Budget 2023 proposes to reduce previously announced funding that
remains unallocated or is no longer required, or to delay it where the
pace of implementation is slower than originally envisioned. This will
result in savings of $6.4 billion over six years, starting in 2022-23.
Eective Government Programs
The regular review of government programs is important if they are to deliver
their intended results for Canadians.
Budget 2023 announces the introduction of cross-government program
eectiveness reviews, to be led by the President of the Treasury Board.
The rst review will examine skills training and youth programming, to
determine, by Budget 2024, whether improvements can be made to help
more Canadians develop the skills and receive the work experience they
need to have successful careers.
Eective Government and a Fair Tax System 185
6.2 Improving Services for Canadians
Budget 2023 proposes new investments to ensure Canadians can count on fast
and eective services from the federal government, and receive the benets
they are entitled to in a timely manner.
Protecting Passenger Rights
When Canadians travel by air, their experience should be safe, dependable, and
respectful of their rights. The Canadian Transportation Agency is responsible
for ensuring Canada’s transportation systems run smoothly and eciently, for
protecting consumers, and for holding airlines accountable.
In Budget 2023, the federal government is proposing new steps to strengthen
the Canadian Transportation Agency, make airlines more accountable, and
ensure that passengers are fairly compensated for delays and cancellations.
Budget 2023 proposes to amend the Canada Transportation Act to
strengthen airline obligations to compensate passengers for delays and
cancellations. These changes will align Canada’s air passenger rights regime
with those of leading international approaches and ensure that Canadians
are fairly compensated for travel delays that are within airlines’ control.
Budget 2023 also announces the government’s intention to amend
the Canada Transportation Act to make the Canadian Transportation
Agency’s complaint adjudication process more ecient, and to provide
the Minister of Transport with the authority to impose a regulatory
charge on airlines to help cover the costs of resolving air passenger
complaints.
These measures build on the government’s March 14, 2023, announcement
of $75.9 million over three years, starting in 2023-24, to ensure the Canadian
Transportation Agency has the resources for enforcement and compliance, and
to provide dispute resolution services to Canadians and businesses when they
are unable to resolve issues directly with air, rail, or marine service providers.
186 Chapter 6
Improving Airport Operations and Passenger Screening
Airlines and airports around the world were hit hard by the pandemic, and
those in Canada were no exception. As air travel returned through 2022,
Canadians faced unacceptable ight delays, long lineups at airports, and
mishandled baggage.
While delays have been reduced in recent months, the federal government is
acting to strengthen air passenger rights and improve Canadians’ experiences
at the airport.
Budget 2023 proposes to provide $1.8 billion over ve years, starting
in 2023-24, to the Canadian Air Transport Security Authority (CATSA) to
maintain and increase its level of service, improve screening wait times,
and strengthen security measures at airports.
Budget 2023 proposes to amend the Canada Transportation Act to
require the sharing and reporting of data by airports and air carriers.
This will help to reduce delays and improve coordination between
airports, airlines, and CATSA.
Budget 2023 also proposes to provide $5.2 million over ve years,
starting in 2023-24, to Transport Canada to collect and analyze air sector
performance data.
Faster Passport Processing and Improved
Immigration Services
Canadians are eager to travel abroad again, and people from around the
world continue to want to come to Canada to work, study, and build their
lives. Whether someone is renewing their passport, immigrating to Canada,
or reuniting with their family, everyone should be able to count on fast and
ecient service.
Last year, as the world opened up and people began to travel, too many
Canadians and newcomers were forced to deal with unacceptable wait times.
To address this, the federal government has adopted new technologies,
streamlined processing, and made signicant new investments, including
$135 million in 2022-23 to address immigration application backlogs. This has
resulted in:
The elimination of passport application backlogs and the return to
pre-pandemic processing times of 10 days for in-person applications at
specialized passport oces, and 20 days for applications received by mail
or dropped o at a Service Canada Centre;
The processing of 5.2 million applications for permanent residence,
temporary residence, and citizenship in 2022—double the number of
applications processed in 2021; and,
Eective Government and a Fair Tax System 187
The government moving more key services online, including the
conrmation of permanent residence status and the introduction of
online citizenship testing and ceremonies, as well as addressing backlogs
of paper-based applications through digitization.
Faster Services for Veterans
Those who served Canada with our ag on their shoulder deserve to receive
benets and services in a timely manner.
Since 2015, the federal government has invested more than $11 billion to
enhance benets and services for veterans, and applications for benets
have increased by 47 per cent. After signicant sta reductions were made
at Veterans Aairs Canada between 2009 and 2014, these cuts and the rise in
applications after 2015 led to unacceptable wait times for too many veterans.
While the government has reduced backlogs by more than 60 per cent since 2020
by hiring 350 sta and speeding up processing, there is still more work to do.
Budget 2023 proposes to provide $156.7 million over ve years, starting
in 2023-24, and $14.4 million ongoing to Veterans Aairs Canada, the
Royal Canadian Mounted Police, and the Veterans Review and Appeal
Board to reduce backlogs and support service delivery across several
programs and services.
Improving Canada.ca and 1 800 O-Canada
All Canadians should have quick and easy access to information on government
programs and services—whether they are a senior who prefers to call, a person
with a disability who requires a more accessible website, or someone who
prefers to look for information on their phone. After a sharp rise in inquiries
during the pandemic, requests for information through Canada.ca and
1 800 O-Canada (622-6232) remain at nearly double their pre-pandemic levels.
Budget 2023 proposes to provide $17.7 million over four years, starting
in 2023-24, to Employment and Social Development Canada to increase
capacity at 1 800 O-Canada call centres, improve Canada.ca, and ensure
that Canadians can access information they need about government
benets and services.
Old Age Security IT Modernization
The federal government delivers more than $60 billion in Old Age Security
benets to more than seven million seniors each year. To ensure the timely and
reliable delivery of these critical benets, the Old Age Security IT system must
be updated.
Budget 2023 proposes to provide $123.9 million over seven years,
starting in 2023-24, to Employment and Social Development Canada to
complete Old Age Security IT modernization.
188 Chapter 6
Ensuring the Integrity of Emergency COVID19 Benets
When COVID19 hit, the federal government responded by providing emergency
income supports to close to nine million Canadians. This support was essential,
and it helped Canadians weather a once-in-a-century pandemic.
To minimize delays and ensure that Canadians received the support they
needed, benets arrived quickly. Inevitably, this led to overpayments and,
in some cases, abuse of the system. In Budget 2023, the government is taking
further action to ensure the integrity of Canada’s emergency benet system.
Budget 2023 proposes to provide $53.8 million in 2022-23 to Employment
and Social Development Canada to support integrity activities relating to
overpayments of COVID19 emergency income supports.
The federal government is committed to working with Canadians to recover
overpayments. Those struggling with the repayment process are able to work
with Canada Revenue Agency to develop a exible repayment plan that works
with their individual life circumstance.
Renewing Equalization and Territorial
Formula Financing
Equalization and Territorial Formula Financing programs enable all provincial
and territorial governments to provide comparable services to Canadians.
Following consultations with provinces and territories, Budget 2023
proposes to renew the Equalization and Territorial Formula Financing
programs for a ve-year period, beginning April 1, 2024, and make technical
changes to improve the accuracy and transparency of the programs.
6.3. A Fair Tax System
Programs and services that Canadians rely on—including Old Age Security, the
Canada Child Benet, Early Learning and Child Care, and transfers to provinces in
support of health care and education—are dependent on a robust national tax base.
Budget 2023 builds on progress the federal government has made since 2015
to close loopholes, crack down on tax avoidance, and ensure that the wealthiest
pay their fair share.
Ensuring the Wealthiest Canadians Pay Their Fair Share
Through the signicant use of deductions, credits, and other tax preferences, some
of the wealthiest Canadians pay little to no personal income tax in a given year.
The Alternative Minimum Tax (AMT) is intended to ensure that the highest-
income Canadians cannot disproportionately lower their tax bill through
advantages in the tax system. The AMT has not been signicantly reformed
since its implementation in 1986, and thousands of the wealthiest Canadians
still pay very little income tax.
Eective Government and a Fair Tax System 189
To ensure the wealthiest Canadians pay their fair share of tax, Budget
2023 proposes legislative amendments to raise the AMT rate from
15 per cent to 20.5 per cent and further limit the excessive use of tax
preferences. These amendments would generate an estimated $3.0
billion in revenues over ve years, beginning in the 2024 taxation year.
Under the proposed reforms, the basic AMT exemption would increase
more than fourfold, from $40,000 to $173,000, signicantly increasing the
income level necessary to pay the AMT. This would result in a tax cut for
tens of thousands of middle-class Canadians, while the AMT will more
precisely target the very wealthy.
Under these reforms, more than 99 per cent of the AMT paid by individual
Canadians would be paid by those who earn more than $300,000 per year, and
about 80 per cent of the AMT paid would be by those who earn more than $1
million per year.
International Tax Reform
Canada is committed to ending the corporate tax race to the bottom and
ensuring that multinational corporations pay their fair share of tax wherever
they do business. This is about putting Canadian workers and businesses on a
level playing eld with our global competitors.
Canada continues to strongly support the two-pillar international tax reform
plan agreed by 138 members of the OECD/G20 Inclusive Framework on Base
Erosion and Prot Shifting.
Pillar One (Reallocation of Taxing Rights)
Pillar One will ensure that the largest and most protable global corporations,
including large digital corporations, pay their fair share of tax in the jurisdictions
where their users and customers are located. Canada and our international
partners have been developing the rules of this innovative new system
through an OECD-led process, and countries are working towards completing
multilateral negotiations so that the treaty to implement Pillar One can be
signed by mid-2023.
To ensure that Canadians’ interests are protected in any circumstance, the
federal government will continue to advance legislation for a Digital Services
Tax. It is Canada’s hope and expectation that the timely implementation of the
new multilateral system will make a Digital Services Tax unnecessary.
190 Chapter 6
Pillar Two (Global Minimum Tax)
Pillar Two, a global minimum tax regime, will ensure that large multinational
corporations are subject to a minimum eective tax rate of 15 per cent on their
prots wherever they do business.
To function eectively, Pillar Two requires coordinated implementation by
countries around the world. Recent steps taken by a number of countries to
implement Pillar Two in 2024, including the members of the European Union,
the United Kingdom, Japan, and the Republic of Korea, mean the multilateral
framework for the global minimum tax regime is now being put in place.
Budget 2023 rearms Canada’s intention, announced in Budget 2022,
to introduce legislation implementing the Pillar Two global minimum tax.
The primary charging rule of Pillar Two and a domestic minimum top-up
tax would be eective for scal years of multinational corporations that
begin on or after December 31, 2023. The secondary charging rule would
be eective for scal years that begin on or after December 31, 2024.
The government will continue to monitor international developments as
it moves forward with the implementation of Pillar Two.
A Tax on Share Buybacks
The 2022 Fall Economic Statement announced the federal government’s
intention to introduce a two per cent tax on share buybacks by public
corporations in Canada, with details to follow in Budget 2023.
Budget 2023 announces that the proposed tax would apply as of January
1, 2024 to the annual net value of repurchases of equity by public
corporations and certain publicly traded trusts and partnerships in
Canada. A business would not be subject to the tax in a year if its gross
repurchases of equity were less than $1 million.
It is estimated that this measure would increase federal revenues by $2.5 billion
over ve years, starting in 2023-24. Importantly, this would also encourage rms
to re-invest in their workers and businesses.
Eective Government and a Fair Tax System 191
Fair Taxation of Dividends Received by Financial
Institutions
Currently, the dividends that nancial institutions receive on Canadian shares
are not treated as business income and are eectively exempt from tax.
Financial institutions rely on this treatment to lower their tax burden, which
reduces tax revenues that are important to delivering benets and services to
Canadians.
Budget 2023 proposes to amend the Income Tax Act to treat dividends
received on Canadian shares held by nancial institutions in the ordinary
course of their business as business income.
This measure would apply to dividends received after 2023, which would
increase federal revenues by $3.15 billion over ve years starting in 2024-25,
and by $790 million ongoing.
Strengthening the General Anti-Avoidance Rule
The General Anti-Avoidance Rule (GAAR) was added to the Income Tax Act in
1988 to prevent abusive tax avoidance. If abusive tax avoidance is established,
the GAAR applies to deny the tax benet that was unfairly created. The GAAR
has helped to tackle abusive tax avoidance but it requires modernizing to
ensure its continued eectiveness.
Budget 2023 proposes to release for consultation draft legislative
proposals to strengthen the GAAR. Additional details are found in the
Budget Supplementary Information, under “General Anti-Avoidance Rule.”
192 Chapter 6
Chapter 6
Eective Government and a Fair Tax System
millions of dollars
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
6.1. Eective Government -160 -3,950 -1,231 -1,411 -3,101 -2,901 -12,754
Refocusing Government
Spending – Reduced Spending on
Consulting, Professional Services
and Travel 0 -500 -1,650 -1,650 -1,650 -1,650 -7,100
Refocusing Government Spending
– Reduced Eligible Spending by
Government Departments and
Agencies 0 0 -681 -1,424 -2,441 -2,441 -6,987
Refocusing Government
Spending – Crown Corporation –
Comparable Spending Reductions 0 0 -126 -262 -450 -450 -1,288
Less: Budget 2022 Commitment 0 0 1,000 2,000 3,000 3,000 9,000
Realigning Previously Announced
Spending -160 -3,450 225 -75 -1,560 -1,360 -6,380
6.2. Improving Services for
Canadians 54 529 733 732 49 44 2,141
Protecting Passenger Rights
1
0 22 27 26 0 0 76
Improving Airport Operations and
Passenger Screening 0 475 644 653 2 2 1,775
Less: Funds Sourced From
Existing Departmental Resources 0 -10 -10 -10 0 0 -31
Faster Services for Veterans 0 24 38 41 28 26 157
Improving Canada.ca and 1 800
O-Canada 0 6 5 4 2 0 18
Old Age Security IT Modernization 0 11 30 18 17 17 93
Ensuring the Integrity of
Emergency COVID-19 Benets 54 0 0 0 0 0 54
6.3. A Fair Tax System 0 -155 -1,455 -1,615 -4,360
-4,000 -11,585
Ensuring the Wealthiest Canadians
Pay Their Fair Share 0 -150 -625 -695 -735 -745 -2,950
International Tax Reform – Pillar
Two (Global Minimum Tax) 0 0 0 0 -2,765 -2,365 -5,130
A Tax on Share Buybacks 0 -35 -515 -605 -640 -680 -2,475
Less: Funds Previously
Provisioned in the Fiscal
Framework 0 30 440 520 550 580 2,120
Fair Taxation of Dividends
Received by Financial Institutions 0 0 -895 -980 -920 -940 -3,735
Less: Funds Previously
Provisioned in the Fiscal
Framework 0 0 140 145 150 150 585
Eective Government and a Fair Tax System 193
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Additional Investments –
Eective Government and a Fair
Tax System 9 662 423 -148 103 -303 746
2026 Census of Population 0 72 82 185 481 102 923
Less: Funds Sourced From
Existing Departmental Resources 0 0 0 -23 -23 -23 -68
Funding proposed for StatCan for the 2026 Census of Population.
2026 Census of Agriculture 0 9 11 11 17 9 57
Funding proposed for StatCan for the 2026 Census of Agriculture.
Increasing the Air Travellers
Security Charge (ATSC) 0 0 -279 -313 -323 -333 -1,248
Budget 2023 proposes to increase ATSC rates, which will support the nancing of air security costs.
Laboratories Canada Program
Operations 0 30 30 0 0 0 59
Funding proposed for PSPC to manage the renewal of key federal science and technology infrastructure as
part of the Laboratories Canada program.
Supporting the Government's
Transition to Cloud 0 3 3 0 0 0 6
Funding proposed to TBS to guide departments on the transition to cloud technology.
Oce of the Commissioner of
Lobbying of Canada 0 0 0 0 0 0 2
Funding proposed for the OCL to continue to fulll its mandate.
Maintaining Capacity for the
Canadian Intergovernmental
Conference Secretariat 0 2 2 2 0 0 5
Less: Costs to be Recovered 0 0 0 0 0 0 -1
Funding proposed for CICS to continue to deliver on its mandate.
Improving Procurement
Opportunities for Canadian
Businesses 0 22 29 29 0 0 80
Less: Funds Sourced From
Existing Departmental Resources 0 -3 -3 -3 0 0 -9
Funding proposed for PSPC to maintain the government’s electronic procurement platform.
Improving the Government's Pay
Administration 0 52 0 0 0 0 52
Funding proposed for TBS to ensure there is sucient capacity to oversee human resources, pay, and
pension matters. Funding proposed for SSC to continue work on a potential next-generation pay solution.
Improving Technical Support to
Access Online Services 0 16 14
0 0 0 30
Funding proposed for ESDC to maintain service levels at the Registration and Authentication Call Centre,
which provides support to Canadians having technical challenges with their My Service Canada Account.
Ensuring Timely Delivery of Social
Insurance Numbers 0 6 5 0 0 0 12
Funding proposed for ESDC to maintain Social Insurance Number-related services, including call centre and
processing capacity.
194 Chapter 6
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Improved Information Sharing
About Deceased Beneciaries 0 5 5 0 0 0 10
Less: Funds Sourced From
Existing Departmental Resources 0 0 0 0 0 0 -1
Funding proposed for ESDC to help provinces improve their death information sharing processes and to
address barriers to timely death notication processing within the federal government.
Protecting the Privacy of
Canadians 0 5 7 4 3 2 21
Less: Funds Sourced From
Existing Departmental Resources 0 -2 -4 -4 -3 -2 -15
Funding proposed for the OPC to undertake more in-depth investigations of privacy breaches across
public and private organizations, to improve response rates to privacy complaints from Canadians and
operationalize new processes required to implement the Consumer Privacy Protection Act.
Developing a Tobacco Cost
Recovery Framework 0 2 2 2 0 0 7
Less: Funds Sourced From
Existing Departmental Resources 0 -2 -2 -2 0 0 -7
Funding for HC to develop a cost recovery framework that would require tobacco manufacturers to
contribute to the cost of federal public health investments in tobacco control.
FINTRAC Funding -2 -3 -4 -6 -6 -5 -27
Proposed adjustments to FINTRAC appropriations due to a cancelled headquarters relocation.
Defending the Canadian Softwood
Lumber Industry 0 26 26 0 0 0 51
Funding proposed for GAC to continue supporting the Canadian response to U.S. softwood lumber duties
and eorts towards a softwood lumber agreement.
Creative Export Strategy (Trade
Promotion) 0 2 2 0 0 0 5
Funding proposed for GAC to continue trade promotion activities under the Creative Export Strategy.
Renewing Pay System Resources 0 517 521 0 0 0 1,038
Funding proposed for PSPC to maintain pay system resources as the government continues its work to
resolve public service pay issues.
GAC Adjustments for Non-
Discretionary Cost Fluctuations 11 26 27 26 26 26 141
Funding proposed for GAC to compensate for non-discretionary cost increases, such as changes in exchange
rates and ination, which aect missions abroad.
GST/HST Treatment of Payment
Card Clearing Services 0 -195 0 0 0 0 -195
Budget 2023 proposes to amend the Goods and Services Tax/Harmonized Sales Tax (GST/HST) denition
of “nancial service” to clarify that payment card clearing services rendered by a payment card network
operator are not included in the denition.
Strengthening the
Intergenerational Business Transfer
Framework 0 -50 -215 -225
-245 -260 -995
Budget 2023 announces the government’s intention to release for consultation draft legislative amendments
to facilitate genuine intergenerational business transfers while protecting the integrity of the tax system.
Eective Government and a Fair Tax System 195
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Total
Retirement Compensation
Arrangements 0 23 60 60 60 60 263
Budget 2023 proposes that the CRA make refunds to certain retirement compensation arrangements for
previously remitted refundable taxes related to premiums for securing retirement benets via a letter of
credit, and to exempt those premiums from refundable tax going forward.
Alcohol Excise Duty 0 100 105 110 115 120 550
Alcohol excise duties are automatically indexed to CPI ination at the start of each scal year. This proposal
temporarily caps the ination adjustment for excise duties on all alcoholic products at 2 per cent for one
year only as of April 1, 2023.
Chapter 6 – Net Fiscal Impact -97 -2,914 -1,529 -2,441 -7,310 -7,160 -21,452
Note: Numbers may not add due to rounding. A glossary of abbreviations used in this table can be found at the
end of Annex 1.
1
Announced March 14, 2023.
Details of Economic and Fiscal Projections 197
Annex 1
Details of Economic and Fiscal Projections
Economic Projections
The average of private sector forecasts has been used as the basis for economic
and scal planning since 1994. This helps ensure objectivity and transparency,
and introduces an element of independence into the government’s economic
and scal forecast. The economic forecast presented in this section is based on
a survey conducted in February 2023. The survey average has been adjusted to
incorporate the actual results of the National Accounts for the fourth quarter of
2022 and the historical revisions released on February 28, 2023.
The February survey includes the views of 13 private sector economists:
‒ BMO Capital Markets,
‒ Caisse de dépôt et placement du Québec,
‒ CIBC World Markets,
‒ The Conference Board of Canada,
‒ Desjardins,
‒ IHS Markit,
‒ Industrial Alliance Insurance and Financial Services Inc.,
‒ Laurentian Bank Securities,
‒ National Bank Financial Markets,
‒ Royal Bank of Canada,
‒ Scotiabank,
‒ TD Bank Financial Group, and
‒ The University of Toronto (Policy and Economic Analysis Program).
Since the survey was conducted in early February, developments in nancial
markets have raised the odds of a more pronounced slowdown in the global
economy. However, outcomes that are better or worse than the survey are both
plausible. The macroeconomic inputs of the February 2023 survey continue to
provide a reasonable basis for scal planning. To facilitate prudent economic
and scal planning, the Department of Finance has developed two scenarios
that consider faster or slower growth tracks relative to the February survey
(see below for details).
198 Annex 1
Private sector economists expect Canada’s economy to slow more than was
projected in the 2022 Fall Economic Statement (FES 2022) (Table A1.1). Real gross
domestic product (GDP) growth is projected to slow from a strong 3.4 per cent
in 2022 (slightly better than the 3.2 per cent expected in FES 2022) to 0.3 per
cent in 2023, before rebounding to 1.5 per cent in 2024 (previously 0.7 per cent
and 1.9 per cent, respectively). Overall, the revisions leave the level of real GDP
about 0.6 per cent lower by 2024 compared to FES 2022. Annual real GDP growth
is expected to strengthen to about 2 per cent on average for the rest of the
forecast horizon, reecting a return to trend for long-run growth rates.
Comparisons of the February survey average to real GDP growth forecasts from
other institutions can be found in Table A1.2.
With the full force of monetary tightening yet to be felt, the survey average
points to a shallow recession this year with a peak-to-trough decline in real
GDP of 0.4 per cent. This would represent a very mild downturn compared to
the peak-to-trough decline of 4.4 per cent in the 2008-09 recession, and even
to the 1.6 per cent decline in the downside scenario considered in FES 2022.
Consistent with the expected slowdown in real GDP growth, Canada’s
unemployment rate is expected to rise from near record-low levels to a peak
of 6.3 per cent by the end of 2023. On an annual basis, the unemployment
rate is expected to increase from 5.3 per cent in 2022 to a still low 5.8 per cent
in 2023 and 6.2 per cent in 2024 before gradually declining to 5.7 per cent by
2026, broadly in line with FES 2022 and reecting the resilience of the Canadian
labour market.
The forecast for short-term interest rates in Canada was revised up by
0.4 percentage points, on average per year, compared to FES 2022.
The February survey average for short-term interest rates is consistent with the
Bank of Canada’s benchmark rate remaining at 4.5 per cent until the fall of this
year, before gradually declining to below 3 per cent by the end of 2024.
Consistent with recent trends, private sector economists expect Consumer Price
Index (CPI) ination to fall below 3 per cent in the third quarter of 2023 and to
reach about 2 per cent, the Bank of Canada’s target, in the second quarter of
2024. On an annual basis, CPI ination is expected to ease from 6.8 per cent
in 2022 to 3.5 per cent in 2023 and to normalize to around 2 per cent over the
remainder of the forecast horizon, the same as in FES 2022 and consistent with
the average rate of ination in Canada over the last 30 years.
After surging following Russia’s illegal invasion of Ukraine, commodity prices
fell sharply in the second half of 2022. The negative impact on GDP ination
(the broadest measure of economy-wide price ination) in the last two
quarters of 2022 was much larger than expected by private sector economists
in FES 2022. As a result, GDP ination was 7.3 per cent in 2022, well below the
8.2 per cent expected in FES 2022.
Details of Economic and Fiscal Projections 199
Commodity prices are also expected to remain lower in future years.
The February 2023 survey expects crude oil prices to decline from an average
of US$94 per barrel in 2022 to US$81 per barrel in both 2023 and 2024, below
the FES 2022 outlook. As a result, GDP ination is also revised down to 0.6 per
cent in 2023, compared to 1.8 per cent in FES 2022. Further ahead, GDP ination
is expected to remain broadly in line with FES 2022. The federal government is
closely monitoring current uctuations in the price of oil.
Together, the downward revisions to GDP ination and, to a lesser extent,
real GDP have weighed considerably on nominal GDP projections. On an annual
basis, nominal GDP increased by 11.0 per cent in 2022 (below the 11.6 per cent
projected in FES 2022) and is projected to slow to 0.9 per cent in 2023
(previously 2.6 per cent). As a result, the level of nominal GDP (the broadest
measure of the tax base) is expected to be $60 billion lower, on average per
year, compared to the private sector economists’ projections in FES 2022. It is
also $16 billion lower, on average per year, compared to the downside scenario
considered in FES 2022.
As the broadest measure of the tax base, the downward revision to nominal
GDP is having an impact on tax receipts and the government revenue outlook.
Slowing growth in nominal GDP in 2023 will push up the debt-to-GDP ratio in
2023-24 before it continues trending down (see below for details).
200 Annex 1
Table A1.1
Average Private Sector Forecasts
Per cent, unless otherwise indicated
2022 2023 2024 2025 2026 2027
2022-
2027
Real GDP growth
1
2022 Fall Economic Statement
3.2 0.7 1.9 2.3 2.1 1.9 2.0
Budget 2023
3.4 0.3 1.5 2.3 2.2 1.9 2.0
GDP ination
1
2022 Fall Economic Statement
8.2 1.8 1.8 1.9 1.9 1.9 2.9
Budget 2023
7.3 0.6 2.0 1.9 1.9 1.9 2.6
Nominal GDP growth
1
2022 Fall Economic Statement
11.6 2.6 3.7 4.2 4.1 3.9 5.0
Budget 2023
11.0 0.9 3.6 4.3 4.1 3.9 4.6
Nominal GDP level (billions of
dollars)
1
2022 Fall Economic Statement
2,801 2,873 2,979 3,105 3,233 3,358
Budget 2023
2,785 2,810 2,910 3,037 3,162 3,285
Dierence between FES 2022
and Budget 2023
-16 -63 -69 -69 -70 -73 -60
3-month treasury bill rate
2022 Fall Economic Statement
2.2 3.6 2.8 2.3 2.1 2.1 2.5
Budget 2023
2.4 4.4 3.3 2.6 2.4 2.4 2.9
10-year government bond rate
2022 Fall Economic Statement
2.8 3.1 2.8 2.8 2.9 3.0 2.9
Budget 2023
2.8 3.0 2.9 3.0 3.1 3.1 3.0
Exchange rate (US cents/C$)
2022 Fall Economic Statement
77.9 77.1 77.9 78.8 79.2 79.7 78.4
Budget 2023
76.9 74.7 76.8 78.3 79.0 79.3 77.5
Unemployment rate
2022 Fall Economic Statement
5.4 6.1 6.2 6.0 5.8 5.7 5.9
Budget 2023
5.3 5.8 6.2 6.0 5.7 5.7 5.8
Consumer Price Index ination
2022 Fall Economic Statement 6.8 3.5 2.1 2.1 2.1 2.1 3.1
Budget 2023 6.8 3.5 2.1 2.1 2.1 2.1 3.1
U.S. real GDP growth
2022 Fall Economic Statement
1.7 0.6 1.7 2.2 2.1 2.0 1.7
Budget 2023
2.1 0.8 1.4 2.1 2.0 1.9 1.7
West Texas Intermediate crude oil
price ($US per barrel)
2022 Fall Economic Statement
97 88 85 82 81 81 86
Budget 2023
94 81 81 79 77 78 82
Note: Forecast averages may not equal average of years due to rounding. Numbers may not add due to rounding.
1
Previously published gures have been restated to reect the historical revisions in the Canadian System of
National Accounts.
Sources: Statistics Canada; for the 2022 Fall Economic Statement, Department of Finance Canada September 2022
survey of private sector economists; for Budget 2023, Department of Finance Canada February 2023 survey of
private sector economists, which has been adjusted to incorporate the actual results of the National Accounts for
the fourth quarter of 2022 released on February 28, 2023.
Details of Economic and Fiscal Projections 201
Table A1.2
Comparison of Real GDP Growth Forecasts
Per cent
2022 2023 2024 2025 2026 2027
Budget 2023
3.4 0.3 1.5 2.3 2.2 1.9
Organisation for Economic Co-operation and
Development (OECD)
3.4 1.1 1.4 .. .. ..
Parliamentary Budget Ocer (PBO)
3.6 1.0 1.6 2.2 2.1 2.0
International Monetary Fund (IMF)
3.5 1.5 1.5 .. .. ..
Bank of Canada
3.6 1.0 1.8 .. .. ..
Sources: Statistics Canada; for Budget 2023, see Table A1.1; OECD Economic Outlook, Interim Report March
2023; PBO, Economic and Fiscal Outlook – March 2023; IMF, World Economic Outlook Update – January 2023,
Bank of Canada, Monetary Policy Report – January 2023.
202 Annex 1
Changes to Fiscal Projections since FES 2022
The scal outlook presented in this budget is centered on the economic
projections provided by the February 2023 survey of private sector economists.
The tables that follow present changes to the scal outlook since FES 2022,
including the impact of government policy actions taken since FES 2022,
measures in this budget, and year-to-date nancial results.
Changes to the Fiscal Outlook since FES 2022
Table A1.3
Economic and Fiscal Developments, Policy Actions and Measures
billions of dollars
Projection
2022– 2023– 2024– 2025– 2026– 2027–
2023 2024 2025 2026 2027 2028
Budgetary balance – 2022 Fall
Economic Statement (FES 2022)
-36.4 -30.6 -25.4 -14.5 -3.4 4.5
Economic and scal developments
since FES 2022
6.4 -4.7 -4.9 -5.1 -7.5 -10.3
Budgetary balance before policy
actions and measures
-30.0 -35.3 -30.3 -19.5 -10.9 -5.8
Policy actions since FES 2022 -5.4 0.7 3.2 2.6 1.7 0.1
Budget 2023 measures (by
chapter)
1. Making Life More Aordable and
Supporting the Middle Class
-2.5 -0.8 -0.3 -0.5 -0.5 -0.6
2. Investing in Public Health Care
and Aordable Dental Care
-2.0 -3.6 -4.6 -6.4 -6.8 -7.9
3. A Made in Canada Plan:
Aordable Energy, Good Jobs, and a
Growing Clean Economy
0.0 -1.2 -3.1 -4.4 -5.9 -6.3
4. Advancing Reconciliation and
Building a Canada That Works for
Everyone
-3.1 -2.5 -1.3 -1.0 -0.6 -0.6
5. Canada’s Leadership in the World -0.1 -0.2 -0.1 -0.1 -0.1 -0.1
6a. Eective Government and
Improving Services to Canadians
0.1 2.8 0.1 0.8 2.9 3.2
6b. A Fair Tax System 0.0 0.2 1.5 1.6 4.4 4.0
Total – Actions Since FES 2022 and
Budget 2023 Measures
-13.0 -4.8 -4.7 -7.3 -4.9 -8.3
Budgetary Balance -43.0 -40.1 -35.0 -26.8 -15.8 -14.0
Budgetary Balance (per cent of GDP) -1.5 -1.4 -1.2 -0.9 -0.5 -0.4
Federal debt (per cent of GDP) 42.4 43.5 43.2 42.2 41.1 39.9
A negative number implies a deterioration in the budgetary balance (lower revenue or higher expenses). A positive
number implies an improvement in the budgetary balance (higher revenue or lower expenses).
Details of Economic and Fiscal Projections 203
Economic and Fiscal Developments Since FES 2022
Table A1.4
Economic and Fiscal Development Since FES 2022
billions of dollars
Projection
2022– 2023– 2024– 2025– 2026– 2027–
2023 2024 2025 2026 2027 2028
Economic and scal
developments by component
1
Change in budgetary revenues
(1.1) Income taxes -5.9 -3.7 -3.3 -5.4 -4.5 -5.9
(1.2) Excise taxes/duties -0.2 -0.9 -1.0 -1.0 -1.2 -1.3
(1.3) Proceeds from the pollution
pricing framework
-0.1 0.3 0.5 0.6 0.7 0.8
(1.4) Employment insurance
premiums
0.1 0.0 -0.8 -1.0 -0.9 -0.9
(1.5) Other revenues
2
-0.1 -1.9 0.3 0.6 0.6 1.1
(1) Total budgetary revenues
-6.2 -6.2 -4.3 -6.2 -5.3 -6.2
Change in program expenses
(2.1) Major transfers to persons 5.7 1.8 1.1 0.8 0.7 0.8
(2.2) Major transfers to other levels
of government
0.0 -0.3 0.4 0.9 0.9 0.8
(2.3) Proceeds from the pollution
pricing framework returned
0.8 0.0 -1.6 -0.6 -0.7 -0.8
(2.4) Direct program expenses
5.8 0.9 2.6 3.2 0.6 0.4
(2) Total program expenses,
excluding net actuarial losses
12.3 2.4 2.5 4.3 1.5 1.2
(3) Public debt charges 0.3 -0.5 -3.4 -3.8 -4.3 -5.3
(4) Net actuarial losses (gains)
0.0 -0.4 0.4 0.5 0.6 0.0
(5) Total economic and scal
developments
6.4 -4.7 -4.9 -5.1 -7.5 -10.3
1
A negative number implies a deterioration in the budgetary balance (lower revenues or higher spending). A positive
number implies an improvement in the budgetary balance (higher revenues or lower spending).
2
Includes Pillar One tax, and Underused Housing Tax in this table only for presentation purposes.
‒ The outlook for budgetary revenues has been revised down relative to
FES 2022 by $5.7 billion on average, reecting lower nominal GDP projections
and the associated implications on the projections of corporate protability
and personal income (particularly slower growth in employment and wages).
As a result, income tax revenues are expected to be lower by approximately
$4.8 billion on average over the forecast horizon.
‒ The outlook for excise taxes/duties has been revised down to reect lower-
than-expected monthly results this year as well as the impact of a weaker
economy and higher borrowing costs on projected taxable consumption.
204 Annex 1
‒ Proceeds from the federal pollution pricing framework that arise from
the provinces and territories that are a part of the federal backstop are
projected to be higher starting July 1, 2023 because of the addition of
Nova Scotia, Prince Edward Island, and Newfoundland and Labrador to
the framework for the fuel charge. Direct proceeds will continue to be fully
returned in the provinces and territories where they are generated.
‒ Employment insurance premium revenues are projected to be slightly
higher in 2022-23 due to better-than-expected labour market outcomes,
then lower starting in 2024-25 as a result of a lower premium rate required
relative to FES 2022 under the existing break-even rate mechanism.
‒ Other revenues have been revised down in the near-term largely because
of a downward revision to expected earnings of the Bank of Canada, owing
to higher deposit interest rates and deposit balances on which the Bank
pays interest. This is oset over the remainder of the forecast horizon due
to greater projected interest revenue on lending to Crown corporations, tax
debt, and net foreign exchange.
The outlook for program expenses has been revised down relative to FES 2022,
reecting lower major transfers to persons, major transfers to other levels of
government, and direct program spending.
‒ With respect to major transfers to persons, the decrease in 2022-23 reects
lower-than-expected monthly results for Employment Insurance (EI)
benets and children’s benets, as well as a $3.2 billion increase in expected
repayments from benet overpayments of COVID-19 support for workers.
‒ In later years, lower expected expenses reect slightly lower projected
elderly benets, owing to revisions to the projected number of
beneciaries, which is oset in part by higher projected CPI ination, to
which the benets are indexed; lower projected EI benets resulting from
lower projected unemployment and earnings, consistent with the revised
outlook; and the carry-forward of lower-than-expected 2022-23 results to
date for children’s benets.
‒ Projected major transfers to other levels of government have increased
slightly in 2023-24, but are lower across the remainder of the outlook,
reecting lower nominal GDP growth to which transfer programs such as
Equalization are indexed. The outlook for Territorial Formula Financing has
been revised downward slightly due to stronger-than-forecasted scal
capacity in all three territories. These decreases are partially oset by a
slight decline in recoveries with respect to the Quebec Abatement.
‒ Proceeds from the pollution pricing framework returned are lower in
2022-23 and then higher across the horizon, reecting revised timing of
returning pollution pricing fuel charge proceeds to small and medium-
sized businesses and Indigenous groups in the jurisdiction where they are
generated. Moreover, the addition of Nova Scotia, Prince Edward Island,
and Newfoundland and Labrador to the framework for the fuel charge,
as discussed above, results in incremental proceeds to be returned.
Details of Economic and Fiscal Projections 205
‒ The outlook for direct program spending has been revised down across the
forecast horizon relative to the FES 2022 forecast.
o Lower expenses in 2022-23 reect slower-than-anticipated spending,
notably for COVID-related procurements of vaccines, therapeutics,
and rapid testing kits, in addition to revised provisions for disaster
assistance. Partially osetting lower spending is an increase in
provisions for contingent liabilities and allowances.
o Across the horizon, lower expenses reect revised timing and
spending against previously announced measures. In the later years,
lower expenses are expected due to the impact of lower projected
incomes on refundable corporate investment tax credits and bad debt
expenses on tax receivables, reecting the weaker revenue outlook
relative to FES 2022 discussed above.
Public debt charges are expected to decrease slightly in 2022-23 relative
to FES 2022 projections to $34.5 billion due to lower near-term borrowing
requirements, partially oset by increases in short- and long-term interest rates
as forecast by private sector economists. Over the remainder of the forecast
horizon, higher projected short- and long-term interest rates and higher
borrowing requirements are expected to progressively increase public debt
charges relative to FES 2022 by an incremental $0.5 billion in 2023-24 rising to
$5.3 billion by 2027-28.
Net actuarial losses, which represent the amortization of changes in the value
of the government’s accrued obligations for pensions and other employee
future benets and pension fund assets, are expected to be higher in 2023-24
and lower in subsequent years. The increase in 2023-24 is largely a result of
lower expected long-term interest rates used to measure the present value
of the obligations at the end of 2022-23, which reduces actuarial gains to be
amortized starting in 2023-24. Thereafter, net actuarial losses are lower than
forecast in FES 2022, due to higher projected long-term interest rates.
206 Annex 1
Summary Statement of Transactions
Table A1.5
Summary Statement of Transactions
billions of dollars
Projection
2021–
2022– 2023– 2024– 2025– 2026– 2027–
2022 2023 2024 2025 2026 2027 2028
Budgetary revenues 413.3 437.3 456.8 478.5 498.4 521.8 542.8
Program expenses,
excluding net
actuarial losses
468.8 435.9 446.6 463.3 475.9 489.2 505.4
Public debt charges 24.5 34.5 43.9 46.0 46.6 48.3 50.3
Total expenses,
excluding net
actuarial losses
493.3 470.4 490.5 509.3 522.5 537.6 555.7
Budgetary balance
before net actuarial
losses
-80.0 -33.2 -33.7 -30.8 -24.1 -15.7 -12.9
Net actuarial losses -10.2 -9.8 -6.4 -4.2 -2.8 0.0 -1.1
Budgetary balance -90.2 -43.0 -40.1 -35.0 -26.8 -15.8 -14.0
Financial Position
Total liabilities 1,838.7 1,870.0 1,912.0 1,978.5 2,037.1 2,084.3 2,127.6
Financial assets 600.3 578.9 578.4 606.9 635.5 665.5 694.2
Net debt 1,238.4 1,291.0 1,333.6 1,371.6 1,401.7 1,418.8 1,433.4
Non-nancial assets 103.9 110.3 112.7 115.8 119.0 120.4 121.0
Federal debt
1,2
1,134.5 1,180.7 1,220.8 1,255.8 1,282.7 1,298.4 1,312.5
Per cent of GDP
Budgetary revenues 16.5 15.7 16.3 16.4 16.4 16.5 16.5
Program expenses,
excluding net
actuarial losses
18.7 15.7 15.9 15.9 15.7 15.5 15.4
Public debt charges 1.0 1.2 1.6 1.6 1.5 1.5 1.5
Budgetary balance -3.6 -1.5 -1.4 -1.2 -0.9 -0.5 -0.4
Federal debt 45.2 42.4 43.5 43.2 42.2 41.1 39.9
1
The opening nancial position for 2022-23 has been adjusted from the closing position shown in the Public Accounts
of Canada 2022 to reect the impact of two new accounting standards for nancial instruments and asset retirement
obligations that came into eect in 2022-23. For further details regarding these adjustments, see Note 8 in The Fiscal
Monitor – August 2022, available on the Department of Finance website.
2
The projected level of federal debt for 2022-23 includes an estimate of other comprehensive income of $1.1 billion
for enterprise Crown corporations and other government business enterprises, and an estimate of $2.9 billion for net
remeasurement gains on swap agreements and foreign exchange forward agreements.
Details of Economic and Fiscal Projections 207
Outlook for Budgetary Revenues
Table A1.6
The Revenue Outlook
billions of dollars
Projection
2021–
2022
2022–
2023
2023–
2024
2024–
2025
2025–
2026
2026–
2027
2027–
2028
Income tax revenues
Personal income tax
198.4 206.8 213.7 224.5 235.7 246.5 257.9
Corporate income tax
78.8 88.0 85.5 86.3 87.8 90.1 93.1
Non-resident income tax
10.8 13.6 13.7 13.1 12.7 13.0 13.6
Total
288.0 308.3 312.9 323.9 336.3 349.6 364.6
Excise tax and duty revenues
Goods and Services Tax
46.2 45.4 51.4 53.5 55.5 57.4 59.4
Customs import duties
5.2 6.2 6.5 6.9 7.1 7.4 7.7
Other excise taxes/duties
11.3 11.4 11.9 12.4 12.5 12.6 12.7
Total
62.7 63.0 69.9 72.8 75.1 77.4 79.8
Other taxes
0.0 0.2 0.9 0.9 1.0 3.8 3.4
Total tax revenues
350.7 371.6 383.7 397.6 412.4 430.8 447.8
Proceeds from the pollution pricing
framework
6.3 7.7 10.1 12.3 14.0 15.7 17.1
Employment Insurance premium
revenues
23.9 26.8 28.2 29.0 29.9 31.0 32.1
Other revenues
Enterprise Crown corporations
12.8 5.9 5.6 10.1 12.4 13.8 14.3
Other programs
18.7 24.3 26.6 26.7 26.4 27.1 27.9
Net foreign exchange
0.9 1.0 2.5 3.0 3.3 3.4 3.5
Total
32.4 31.3 34.7 39.7 42.1 44.3 45.8
Total budgetary revenues
413.3 437.3 456.8 478.5 498.4 521.8 542.8
Per cent of GDP
Total tax revenues
14.0 13.3 13.7 13.7 13.6 13.6 13.6
Proceeds from the pollution pricing
framework
0.3 0.3 0.4 0.4 0.5 0.5 0.5
Employment Insurance premium
revenues
1.0 1.0 1.0 1.0 1.0 1.0 1.0
Other revenues
1.3 1.1 1.2 1.4 1.4 1.4 1.4
Total budgetary revenues
16.5 15.7 16.3 16.4 16.4 16.5 16.5
Note: Totals may not add due to rounding.
Table A1.6 above provides an overview of projected budgetary revenues by
major component.
208 Annex 1
Income Tax Revenues
Personal income tax revenues are projected to increase by 4.2 per cent to
$206.8 billion in 2022-23, reecting year-to-date results. After an expected
slowing in 2023-24, personal income tax revenue growth is projected to average
4.8 per cent, reecting steady growth in employment and investment income.
Corporate income tax revenues are projected to increase by 11.7 per cent, to
$88 billion in 2022-23, based on year-to-date growth that has been propelled
by broad-based gains across industry sectors. Beyond this, corporate income
tax revenues are expected to retreat by 2.9 per cent in 2023-24 due to the
projected slowdown in economic growth and then grow at an average rate of
2.2 per cent per year for the remainder of the forecast horizon.
Income taxes paid by non-residents on Canadian-sourced income, notably
dividends and interest payments, are expected to grow by 25.7 per cent to
$13.6 billion in 2022-23. Non-resident income tax revenue growth is then
expected to be roughly at.
Excise Tax and Duty Revenues
Goods and Services Tax (GST) revenues are forecast to fall 1.6 per cent
to $45.4 billion in 2022-23. Over the remainder of the forecast period,
GST revenues are expected to gain on average 5.5 per cent per year, in line with
the outlook for taxable consumption trends.
Customs and import duties are projected to increase 18.8 per cent in 2022-23,
based on year-to-date results that have been driven by the repeal of remission
of duties on personal protective equipment and other medical goods, and
strong growth in imports. Over the remainder of the forecast horizon, projected
growth averages 4.4 per cent.
Other excise taxes and duties are expected to increase to $11.4 billion in
2022-23, or 1.1 per cent, reecting year-to-date data. Revenues from these
taxes are then projected to grow to $12.7 billion by 2027-28. This primarily
reects the outlook for the consumption of motive fuels and alcohol products.
Other taxes include revenues from the Underused Housing Tax announced in
the 2021 Economic and Fiscal Update and from the two-pillar international tax
reform plan agreed by 138 members of the OECD/G20 Inclusive Framework on
Base Erosion and Prot Shifting. Revenues from these taxes are projected to
grow to $3.4 billion in 2027-28, primarily reecting the projected new revenues
from Pillar Two of the international tax reform.
Details of Economic and Fiscal Projections 209
Proceeds from the Pollution Pricing Framework
Proceeds from the pollution pricing framework are forecast to increase primarily
due to the increase in the price on pollution.
1
Moreover, starting July 1, 2023,
the implementation of the federal fuel charge in Nova Scotia, Prince Edward
Island, and Newfoundland and Labrador will contribute to higher pollution
pricing proceeds. Direct proceeds will continue to be fully returned in the
provinces or territories where they are generated.
Employment Insurance Premium Revenues
EI premium revenues are projected to grow at 12.3 per cent in 2022-23 due
to continued strength in the labour market. For the remainder of the forecast,
EI premium revenues are projected to grow at an average of 3.7 per cent,
reecting steady earnings growth (see Box A1.1 for details of the outlook for
the EI Operating Account). Holding steady at $1.63 in 2024, the EI premium
rate will be 15 cents lower than it was between 2013 and 2016 ($1.88). The EI
premium rate reached its lowest levels in the last twenty-ve years in 2019,
2020, and 2021 ($1.58).
1 The trajectory for the price on pollution reects annual increases of $15/tonne, from $50/tonne, beginning
in 2023-24, as set out in the Update to the Pan-Canadian Approach to Carbon Pollution Pricing 2023-2030,
released in August 2021.
210 Annex 1
Box A1.1 Employment Insurance Operating Account
billions of dollars
2021-
2022
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
EI premium revenues
23.9 26.8 28.2 29.0 29.9 31.0 32.1
EI benets
1
38.9 22.6 24.2 25.5 26.2 26.6 27.3
EI administration and
other expenses
2
2.6 2.6 2.1 2.0 2.0 2.0 2.0
2021
3
2022 2023 2024 2025 2026 (…) 2030
EI Operating Account
annual balance
-24.6 1.9 2.8 2.0 2.0 2.9 4.0
EI Operating Account
cumulative balance
-25.9 -24.0 -21.1 -19.2 -17.2 -14.2
0.7
4
Projected premium rate
(per $100 of insurable
earnings)
1.58 1.58 1.63 1.63 1.63 1.63 1.63
1
EI benets include regular EI benets, sickness, maternity, parental, compassionate care, shing and work-sharing
benets, and employment benets and support measures. EI benets exclude EI-Emergency Response Benet
costs in line with the government’s commitment to credit the EI Operating Account.
2
The remaining EI costs relate mainly to administration and are included in direct program expenses.
3
Values for 2021 are actual data. Values for 2022 and future years are a projection.
4
The EI Operating Account cumulative balance does not reach exactly zero at the end of the seven-year period as
projected EI rates are rounded to the nearest whole cent per $100 of insurable earnings, in accordance with the
Employment Insurance Act.
The Employment Insurance (EI) Operating Account operates within the
Consolidated Revenue Fund. As such, EI-related revenues and expenses that
are credited and charged to the Account, respectively, in accordance with the
Employment Insurance Act, are consolidated with those of the government, and
impact the budgetary balance. For consistency with the EI premium rate, which
is set on a calendar-year basis with the objective of having the Account break
even over time, the annual and cumulative balances of the Account are also
presented on a calendar-year basis.
The EI Operating Account is expected to record annual surpluses throughout
the forecast in order to reach cumulative balance in 2030 in line with the
break-even rate-setting mechanism that started with the setting of the 2017
premium rate.
Details of Economic and Fiscal Projections 211
Other Revenues
Other revenues consist of three broad components: net income from enterprise
Crown corporations; other program revenues from returns on investments,
proceeds from the sales of goods and services, and other miscellaneous
revenues; and net foreign exchange revenues.
- Enterprise Crown corporation revenues are projected to be lower
temporarily in 2022-23 and 2023-24, largely reecting the Bank of
Canada’s forecast of net losses, as interest expense paid on deposits held
by the Bank at variable interest rates is growing faster than revenues on
the Bank’s xed-rate investments in the rising interest rate environment.
Beyond this, growth is in line with the outlook of the Bank and other
enterprise Crown corporation prots, as well as increased interest
revenues from lending to enterprise Crown corporations.
- Other program revenues are aected by consolidated Crown corporation
revenues, interest rates, ination, and exchange rate movements (which
aect the Canadian-dollar value of foreign-denominated assets). These
revenues are projected to increase by an average of 19.1 per cent in
2022-23 and 2023-24 primarily due to an increase in interest and penalty
revenue on tax debt as a result of higher interest rates, additional
spectrum auction revenue, and the rebound in sales of goods and
services (e.g. fees for passports and visas, VIA Rail revenue). Over the
remainder of the forecast horizon, other program revenue is projected to
continue to grow by 1.3 per cent on average.
- Net foreign exchange revenues, which consist mainly of returns on
Canada’s ocial international reserves held in the Exchange Fund
Account, are volatile and sensitive to uctuations in foreign exchange
rates and foreign interest rates. Assets in the Exchange Fund Account are
mainly invested in debt securities of sovereigns and their agencies. They
are held to aid in the control and protection of the external value of the
Canadian dollar and to provide a source of liquidity for the government,
if required. These revenues are projected to increase, as losses on sales of
securities into a rising interest rate environment ease, and higher interest
rates act on growing reserves.
212 Annex 1
Outlook for Expenses
Table A1.7
The Expense Outlook
billions of dollars
Projection
2021– 2022– 2023– 2024– 2025– 2026– 2027–
2022 2023 2024 2025 2026 2027 2028
Major transfers to persons
Elderly benets 60.8 69.1 75.9 81.2 86.3 91.4 96.3
Employment Insurance benets
1
38.9 22.6 24.2 25.5 26.2 26.6 27.3
COVID-19 Income Support for
Workers
2
15.6 -3.0 0.0 0.0 0.0 0.0 0.0
Canada Child Benet
3
26.2 24.5 25.6 27.4 28.5 29.3 30.0
Total 141.5 113.3 125.7 134.1 141.1 147.3 153.6
Major transfers to other levels
of government
Canada Health Transfer
4
45.1 47.1 49.4 52.0 54.6 57.3 60.2
Canada Social Transfer 15.5 15.9 16.4 16.9 17.4 17.9 18.5
Equalization 20.9 21.9 24.0 25.2 25.9 27.0 28.1
Territorial Formula Financing 4.4 4.6 4.8 5.1 5.3 5.4 5.7
Health agreements with
provinces and territories
5
2.5 1.2 3.7 3.7 3.7 3.7 2.5
Canada-wide early learning and
child care
6
2.9 4.5 5.6 6.6 7.9 7.9 7.7
Canada Community-Building
Fund
2.3 2.3 2.4 2.4 2.5 2.5 2.6
Other scal arrangements
7
-5.3 -6.5 -6.8 -7.2 -7.5 -7.8 -8.2
Total 88.4 91.0 99.5 104.7 109.8 113.9 117.0
Proceeds from the pollution
pricing framework returned
3.8 6.9 11.2 13.5 14.0 15.8 17.1
Direct program expenses
Canada Emergency Wage
Subsidy
22.3 -0.2 0.0 0.0 0.0 0.0 0.0
Other transfer payments 88.5 93.6 86.4 90.8 91.1 91.2 94.0
Operating expenses
8
124.3 131.4 123.7 120.2 119.9 121.1 123.7
Total 235.1 224.8 210.2 211.0 211.0 212.3 217.7
Total program expenses,
excluding net actuarial losses
468.8 435.9 446.6 463.3 475.9 489.2 505.4
Public debt charges 24.5 34.5 43.9 46.0 46.6 48.3 50.3
Total expenses, excluding net
actuarial losses
493.3 470.4 490.5 509.3 522.5 537.6 555.7
Net actuarial losses (gains) 10.2 9.8 6.4 4.2 2.8 0.0 1.1
Total expenses 503.5 480.2 496.9 513.5 525.2 537.6 556.9
Per cent of GDP
Major transfers to persons 5.6 4.1 4.5 4.6 4.6 4.7 4.7
Major transfers to other levels of
government
3.5 3.3 3.5 3.6 3.6 3.6 3.6
Direct program expenses 9.4 8.1 7.5 7.3 6.9 6.7 6.6
Total program expenses,
excluding net actuarial losses
18.7 15.7 15.9 15.9 15.7 15.5 15.4
Total expenses 20.1 17.2 17.7 17.6 17.3 17.0 17.0
Details of Economic and Fiscal Projections 213
Note: Totals may not add due to rounding.
1
EI benets include regular EI benets, sickness, maternity, parental, compassionate care, shing and work-sharing
benets, and employment benets and support measures. Remaining EI costs relate mainly to administration and are
part of direct program expenses.
2
Includes the Canada Emergency Response Benet, the Canada Recovery Benet, the Canada Recovery Caregiving
Benet, the Canada Recovery Sickness Benet, and the Canada Worker Lockdown Benet.
3
Includes the Child Disability Benet.
4
Includes the one-time top-up of $2 billion in 2022-23 and 5 per cent guarantee until 2027-28.
5
Includes Home and Community Care and Mental Health and Addictions Services Agreements, and the new Tailored
Bilateral Agreements, but excludes $3 billion for long-term care, $1.7 billion for personal support worker’s wage
increases, and the Territorial Health Investment Fund which are under direct program expenses.
6
Canada-wide early learning and child care transfer payments to provinces and territories exclude funding for Indigen-
ous early learning and child care, which are included in the other transfer payments line.
7
Other scal arrangements include the Quebec Abatement (osetting amounts to reect the reduction in federal tax
collected for the Youth Allowances Recovery and Alternative Payments for Standing Programs); statutory subsidies;
payments under the Canada-Nova Scotia Arrangement on Oshore Revenues; payments for the Transfer of Hibernia
Net Prots Interest and Incidental Net Prots Interest Net Revenues to Newfoundland and Labrador; and potential
Fiscal Stabilization payments.
8
This includes capital amortization expenses.
Table A1.7, above, provides an overview of the projection for program expenses
by major component.
Major Transfers to Persons
Major transfers to persons consist of elderly benets, Employment Insurance (EI)
benets, the Canada Child Benet (CCB), and the COVID-19 income supports for
workers (2022-23 only).
Elderly benets are projected to reach $69.1 billion in 2022-23, up 13.7 per cent.
Over the forecast horizon, elderly benets are forecast to increase by 6.9 per
cent on average, annually. Growth in elderly benets is due to the increasing
population of seniors and projected consumer price ination, to which benets
are fully indexed, as well as the 10 per cent increase to Old Age Security
payments for pensioners 75 and over on an ongoing basis as of July 2022,
announced in Budget 2021.
EI benets are projected to decrease to $22.6 billion in 2022-23, largely
reecting the expiry of temporary measures to facilitate access and a lower
unemployment rate. EI benets are then expected to grow at an average annual
rate of 6.2 per cent throughout 2023-24 and 2024-25, due to the projected
deterioration in labour market conditions, before returning to an average
2.3 per cent annual growth rate for the remainder of the forecast horizon.
During the pandemic, the government provided support to Canadians through
the Canada Emergency Response Benet, Canada Recovery Benets and the
Canada Worker Lockdown Benet. These temporary programs are now closed,
with forecasted amounts in 2022-23 mainly reecting expected repayments of
benet overpayments.
CCB payments are projected to decrease 6.6 per cent to $24.5 billion in
2022-23, largely reecting the end of the COVID-19 temporary supplement
for families with young children. CCB payments are then expected to grow by
4.5 per cent in 2023-24 and 7.0 in 2024-25 due to consumer price ination, to
which benets are indexed, before returning to an average 3.1 per cent growth
over the remainder of the forecast.
214 Annex 1
Major Transfers to Other Levels of Government
Major transfers to other levels of government include the Canada Health
Transfer (CHT), the Canada Social Transfer (CST), Equalization, Territorial Formula
Financing, the Canada Community-Building Fund, health agreements with
provinces and territories, Canada-wide early learning and child care, and other
scal arrangements.
In 2022-23, these transfers are expected to increase by 2.9 per cent to
$91.0 billion, reecting the $2 billion CHT top-up as part of the government’s
ten-year federal health plan to work with provinces and territories as
announced on February 7, 2023. The immediate top-up will help to address
urgent pressures in emergency rooms, operating rooms, and pediatric hospitals
and, together with the new CHT growth guarantee of 5 per cent per year
for 5 years, will see CHT support increase from $49.4 billion in 2023-24 to
$60.2 billion in 2027-28. Compared to the outlook in FES 2022, provinces and
territories are expected to receive an additional $4.6 billion through the CHT for
the 2022-23 to 2027-28 period.
The CST is legislated to grow at 3 per cent per year. Equalization payments are
indexed to the three-year average of nominal GDP growth. Canada Community-
Building Fund payments are indexed at 2 per cent per year, with increases
applied in $100 million increments. Health agreements with provinces and
territories, which include Home and Community Care and Mental Health and
Addictions Services Agreements, and the new Tailored Bilateral Agreements will
provide $3.7 billion per year until the expiry of the home care and mental health
agreements in 2026-27 and $2.5 billion in 2027-28. Canada-wide early learning
and child care transfer payments are expected to increase from $4.5 billion in
2022-23 to $7.7 billion in 2027-28, which includes $625 million over four years,
beginning in 2023-24, for the Early Learning and Child Care Infrastructure Fund.
Proceeds from the Pollution Pricing Framework Returned
Proceeds from the pollution pricing framework returned represent the return
of all direct proceeds from the federal fuel charge and Output Based Pricing
System to the jurisdiction from which they were collected. Proceeds from the
pollution pricing framework returned are projected to be $6.9 billion in 2022-
23, increasing to $17.1 billion by 2027-28, reecting a higher price on carbon
pollution and the application of the federal fuel charge in Nova Scotia, Prince
Edward Island, and Newfoundland and Labrador beginning on July 1, 2023.
Details of Economic and Fiscal Projections 215
Direct Program Expenses
Direct program expenses consist of the Canada Emergency Wage Subsidy,
other transfer payments administered by departments, and operating expenses.
Overall, direct program expenses are projected to decrease from $224.8 billion
in 2022-23 to $210.2 billion in 2023-24 before growing to $217.7 billion in
2027-28.
Other transfer payments administered by departments are projected to reach
$93.6 billion in 2022-23, and then decline to $86.4 billion in 2023-24 before
growing at 2.1 per cent to $94.0 billion in 2027-28. The projected initial
decline in other transfer payments is due in part to the expiry of measures,
such as the end of remaining COVID-19 related rent and wage supports
including the Tourism and Hospitality Recovery Program and Local Lockdown
Program. The projected increase in other transfer payments in 2027-28 reects
Budget 2023 measures with growing proles, including incentives for clean
energy technologies, and refundable tax credits for clean fuels and clean
technology manufacturing.
Operating expenses reect the cost of doing business for more than
100 government departments, agencies, and Crown corporations.
Operating expenses are projected to reach $131.4 billion in 2022-23, and
decline to $119.9 billion in 2025-26, due in part to tapering of COVID-19 related
spending, such as for procurement of vaccines, therapeutics, and test kits.
Growth in operating expenses over the outer years of the horizon is driven in
part by wages for federal employees and capital amortization expenses, which is
oset in part by the results of expenditure reduction actions announced in
Budget 2022 and in this budget.
Public Debt Charges
Public debt charges are expected to increase from $34.5 billion in 2022-23 to
$50.3 in 2027-28 due to increases in short- and long-term interest rates as
forecast by private sector economists and higher borrowing requirements. As a
share of GDP, public debt charges are projected to rise to 1.6 per cent until
2024-25 before falling to 1.5 per cent for the remainder of the forecast horizon,
a level that is low by historical standards.
Net Actuarial Losses
Net actuarial losses, which represent changes in the value of the government’s
obligations for pensions and other employee future benets, are expected to
gradually decline over the forecast horizon, from a projected loss of $9.8 billion
in 2022-23 to $1.1 billion in 2027-28, reecting higher expected interest rates
used to measure the present value of the obligations.
216 Annex 1
Financial Source/Requirement
The nancial source / requirement measures the dierence between cash
coming into the government and cash going out. In contrast, the budgetary
balance is presented on a full accrual basis of accounting, meaning that
government revenues and expenses are recorded when they are earned or
incurred, regardless of when the cash is received or paid.
Table A1.8 provides a reconciliation of the two measures, starting with the
budgetary balance. Non-budgetary transactions shown in the table reect the
reversal of certain revenues and expenses included in the budgetary balance
that have no impact on cash ows in the year, such as the amortization of non-
nancial assets. They also include the addition of changes in asset and liability
balances that have no accrual impact in a year but do result in the inow or
outow of cash, such as the payment of accounts payable. An increase in a
liability or decrease in an asset represents a nancial source, whereas a decrease
in a liability or increase in an asset represents a nancial requirement. The sum
of the budgetary balance and changes in asset and liability balances reected
under non-budgetary transactions is equal to the government’s net source of
(+), or requirement for (-), cash.
Table A1.8
The Budgetary Balance, Non-Budgetary Transactions and Financial Source/
Requirement
billions of dollars
Projection
2021–
2022
2022–
2023
2023–
2024
2024–
2025
2025–
2026
2026–
2027
2027–
2028
Budgetary balance -90.2 -43.0 -40.1 -35.0 -26.8 -15.8 -14.0
Non-budgetary transactions
Pensions and other accounts 12.5 11.4 9.5 4.9 3.2 -0.2 0.5
Non-nancial assets -2.8 -5.0 -2.5 -3.0 -3.2 -1.4 -0.6
Loans, investments, and
advances
Enterprise Crown corporations -19.3 -6.9 -9.7 -10.6 -12.9 -15.2 -13.9
Other -4.0 -2.4 21.2 -4.8 -4.6 -4.0 -3.4
Total -23.3 -9.3 11.5 -15.4 -17.5 -19.2 -17.3
Other transactions
Accounts payable, receivable,
accruals, and allowances 33.8 -10.0 -31.6 -16.1 -9.2 -10.5 -8.4
Foreign exchange activities
and derivatives -11.4 -4.3 -9.6 -8.1 -4.2 -3.9 -3.9
Total 22.4 -14.3 -41.3 -24.2 -13.4 -14.3 -12.3
Total non-budgetary
transactions 8.8 -17.3 -22.8 -37.8 -31.0 -35.2 -29.8
Financial source (requirement) -81.4 -60.2 -62.9 -72.7 -57.8 -50.9 -43.8
Details of Economic and Fiscal Projections 217
As shown in Table A1.8, a nancial requirement is projected in each year
over the forecast horizon, reecting nancial requirements associated with
the projected budgetary decits, as well as forecast requirements from non-
budgetary activities.
A nancial source is projected for pensions and other accounts for most years
over the forecast horizon. Pensions and other accounts include the activities of
the Government of Canada’s employee pension plans and those of federally
appointed judges and Members of Parliament, as well as a variety of other
employee future benet plans, such as health care and dental plans, and
disability and other benets for veterans and others. A nancial source for
pensions and other accounts reects the dierence between non-cash pension
and benet expenses recorded as part of the budgetary balance to reect the
value of benets earned by employees during a scal year and the annual cash
outows for benet payments.
Financial requirements for non-nancial assets mainly reect the dierence
between cash outlays for the acquisition of new tangible capital assets and
the amortization of capital assets included in the budgetary balance. They also
include disposals of tangible capital assets and changes in inventories and
prepaid expenses. Financial requirements are projected in each year over the
forecast horizon, reecting forecast net growth in non-nancial assets.
Loans, investments, and advances include the government’s investments
in enterprise Crown corporations, including Canada Mortgage and
Housing Corporation, Export Development Canada, the Business Development
Bank of Canada, and Farm Credit Canada. They also include loans, investments,
and advances to national and provincial governments and international
organizations, and under government programs, including the Canada
Emergency Business Account (CEBA). The projected nancial source for other
loans, investments, and advances in 2023-24 is due to the expected repayment
of CEBA loans, reecting the extension of the forgiveness repayment date from
December 31, 2022, to December 31, 2023.
In general, loans, investments, and advances are expected to generate
additional revenues for the government in the form of interest or additional
net prots of enterprise Crown corporations, which partly oset debt charges
associated with these borrowing requirements. These revenues are reected in
the budgetary balance projections.
Other transactions include the payment of tax refunds and other accounts
payable, the collection of taxes and other accounts receivable, the conversion
of other accrual adjustments included in the budgetary balance into cash, as
well as foreign exchange activities and derivatives. Projected cash requirements
over the forecast horizon mainly reect the payment of accounts payable and
forecast increases in the government’s ocial international reserves held in the
Exchange Fund Account.
218 Annex 1
Economic Scenario Analysis
As discussed in the Economic Overview, the macroeconomic inputs of the
February 2023 survey continue to provide a reasonable basis for scal planning.
However, to facilitate prudent economic and scal planning, and in light of
elevated global uncertainty and recent developments in nancial markets, the
Department of Finance has developed two scenarios that consider faster or
slower growth tracks relative to the February survey (Table A1.9).
Downside Scenario
The Downside Scenario considers the economic repercussions if high ination
were more persistent than expected, in Canada and globally, leading central
banks to raise interest rates by more than anticipated. This is exacerbated
by stresses in the global nancial system associated with the sharp rise in
interest rates, which tighten global nancial conditions and negatively impact
condence. The overall result is a sharper slowdown in the global economy, as
well as a steeper housing correction and more pronounced recession in Canada.
- CPI ination is 0.3 percentage points above the February survey, on
average, in 2023 and 2024. CPI ination stays above 2.5 per cent until the
third quarter of 2024—about three quarters longer than in the survey—
reaching 2 per cent in 2026.
- In response to higher CPI ination, short-term interest rates reach
4.75 per cent in the second quarter of 2023 before declining to 3 per cent
in the rst quarter of 2025 – about three months later than in the survey.
Overall, short-term interest rates are up by 0.2 percentage points, on
average, in 2023 and 2024.
- As a result of higher interest rates, tightened nancial conditions and
weaker global activity, the Canadian economy enters a somewhat more
severe recession in the second quarter of 2023. Real GDP contracts by
1.9 per cent from peak to trough, compared to 0.4 per cent in the survey
but signicantly smaller than in the 2008-09 recession (-4.4 per cent).
On an annual basis, real GDP growth is negative in 2023 and slower than
anticipated in 2024, before picking up in 2025.
- Consistent with weaker economic activity, the unemployment rate rises
to a peak of 6.9 per cent in the rst quarter of 2024 and is 0.4 percentage
points higher than the survey, on average, in 2024.
- Despite higher CPI ination, GDP ination is lower than in the survey as
weaker global growth expectations and uncertainties weigh on commodity
prices. Crude oil prices decline from US$94 per barrel in 2022 to US$69 per
barrel in 2023 (down from US$81 per barrel in the survey) and remain
US$3 per barrel below the survey over the rest of the forecast horizon.
- Together, slower real GDP growth and lower GDP ination reduce the
level of nominal GDP by $41 billion, on average per year, compared to
the survey.
Details of Economic and Fiscal Projections 219
Upside Scenario
In the Upside Scenario, the Canadian economy manages to avoid a shallow
recession as continued easing of supply challenges, in Canada and globally,
helps to bring down ination even as economies remain stronger than
anticipated. In Canada, this improved global economic backdrop is also
supported by a larger boost from our rapidly growing population, expanding
Canada’s growth potential. A faster rebound in China’s economy provides a
boost to global growth and commodity prices.
- As a result of improved supply conditions and resilient demand, the
Canadian economy continues to expand at a modest pace over the
course of 2023. On an annual basis, real GDP growth is 1.6 per cent in
2023 (up 1.3 percentage point from the February survey) and 1.7 per cent
in 2024 (up 0.2 percentage points).
- With a stronger economy, the unemployment rate rises by less than
expected, averaging 5.6 per cent in 2024 (down 0.6 percentage points
from the survey).
- Despite stronger growth, CPI ination eases somewhat faster than
expected in 2023 due to a rapid improvement in supply constraints,
averaging 0.2 percentage points below the survey in 2023.
- In response to lower CPI ination, short-term interest rates start to
decline in the second quarter of 2023—about one quarter sooner than in
the survey—and are 0.1 percentage points below the survey, on average,
in 2023 and 2024.
- Despite slightly lower CPI ination, GDP ination is higher than in the survey
as stronger global activity and dissipation in risk aversion from heightened
nancial sector stress result in higher commodity prices. After averaging
US$94 per barrel in 2022, crude oil prices average US$85 per barrel in 2023
(up from US$81 per barrel in the survey) and remain US$8 per barrel above
the survey over the rest of the forecast horizon.
- Together, faster real GDP growth and higher GDP ination raise the level of
nominal GDP by $41 billion, on average per year, compared to the survey.
220 Annex 1
Table A1.9
Department of Finance Economic Scenarios
Per cent, unless otherwise indicated
2023 2024 2025 2026 2027
2023-
2027
Real GDP growth
Budget 2023
0.3 1.5 2.3 2.2 1.9 1.7
Downside Scenario
-0.2 1.0 2.7 2.3 2.0 1.6
Upside Scenario
1.6 1.7 1.9 1.9 1.8 1.8
GDP ination
Budget 2023
0.6 2.0 1.9 1.9 1.9 1.7
Downside Scenario
-0.2 1.9 2.1 1.9 1.9 1.5
Upside Scenario
1.0 2.0 1.9 1.9 1.9 1.7
Nominal GDP growth
Budget 2023
0.9 3.6 4.3 4.1 3.9 3.4
Downside Scenario
-0.4 3.0 4.8 4.3 3.9 3.1
Upside Scenario
2.6 3.8 3.9 3.8 3.7 3.5
Nominal GDP level (billions of
dollars)
Budget 2023
2,810 2,910 3,037 3,162 3,285
Downside Scenario
2,774 2,858 2,996 3,124 3,246
Upside Scenario
2,856 2,964 3,079 3,196 3,314
Dierence between Budget 2023
and Downside Scenario
-35 -53 -41 -39 -39 -41
Dierence between Budget 2023
and Upside Scenario
47 53 43 34 29 41
3-month treasury bill rate
Budget 2023
4.4 3.3 2.6 2.4 2.4 3.0
Downside Scenario
4.6 3.6 2.6 2.4 2.3 3.1
Upside Scenario
4.3 3.2 2.6 2.4 2.4 3.0
Unemployment rate
Budget 2023
5.8 6.2 6.0 5.7 5.7 5.9
Downside Scenario
6.0 6.7 6.3 6.0 5.9 6.2
Upside Scenario
5.4 5.6 5.5 5.5 5.5 5.5
Consumer Price Index ination
Budget 2023
3.5 2.1 2.1 2.1 2.1 2.4
Downside Scenario
3.7 2.4 2.2 2.0 2.0 2.5
Upside Scenario
3.4 2.0 2.0 2.0 2.0 2.3
West Texas Intermediate crude oil
price ($US per barrel)
Budget 2023
81 81 79 77 78 79
Downside Scenario
69 72 76 77 78 74
Upside Scenario
85 86 87 87 88 87
Note: Forecast averages may not equal average of years due to rounding. Numbers may not add due to rounding.
Sources: Statistics Canada; Department of Finance Canada February 2023 survey of private sector economists,
which has been adjusted to incorporate the actual results of the National Accounts for the fourth quarter of
2022 released on February 28, 2023; Department of Finance Canada calculations
.
Details of Economic and Fiscal Projections 221
Fiscal Impacts of Economic Scenarios
The potential impact of the two economic scenarios on the projected federal
decit and debt-to-GDP ratio are depicted in Charts A1.1 and A1.2 below.
Chart A1.1
Decit Under Economic Scenarios
Chart A1.2
Federal Debt-to-GDP Ratio Under
Economic Scenarios
-43.0
-40.1
-35.0
-26.8
-15.8
-14.0
-43.0
-47.0
-42.1
-34.2
-23.3
-21.4
-42.2
-32.3
-28.6
-20.2
-10.3
-7.8
-50
-40
-30
-20
-10
0
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28
Budget 2023
Downside
Upside
billions of dollars
43.5
43.2
42.2
41.1
39.9
42.4
41.9
41.0
39.8
38.6
42.4
44.3
44.4
43.5
42.5
41.5
38
40
42
44
46
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28
per cent of GDP
Budget 2023
Downside
Upside
Downside Scenario
In the Downside Scenario, the decit would increase by about $7.2 billion
annually on average over the planning horizon. The weakened outlook for
nominal GDP would entail somewhat weaker revenues (down on average by
just over $5.6 billion annually), and higher CPI ination and interest rates lead to
higher costs stemming from ination-indexed programs (up on average by about
$0.9 billion annually) and higher public debt charges (up by about $0.8 billion on
average), respectively. As a result of the higher decits and weaker nominal GDP
growth, the federal debt-to-GDP ratio would be expected to rise to 44.4 per cent
by 2024-25, before declining to 41.5 per cent by 2027-28.
222 Annex 1
Upside Scenario
In the Upside Scenario, the decit would improve by an average of $6.5 billion
per year. Stronger nominal GDP growth results in higher income tax revenues
and the improved outlook for consumption results in higher projected GST
revenues. Overall, revenues are projected to be $5.0 billion higher annually, on
average, in this scenario. On the expense side, the lower projected CPI ination
means lower expenses for CPI-indexed programs. Lower interest rates mean
that public debt charges would also be lower by $0.9 billion under this scenario.
The reduction in these projected expenses is partially oset by higher projected
CHT and Equalization transfers spurred by higher nominal GDP growth to which
they are indexed. Overall, expenses would be $1.5 billion lower annually, on
average, in this scenario.
As a result of the lower decits and stronger nominal GDP growth, the federal
debt-to-GDP ratio would fall to 38.6 per cent by 2027-28.
Details of Economic and Fiscal Projections 223
Long-Term Debt Projections
As with any projection that extends over several decades, the long-term debt-
to-GDP ratio projections presented in Budget 2023 are subject to a high degree
of uncertainty and are sensitive to assumptions. They should not be viewed as
predictions of the future, but instead as modelling scenarios based on a set
of reasonable economic and demographic assumptions, assuming no future
changes in policies.
Building on the Budget 2023 forecast, long-term scal projections continue to
indicate that federal public nances are sustainable beyond the usual forecast
horizon (Chart A1.3). This is despite adverse demographic trends, including
an aging population, assumed modest future productivity growth rates, and
projected increases in interest rates. As discussed in more detail below, this
conclusion is also robust to changes in assumptions, including, for example, the
projected growth rate of real GDP.
Chart A1.3
Long-Term Projections of the Federal Debt
-10
0
10
20
30
40
50
2015-16 2020-21 2025-26 2030-31 2035-36 2040-41 2045-46 2050-51 2055-56
per cent of GDP
Budget 2023
Real GDP growth is 0.25 p.p lower
Real GDP growth is 0.25 p.p higher
Long-term
Projections
Budget
2023
Forecast
Note: p.p. = percentage points.
Sources: Statistics Canada; Department of Finance Canada.
Keeping the federal debt-to-GDP ratio on a downward trend over the medium
and longer term will help ensure that future generations are not burdened with
debt and that scal room remains available to face future challenges and risks
that are not accounted for in this projection. These include recessions, new
pandemics, geopolitical risk, climate change and the transition to net-zero.
Overall, combined with improving scal positions at the provincial-territorial
level and Canada’s well-funded pension plans (see Box A1.2), keeping federal
public nances on a sustainable path will further help ensure Canada’s enviable
international scal position excellent credit ratings are preserved.
224 Annex 1
Box A1.2 Canada’s Pension Plans Are Well Funded
Ocial debt statistics published by international organizations such as the
International Monetary Fund (IMF) and the Organisation for Economic Co-
operation and Development (OECD) overstate Canada’s public debt relative
to that of most other countries—including most G7 countries. This is due to
the slow adoption by other countries of international accounting standards
that require the recognition of unfunded liabilities for public sector employee
pension plans. Canada implements these standards, and the latest available
data suggest that Canada’s net debt would be, on average, more than 20
percentage points of GDP lower than that of other G7 countries for which this
information is available, if they adopted the same standards (Chart A1.4).
Also, Canada has accumulated more assets in public pension funds (e.g., the
Canada Pension Plan) than all other G7 countries but Japan, and signicantly
more private retirement plan assets than other G7 countries save for the U.S.
where our levels are roughly on par (Chart A1.5). Combined with well-funded
public sector employee pension plans, these signicant retirement assets mean
Canada is better equipped than its G7 peers to deal with scal risks associated
with long-term liabilities from population aging—further supporting Canada’s
scal advantage over the longer term.
Chart A1.4
Unfunded Government Employee
Pension Plan Liabilities,
G7 Countries, 2018
Chart A1.5
Private Retirement Plan Assets and
Public Pension Funds, G7 Countries,
2020 or Latest Year Available
0 20 40 60 80
Italy
Japan
Canada
U.S.
Germany
U.K.
France
Not Available
No dedicated pension plan
per cent of GDP
0 50 100 150 200
Germany
Italy
France
Japan
U.K.
U.S.
Canada
per cent of GDP
Retirement savings plans
Public pension reserve funds
Sources: Statistics Canada National Balance Sheet
Accounts, the Financial Accounts of the United States
Tables L.119 and L.120, OECD National Accounts Table
29: Social Insurance Pension Schemes (2018). Data
unavailable for Japan.
Notes: “Retirement savings plans” refers to private
pension plans administered by an institution other
than general government. “Public pension reserve
funds” are reserves established to support public
pension plans (e.g., the Canada Pension Plan).
Source: OECD, Pensions at a Glance 2021.
Details of Economic and Fiscal Projections 225
To form the long-term economic projections, the medium-term (2022 to 2027)
economic forecasts presented in Budget 2023 are extended to 2055 using the
Department of Finance Canada’s long-term economic projection model. In
this model, annual real GDP growth depends on labour productivity growth
(1 per cent per year), which is calibrated over its 1974-2019 historical average,
and labour supply growth (average of 0.6 per cent per year), which is based on
demographic projections produced by Statistics Canada and projections for the
labour force participation rate and average hours worked using econometric
models developed by the Department. Assuming a constant 2 per cent annual
rate for GDP ination, nominal GDP is projected to grow by an average of
3.6 per cent per year from 2028 to 2055 (Table A1.10).
Table A1.10
GDP Growth Projection, Baseline Scenario, Average Annual Growth Rates
Per cent, unless otherwise indicated
1970–2021 2022–2027 2028–2055
Real GDP growth
2.6 2.0 1.6
Contributions of (percentage points):
Labour supply growth
1.5 1.3 0.6
Working-age population
1.5 1.4 0.8
Labour force participation
0.2 -0.6 -0.2
Unemployment rate
-0.1 0.3 0.0
Average hours worked
-0.2 0.1 0.0
Labour productivity growth
1.2 0.8 1.0
Nominal GDP growth
6.8 4.8 3.6
Note: Contributions may not add up due to rounding.
Sources: Statistics Canada; Department of Finance Canada calculations.
The long-term federal debt projections are obtained through an accounting
model in which each revenue and expense category is modelled as a function
of its underlying demographic and economic variables, with the relationships
dened by a mix of current government policies and assumptions. The key
assumptions underlying scal projections from 2028-29 through 2055-56 are
the following:
- All tax revenues as well as direct program expenses grow broadly with
nominal GDP, with the exceptions of a number of measures that will no
longer be available after a certain date (e.g. the clean electricity, clean
technology and clean hydrogen investment tax credits and funding to
support clean electricity projects) which are incorporated based on their
projected costs.
- The Canada Health Transfer, Canada Social Transfer, and Equalization
grow with their respective legislated escalators. The remaining federal
transfers to other levels of government, depending on the transfer,
grow with nominal GDP, the targeted populations and ination, current
legislation or agreements.
226 Annex 1
- The Old Age Security program and children’s benets grow with the
targeted populations and ination. Employment Insurance (EI) benets
grow in line with the number of beneciaries and the growth in average
weekly earnings. The EI premium rate grows according to current
program parameters.
- The eective interest rate on interest-bearing federal debt is assumed,
under the baseline scenario, to gradually increase from about 2.7 per cent
in 2027–28 to 3.4 per cent by 2055-56.
Sensitivity analysis shows that the long-term scal projections are robust to
some changes to key assumptions (Tables A1.11 and A1.12).
Table A1.11
Description of Alternative Assumptions
1
alternative assumption less baseline
Baseline
2
High Low
Demographic:
Fertility rate (average births per woman)
1.5 births +0.5 births -0.5 births
Immigration (per cent of population)
0.9 +0.25 p.p. -0.25 p.p.
Life expectancy at 65
23.1 years +3 years -3 years
Economic:
Total labour force participation rate (per cent)
61.4 +2.0 p.p. -2.0 p.p.
Average weekly hours worked (hours)
33.3 +1.0 hour -1.0 hour
Unemployment rate (per cent)
5.7 +1.0 p.p. -1.0 p.p.
Labour productivity (per cent)
1.0 +0.25 p.p. -0.25 p.p.
Interest rates (per cent)
3.2 +1.0 p.p. -1.0 p.p.
Note: p.p. = percentage point.
1
These alternative assumptions are applied starting in 2028 except for changes in life expectancy, which are
gradually applied over the projection horizon.
2
Baseline shown as the average over the period 2028 to 2055.
Details of Economic and Fiscal Projections 227
Table A1.12
Budgetary Balance and Debt in 2055–56 Under Alternative Assumptions
Per cent of GDP
Baseline High Low
Budgetary
Balance
Debt
Budgetary
Balance
Debt
Budgetary
Balance
Debt
Demographic:
Fertility rate 1.3 5.3 1.1 9.2 1.5 1.4
Immigration 1.3 5.3 1.7 -0.1 0.9 11.7
Life expectancy at 65 1.3 5.3 1.0 9.1 1.5 3.2
Economic:
Total labour force
participation rate 1.3 5.3 1.6 0.4 1.0 10.9
Average weekly hours
worked 1.3 5.3 1.6 0.8 1.0 10.4
Unemployment rate 1.3 5.3 1.2 7.0 1.4 3.7
Labour productivity 1.3 5.3 1.8 -0.6 0.8 11.8
Interest rates 1.3 5.3 0.9 12.7 1.6 -0.3
Supplementary Information
Sensitivity of Fiscal Projections to Economic Shocks
Changes in economic assumptions aect the projections for revenues and
expenses. The following tables illustrate the sensitivity of the budgetary
balance to a number of economic shocks relative to the baseline Budget 2023
projections, which already incorporate forecast changes in levels to these
components over the budget horizon:
‒ A one-year, 1-percentage-point decrease in real GDP growth driven
equally by lower productivity and employment growth.
‒ A decrease in nominal GDP growth resulting solely from a one-year,
1-percentage-point decrease in the rate of GDP ination (assuming that
the Consumer Price Index moves in line with GDP ination).
‒ A sustained 100-basis-point increase in all interest rates.
These sensitivities are estimates that assume any decrease in economic activity
is proportional across income and expenditure components, and are meant to
provide a broad illustration of the impact of economic shocks on the outlook
for the budgetary balance. The sensitivity analysis conducted in this section
has been presented routinely in budgets since 1994 and is separate from
the scenarios for a faster or slower recovery presented earlier in this annex.
Actual economic shocks may have dierent scal impacts. For example, they
may be concentrated in specic sectors of the economy or cause dierent
responses in key economic variables (e.g., GDP ination and CPI ination may
have dierent responses to a given shock).
228 Annex 1
Table A1.13
Estimated Impact of a One-Year, 1-Percentage-Point Decrease in Real GDP
Growth on Federal Revenues, Expenses and Budgetary Balance
billions of dollars
Year 1 Year 2 Year 5
Federal revenues
Tax revenues
Personal income tax
-2.8 -3.0 -3.4
Corporate income tax
-0.8 -0.8 -0.9
Goods and Services Tax
-0.5 -0.5 -0.6
Other
-0.2 -0.2 -0.2
Total tax revenues
-4.3 -4.5 -5.0
Employment Insurance premiums
0.2 1.0 1.0
Other revenues
-0.1 -0.1 -0.1
Total budgetary revenues
-4.2 -3.6 -4.1
Federal expenses
Major transfers to persons
Elderly benets
0.0 0.0 0.0
Employment Insurance benets
1.0 1.0 1.1
Canada Child Benet
0.0 0.1 0.2
Total major transfers to persons
0.9 1.1 1.2
Other program expenses
-0.3 -0.1 -0.2
Public debt charges
0.1 0.2 0.6
Total expenses
0.7 1.2 1.6
Budgetary balance
-4.9 -4.8 -5.7
A 1-percentage-point decrease in real GDP growth proportional across income and
expenditure components reduces the budgetary balance by $4.9 billion in the rst
year, $4.8 billion in the second year, and $5.7 billion in the fth year (Table A1.13).
– Tax revenues from all sources fall by a total of $4.3 billion in the rst
year. Personal income tax revenues decrease as employment and the
underlying tax base fall. Corporate income tax revenues fall as output
and prots decrease. GST revenues decrease because of lower consumer
spending associated with the fall in employment and personal income.
– EI premium revenues increase as a result of an increase in the EI premium
rate, which, under the seven-year break-even mechanism, adjusts to
oset the increase in benets due to the higher number of unemployed,
such that the EI Operating Account balances over time.
– Expenses rise, mainly reecting higher EI benets (due to an increase in the
number of unemployed) and higher public debt charges (reecting a higher
stock of debt due to the lower budgetary balance). This rise is partially oset
by lower other program expenses, like Equalization, as the decline in real
GDP is reected in nominal GDP, to which these payments are indexed.
Details of Economic and Fiscal Projections 229
Table A1.14
Estimated Impact of a One-Year, 1-Percentage-Point Decrease in GDP Ination
on Federal Revenues, Expenses and Budgetary Balance
billions of dollars
Year 1 Year 2 Year 5
Federal revenues
Tax revenues
Personal income tax
-2.7 -2.5 -2.8
Corporate income tax
-0.8 -0.8 -0.9
Goods and Services Tax
-0.5 -0.5 -0.6
Other
-0.2 -0.2 -0.2
Total tax revenues
-4.2 -4.0 -4.4
Employment Insurance premiums
0.0 -0.1 -0.2
Other revenues
-0.2 -0.2 -0.2
Total budgetary revenues
-4.4 -4.3 -4.8
Federal expenses
Major transfers to persons
Elderly benets
-0.5 -0.8 -0.9
Employment Insurance benets
-0.1 -0.1 -0.2
Canada Child Benet
0.0 -0.1 -0.3
Total major transfers to persons
-0.5 -1.0 -1.5
Other program expenses
-0.8 -0.7 -1.6
Public debt charges
-0.7 0.1 0.2
Total expenses
-2.1 -1.6 -2.8
Budgetary balance
-2.3 -2.6 -2.0
A 1-percentage-point decrease in nominal GDP growth proportional across
income and expenditure components, resulting solely from lower GDP ination
(assuming that the CPI moves in line with GDP ination), lowers the budgetary
balance by $2.3 billion in the rst year, $2.6 billion in the second year, and
$2.0 billion in the fth year (Table A1.14).
– Lower prices result in lower nominal income and, as a result, personal
income tax revenues decrease. As the parameters of the personal income
tax system are indexed to ination, the scal impact is smaller than under
the real shock. For the other sources of tax revenue, the negative impacts
are similar under the real and nominal GDP shocks.
– EI premium revenues decrease in response to lower earnings.
– Other revenues decline slightly as lower prices lead to lower revenues
from the sales of goods and services, and lower growth in tax revenue
results in slightly lower interest and penalty revenue.
230 Annex 1
– Partly osetting lower revenues are the declines in the cost of statutory
programs that are indexed to CPI ination, such as elderly benet
payments, which puts downward pressure on federal program expenses.
In addition, other program expenses are also lower as certain programs
are linked directly to growth in nominal GDP, such as Equalization.
– Public debt charges decline in the rst year due to lower costs associated
with Real Return Bonds.
Table A1.15
Estimated Impact of a Sustained 100-Basis-Point Increase in All Interest Rates
on Federal Revenues, Expenses and Budgetary Balance
billions of dollars
Year 1 Year 2 Year 5
Federal revenues
-0.2 1.1 3.4
Federal expenses
3.8 6.2 10.3
Budgetary balance
-4.0 -5.1 -6.9
A 1 per cent increase in interest rates decreases the budgetary balance by $4.0
billion in the rst year, $5.1 billion in the second year, and $6.9 billion in the fth
year (Table A1.15). Higher interest rates directly impact estimated public debt
charges on marketable debt in two ways. First, interest costs increase as existing
debt matures and is renanced at higher rates. Second, rising rates increase the
expected cost of future borrowing needs. Public debt charges are estimated
based on the current expectations for future changes in interest rates, which are
subject to change based on economic conditions.
It is important to note that interest rates also directly aect other government
revenues and expenses and that they typically do not change in isolation.
That is, with higher interest rates, the government would realize some osetting
benets, including:
– Higher revenues from the government’s interest-bearing assets, and
interest and penalty revenue on tax debt, which are recorded as part of
other revenues;
– Corresponding downward adjustments that reduce the valuations of
public sector pensions and employee benets obligations, which are not
incorporated in the table above; and,
– Higher government tax revenues if interest rate increases were due to
stronger economic growth (also not included in the table above).
Even with a 1 per cent increase in interest rates, public debt charges are
sustainable and would remain near historic lows as a proportion of GDP.
Details of Economic and Fiscal Projections 231
Policy Actions Taken Since the 2022 Fall Economic
Statement
Since 2016, the government has provided a transparent overview of all
policy actions taken between budgets and updates. These measures, listed in
Table A1.16, ensure that Canadians are continually well served by the programs
they rely on.
Table A1.16
Policy Actions Since the 2022 Fall Economic Statement
millions of dollars
Dept.
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Clean Growth, Innovation
and Infrastructure
Critical Minerals Infrastructure
Fund
1
NRCan
0 100 120 150 190 214
Less: Previously
Provisioned in the Fiscal
Framework
0 -214 -214 -214 -214 -214
National Adaptation Strategy
2
Multiple 0 638 225 274 261 282
Oil-to-Heat Pumps
Aordability Grant
NRCan 4 54 64 64 64 0
Re-Aligning Strategic
Innovation Fund Resources
ISED -609 -398 -250 135 -500 -300
Housing Accelerator Fund
Administration
3
CMHC
24 76 0 0 0 0
Less: Funds Previously
Provisioned in the Fiscal
Framework
-12 -38 0 0 0 0
Membership in the Square
Kilometre Array Observatory
NRC 0 41 41 37 36 35
Support for the Praxis Spinal
Cord Institute
ISED
6 6 0 0 0 0
Less: Previously
Provisioned in the Fiscal
Framework
-6 -1 0 0 0 0
Reconciliation and
Communities
Commemorative Initiatives to
Honour Queen Elizabeth II
PCH
1 0 0 0 0 0
Less: Funds Sourced
from the Treasury Board
Management Reserve
-1 0 0 0 0 0
232 Annex 1
Dept.
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Preserving the
Commemorative Integrity of
the Juno Beach Centre
VAC 4 0 0 0 0 0
Supporting Essential Goods
and Services within Federal
Correctional Facilities
CSC 0 42 42 42 42 42
Supporting the RCMP’s
Contract Policing Program
RCMP 89 4 4 0 0 0
Temporary Lodgings for
Asylum Seekers in Need of
Shelter
IRCC
109 368 0 0 0 0
Less: Funds Sourced
From Existing Departmental
Resources
-20 0 0 0 0 0
Veterans Aairs Canada
Adjustments for Non-
Discretionary Cost
Fluctuations
VAC 0 1 1 1 1 1
Accelerating Funding Toward
Housing in Urban, Rural
and Northern Indigenous
Communities
ISC,
CMHC
0 197 85 0 0 0
Less: Funds Previously
Provisioned in the Fiscal
Framework
-4 -6 -52 -110 -110 0
Supporting Indigenous
Communities during
Emergencies
ISC 160 0 0 0 0 0
Canada in the World
Additional Demining
Assistance to Ukraine
GAC
15 0 0 0 0 0
Less: Funds Previously
Provisioned in the
International Assistance
Envelope
-15 0 0 0 0 0
Additional Military Aid for
Ukraine
DND 500 0 0 0 0 0
Continuing to Provide
Financial Assistance for
Ukrainians
IRCC
200 118 0 0 0 0
Less: Funds Sourced
From Existing Departmental
Resources
-30 0 0 0 0 0
Extending Canada's Middle
East Strategy
GAC,
DND,
CSE,
CSIS
288 208 208 1 1 0
Less: Funds Sourced
From Existing Departmental
Resources
-91 -94 -94 0 0 0
Details of Economic and Fiscal Projections 233
Dept.
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Indo-Pacic Strategy
4
Multiple
0 256 312 321 324 309
Less: Funds Sourced
From Existing Departmental
Resources
0 -52 -53 -53 -53 -53
Project Finance for
Permanence and Support
for Developing Countries'
Conservation Eorts
ECCC,
GAC
0 217 238 238 115 115
Less: Funds Sourced
From Existing Departmental
Resources
0 -2 0 0 0 0
Support for Türkiye and Syria
GAC
40 0 0 0 0 0
Less: Funds Previously
Provisioned in the
International Assistance
Envelope
-40 0 0 0 0 0
Supporting the Democracy in
La Francophonie Initiative
GAC
0 5 5 0 0 0
Less: Funds Previously
Provisioned in the
International Assistance
Envelope
0 -5 -5 0 0 0
Using Tari Revenue to
Support Ukraine's Power Grid
FIN
115 0 0 0 0 0
Less: Projected Revenues -115 0 0 0 0 0
Immediate Support to Haiti
DND,
GAC
0 100 0 0 0 0
Less: Funds Previously
Provisioned in the
International Assistance
Envelope
0 -95 0 0 0 0
Less: Funds Sourced
From Existing Departmental
Resources
0 -5 0 0 0 0
Eective Government, Tax
Fairness, and Financial
Sector Policy
2022-23 Adjustment to the
Grant for the Canada-Quebec
Accord on Immigration
IRCC 30 0 0 0 0 0
Additional Support for the
Public Order Emergency
Commission
PCO 3 0 0 0 0 0
Employment and Social
Development Canada Rent
Price Adjustment
ESDC 0 11 11 11 11 11
Less: Funds From CPP
Account
0 -2 -2 -2 -2 -2
234 Annex 1
Dept.
2022-
2023
2023-
2024
2024-
2025
2025-
2026
2026-
2027
2027-
2028
Marine and Aviation Fuel Cost
Pressures
DFO 52 0 0 0 0 0
Canadian Coast Guard Arctic
and Oshore Patrol Ships
5
DFO 0 0 0 0 0 5
Price and Volume Protection
for Federal Real Property
PSPC 1 55 55 55 55 55
Obligations for Federal Public
Sector Employee Benet Plans
TBS 50 0 0 0 0 0
Changes to Automobile
Deduction Limits
- 0 7 7 7 7 7
Standing up a public registry
of corporate benecial
ownership
ISED 3 13 11 7 7 7
Less: Funds Sourced
From Existing Departmental
Resources
-2 -7 -4 -3 -3 -4
2022 Fall Economic Statement
Provision for Anticipated
Near-Term Pressures
-1,000 -1,000 -2,000 -1,500 -1,500 -1,500
(Net) Fiscal Impact of Non-
Announced Measures
6
5,689 -1,293 -1,936 -2,101 -473 912
Net Fiscal Impact – Total
Policy Actions Since Fall
Economic Statement 2022
5,438 -695 -3,181 -2,641 -1,742 -76
Totals may not add due to rounding.
1
Total funding adds to $1.5 billion over seven years, starting in 2023-24, as announced
in Budget 2022. The funding prole has been revised.
2
This includes funding for Environment and Climate Change Canada; Natural Resources
Canada; Infrastructure Canada; Public Safety Canada; Crown-Indigenous Relations and
Northern Aairs Canada; Health Canada; National Research Council Canada; Innovation,
Science and Economic Development Canada and Indigenous Services Canada.
3
Funding prole has since been revised to $41 million in 2023-24; $21 million in
2024-25; $17 million in 2025-26; $16 million in 2026-27; and $7 million in 2027-28.
4
This includes funding for Global Aairs Canada; National Defence; Fisheries and Oceans
Canada; Immigration; Refugees and Citizenship Canada; Canadian Security Intelligence
Service; Communications Security Establishment; Employment and Social Development
Canada; Canadian Food Inspection Agency; Royal Canadian Mounted Police; National
Research Council Canada; Agriculture and Agri-Food Canada; Canada Border Services
Agency; Natural Resources Canada; Export Development Canada; the Privy Council
Oce; Innovation, Science and Economic Development; and Public Safety Canada. The
Indo-Pacic Strategy also announced $750 million to enhance the capacity of FinDev
Canada to expand its operations into the Indo-Pacic and accelerate its work in priority
markets to support high-quality, sustainable infrastructure. Funding will be transferred
from Export Development Canada.
Details of Economic and Fiscal Projections 235
5
Total funding includes an additional $510 million in remaining amortization between
2028-29 to 2063-64.
6
The net scal impact of measures that are not announced is presented at the
aggregate level and would include provisions for anticipated Cabinet decisions not
yet made (including the use of such provisions from previous budgets and updates)
and funding decisions related to national security, commercial sensitivity, contract
negotiations and litigation issues.
236 Annex 1
Glossary of Abbreviated Titles
AAFC Agriculture and Agri-Food Canada
ACOA Atlantic Canada Opportunities Agency
CanNor Canadian Northern Economic Development Agency
CATSA Canadian Air Transport Security Authority
CBSA Canada Border Services Agency
CED Canada Economic Development for Quebec Regions
CFIA Canadian Food Inspection Agency
CIRNAC Crown-Indigenous Relations and Northern Aairs Canada
CMHC Canada Mortgage and Housing Corporation
CRA Canada Revenue Agency
CSA Canadian Space Agency
CSC Correctional Service of Canada
CSE Communications Security Establishment
CSIS Canadian Security Intelligence Service
DFO Fisheries and Oceans Canada
DND National Defence
ECCC Environment and Climate Change Canada
ESDC Employment and Social Development Canada
FedDev Federal Economic Development Agency for Southern Ontario
FedNor Federal Economic Development Agency for Northern Ontario
FIN Department of Finance Canada
GAC Global Aairs Canada
HC Health Canada
INFC Infrastructure Canada
IRB Immigration and Refugee Board of Canada
IRCC Immigration, Refugees and Citizenship Canada
ISC Indigenous Services Canada
ISED Innovation, Science and Economic Development Canada
JUS Justice Canada
NAC National Arts Centre
NFB National Film Board
NRCan Natural Resources Canada
NRCC National Research Council Canada
NSICOP National Security and Intelligence Committee of Parliamentarians
NSIRA National Security and Intelligence Review Agency
OCI Correctional Investigator Canada
OPC Oce of the Privacy Commissioner
PaciCan Pacic Economic Development Canada
PCA Parks Canada Agency
PCH Canadian Heritage
PCO Privy Council Oce
PHAC Public Health Agency of Canada
PrairiesCan Prairies Economic Development Canada
PS Public Safety Canada
PSC Public Service Commission
PSPC Public Services and Procurement Canada
RCMP Royal Canadian Mounted Police
SCC-CCN Standards Council of Canada
SSC Shared Services Canada
StatCan Statistics Canada
TBS Treasury Board of Canada Secretariat
TC Transport Canada
TSB Transportation Safety Board
Debt Management Strategy 237
Annex 2
Debt Management Strategy
Introduction
The 2023-24 Debt Management Strategy sets out the Government of Canada’s
objectives, strategy, and borrowing plans for its domestic and foreign debt
program and the management of its ocial reserves.
The Financial Administration Act (FAA) requires that the Minister of Finance
table, in each House of Parliament, a report on the anticipated borrowing to
be undertaken in the scal year ahead, including the purposes for which the
money will be borrowed and the management of the public debt, no later
than 30 sitting days after the beginning of the scal year. The 2023-24 Debt
Management Strategy fullls this requirement.
Objectives
The fundamental objectives of debt management are to raise stable and low-
cost funding to meet the nancial requirements of the Government of Canada
and to maintain a well-functioning market for Government of Canada securities.
Having access to a well-functioning government securities market contributes
to lower costs and less volatile pricing for the government, ensuring that
funds can be raised eciently over time to meet the government’s nancial
requirements.
The Debt Management Strategy provides transparency on the government’s
borrowing plans in order to support a liquid and well-functioning market for
Government of Canada securities and ensure the long-term sustainability of its
borrowing plans.
The government will continue to closely monitor nancial markets and will
adjust issuance if necessary to appropriately and responsibly respond to shifts
in market demand or changes to nancial requirements.
Outlook for Government of Canada Debt
As a result of the government’s responsible scal management, Canada
continues to have an enviable scal position relative to international peers,
with the lowest net debt-to-GDP ratio in the G7. Rating agencies have stated
that Canada's eective, stable, and predictable policymaking and political
institutions, economic resilience and diversity, well-regulated nancial markets,
and its monetary and scal exibility all contribute to Canada's strong current
credit ratings: Moody’s (Aaa), S&P (AAA), DBRS (AAA), and Fitch (AA+).
238 Annex 2
Planned Borrowing Activities for 2023-24
The projected sources and uses of borrowings for 2023-24 are presented in
Table A2.1. The comparison of actual sources and uses of borrowings against
projections will be reported in the Debt Management Report for 2023-24. This
document will be released soon after the Public Accounts of Canada 2024, which
will provide detailed accounting information on the government’s interest-
bearing debt.
Sources of Borrowings
The aggregate principal amount of money to be borrowed by the government
in 2023-24 is projected to be $421 billion, about 85 per cent of which will be
used to renance maturing debt. This level of borrowing is consistent with the
current legislated limit of $1,831 billion set out in the Borrowing Authority Act
and the approved Governor in Council Order that set the annual borrowing limit
for 2023-24 at $444 billion.
Uses of Borrowings
The size of the 2023-24 borrowing program reects both requirements to
renance debt of $358 billion as well as the projected nancial requirement
of $63 billion. Borrowings for domestic needs will be sourced from domestic
wholesale markets (Table A2.1).
Reecting the increase in interest rates over the last year, public debt charges
have risen and are projected to be $43.9 billion for 2023-24, representing
1.6 per cent of GDP (Chart A2.1). Over the forecast horizon, public debt charges
are projected to remain steady as a share of GDP, at 1.5 per cent of GDP
($50.3 billion) by 2027-28. This level is substantially lower than the average cost
of nancing debt over the last two decades, even with a signicantly higher
public debt because of COVID-19. Debt charges are projected to represent
approximately 9.3 per cent of total government revenue by 2027-28, similar to
the level in 2013-14.
Actual borrowings for the year may dier due to uncertainty associated with
economic and scal projections, the timing of cash transactions, and other
factors such as changes in foreign reserve needs and Crown corporation
borrowings. To adjust for these unexpected changes in nancial requirements,
debt issuance can be altered during the year, typically rst through changes
in the issuance of treasury bills. The government may also adjust issuance for
bonds in response to shifts in market demand.
Debt Management Strategy 239
Table A2.1
Planned/Actual Sources and Uses of Borrowings for Fiscal Year 2023-24
$ Billions
Sources of borrowings
Payable in Canadian Currency
Treasury bills
1
242
Bonds
172
Total payable in Canadian currency
414
Payable in foreign currencies
7
Total sources of borrowings
421
Uses of borrowings
Renancing needs
Payable in Canadian Currency
Treasury bills
202
Bonds
153
Retail debt
0
Total payable in Canadian currency
355
Payable in foreign currencies
3
Total renancing needs
358
Financial requirement
Budgetary balance
40
Non-budgetary transactions
Pension and other accounts
-9
Non-nancial assets
2
Loans, investments and advances
Of which:
Loans to enterprise Crown corporations
10
Other
-21
Other transactions
2
41
Total nancial requirement
63
Total uses of borrowings
421
Change in other unmatured debt transactions
3
0
Net increase or decrease (-) in cash
0
Source: Department of Finance Canada calculations.
Notes: Numbers may not add due to rounding. In the uses of borrowings section, a negative sign denotes a nan-
cial source.
1
Treasury bills are rolled over, or renanced, a number of times during the year. This results in a larger number of
new issues per year than the stock of outstanding at the end of the scal year, which is presented in the table.
2
Other transactions primarily comprise the conversion of accrual transactions to cash inows and outows for
taxes and other accounts receivable, provincial and territorial tax collection agreements, amounts payable to
taxpayers and other liabilities, and foreign exchange accounts.
3
Includes cross-currency swap revaluation, unamortized discounts on debt issues, obligations related to capital
leases, and other unmatured debt, where this refers to in the table.
240 Annex 2
Chart A2.1
Public Debt Charges as a percentage of GDP
$ Billions
0
2
4
6
8
1981 1986 1991 1996 2001 2006 2011 2016 2021 2026
Forecast Historical
per cent of GDP
2023-24 Borrowing Program
In 2023-24, Canada will continue transitioning away from the long-term
emphasis maintained during COVID-19. This will allow Canada to return to
a more sustainable debt structure that ensures sucient issuance across all
sectors and better balances the costs and risks of Canada’s debt program over
the longer term. Nonetheless, the share of bond issuances with a maturity of
10 years or greater will remain relatively historically high at 29 per cent of bond
issuances (Table A2.2). In the decade prior to the pandemic, on average about
20 per cent of the bonds issued by the government were issued at maturities of
10 years or greater.
Cancellation of the 3-Year Sector
The 3-year sector has been reintroduced multiple times since its inception
to manage higher funding needs and was helpful to fund the government’s
COVID-19 response.
However, overall issuance has declined signicantly from a peak of $593 billion
during COVID-19, with a borrowing program of $421 billion expected for
2023-24. Reecting lower funding needs and to support well-functioning markets,
the government will cease issuance in the 3-year sector eective in the second
scal quarter. This will ensure the current 3-year benchmark bond maturing in
April 2026 is built to an appropriate size before issuances are discontinued.
This decision will support liquid markets by consolidating issuance within core
funding sectors, and will provide additional exibility to reduce issuance in the
remaining sectors without impairing market functioning.
Debt Management Strategy 241
This decision also reects the outcome of the annual Debt Management Strategy
consultations. In fall 2022, as in past years, market participants suggested
reallocating 3-year bond issuance to other sectors. These comments are included
in the detailed summary of the fall 2022 consultations which can be found online
at: https://www.bankofcanada.ca/wp-content/uploads/2022/11/fall-2022-debt-
management-strategy-consultations-summary.pdf.
Table A2.2
Gross Bond Issuances by Maturity
$ Billions, end of scal year
10 Year
Average
1
2022-23
Estimated
2023-24
Planned
Share
of Bond
Issuance Issuance
Share
of Bond
Issuance Issuance
Share
of Bond
Issuance
Short (2, 3, 5-year sectors)
77% 118 64% 122 71%
Long (10-year+)
23% 67 36% 50 29%
Gross Bond Issuance
100% 185 100% 172 100%
Note: Numbers may not add due to rounding.
1
The average of the previous 10 scal years (2012-13 through 2021-22).
Composition of Market Debt
The total stock of market debt is projected to reach $1,319 billion by the end of
2023-24 (Table A2.3).
Table A2.3
Change in Composition of Market Debt
$ Billions, end of scal year
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Estimated
2023-24
Projected
Domestic bonds
1
597 875 1,031 1,038 1,057
Treasury bills
152 219 187 202 242
Foreign debt
16 15 14 15 20
Retail debt
1 0 0 0 0
Total market debt
765 1,109 1,232 1,255 1,319
Sources: Bank of Canada; Department of Finance Canada calculations.
Note: Numbers may not add due to rounding.
1
Includes additional debt that accrues during the scal year as a result of the ination adjustments to Real Re-
turn Bonds.
Gross debt issuance will increase in 2023-24 compared to 2022-23 as cash
balances were used to oset some of the government’s nancial requirements
in 2022-23 (Table A2.4).
242 Annex 2
Table A2.4
Projected Gross Issuance of Bonds and Bills for 2023-24
$ Billions, end of scal year
2021-22
Actual
2022-23
Estimated
2023-24
Planned
Treasury bills
187 202 242
2-year
67 67 76
3-year
29 20 6
5-year
44 31 40
10-year
79 52 40
30-year
28 14 10
Green bonds
5 - -
1
Total bonds
257
2
185
3
172
Total gross issuance
444 387 414
Sources: Bank of Canada; Department of Finance Canada calculations.
Notes: Numbers may not add due to rounding.
1
Issuance subject to expenditure availability and market conditions.
2
Total issuance includes real-return bonds and ultra-long bonds.
3
Total issuance includes real-return bonds, ultra-long bonds, and the Ukraine Sovereignty Bond.
Treasury Bill Program
Bi-weekly issuance of 3-, 6-, and 12-month maturities are planned for 2023-24,
with auction sizes planned to be largely within the $14 billion to $30 billion
range. The government targets an increase in the year-end stock of treasury
bills to $242 billion by the end of 2023-24, from an estimated $202 billion on
March 31, 2023. This approach is intended to support a liquid and well-functioning
market for Canadian federal government treasury bills, which helps investors who
need access to short-term, interest-bearing securities in lieu of cash.
This approach is also informed by the Debt Management Strategy consultations
with market participants held in fall 2022. Market participants indicated that
there continues to be a high level of demand for treasury bills, driven by the
uncertainty in markets and the rising interest rate environment.
Cash management bills (i.e., short-dated treasury bills) help manage
government cash requirements in an ecient manner. These instruments will
also be used in 2023-24 when needed.
2023-24 Bond Program
Annual gross bond issuance is planned to be about $172 billion in 2023-24,
$13 billion lower than the $185 billion issued for 2022-23 (Table A2.4).
Debt Management Strategy 243
Maturity Date Cycles and Benchmark Bond Target
Range Sizes
For 2023-24, reecting the cancellation of the 3-year sector, benchmark target
range sizes in the shorter-term bond sectors are higher relative to 2022-23
(Table A2.5). The continued transition away from the long-term emphasis results
in lower benchmark target range sizes for longer-term bond sectors relative to
2022-23.
Table A2.5
Maturity Date Patterns and Benchmark Size Ranges
1
$ Billions
Feb. Mar. Apr. May June Aug. Sept. Oct. Nov. Dec.
2-year
16-22 16-22 16-22 16-22
3-year
8-12
5-year
16-22 16-22
10-year
16-22 16-22
30-year
18-28
Source: Department of Finance Canada calculations.
Note: These amounts do not include coupon payments.
1
Actual annual issuance may dier.
Bond Auction Schedule
In 2023-24, there will be regular auctions of 2-, 5-, 10-, and 30-year bonds.
3-year bond auctions will only take place in the rst scal quarter. The number
of planned auctions in 2023-24 for each sector is shown in Table A2.6.
The actual number of auctions for 2023-24 may be dierent from the planned
number due to unexpected changes in borrowing requirements or shifts in
market demand.
Table A2.6
Number of Planned Auctions for 2023-24
$ Billions
Sector
Planned Bond Auctions
2-year
16
3-year
2
5-year
8
10-year
12
30-year
8
Source: Department of Finance Canada.
Note: These amounts do not include coupon payments.
The dates of each auction will continue to be announced through the Quarterly
Bond Schedule, which is published on the Bank of Canada’s website prior to the
start of each quarter.
244 Annex 2
Federal Green Bond Program
To support the growth of the sustainable nance market in Canada, in March 2022
the government published a green bond framework and issued its inaugural federal
green bond, delivering on commitments made in Budget 2021. The government
remains committed to regular green bond issuances.
The government continues to monitor developments related to green
investment taxonomies, including the Sustainable Finance Action Council’s
“Taxonomy Roadmap Report”, the European Commission’s “EU Taxonomy for
Sustainable Activities”, the forthcoming EU Green Bond framework and the UK’s
green taxonomy, as well as evolving market standards and investor preferences.
The government is also continuing to explore a Sustainable Bond Framework
which could include green, social, and transition bonds. Targeted discussions
with market participants on this issue are ongoing.
Consultations on Canada Mortgage Bonds
In 2001, Canada Mortgage and Housing Corporation (CMHC) launched the
Canada Mortgage Bond (CMB) program to help stabilize access to mortgage
funding in all economic conditions. CMBs carry the full faith and credit of
Canada and constitute a direct, unconditional obligation of Canada. However,
despite carrying the same credit rating, CMBs are a more costly form of
borrowing compared to regular Government of Canada bonds. In this context,
consolidating CMBs into the regular Government of Canada borrowing program
represents an opportunity to reduce debt charges and reinvest savings into
important aordable housing programs.
The government intends to undertake market consultations on the proposal
to consolidate the Canada Mortgage Bonds within the government’s regular
borrowing program, including on an implementation plan that would ensure
stable access to mortgage nancing. The government will return in the fall
economic and scal update on this matter.
Management of Canada’s Ocial
International Reserves
The Exchange Fund Account, managed by the Minister of Finance on behalf
of the Government of Canada, represents the largest component of Canada’s
ocial international reserves. It is a portfolio of Canada’s liquid foreign
exchange reserves and special drawing rights (SDRs) used to aid in the control
and protection of the external value of the Canadian dollar and provide a
source of liquidity to the government, if needed. In addition to the Exchange
Fund Account, Canada’s ocial international reserves include Canada’s reserve
position held at the International Monetary Fund.
Debt Management Strategy 245
The government borrows to invest in liquid reserves, which are maintained at
a level at or above 3 per cent of nominal GDP. Net funding requirements for
2023-24 are estimated to be around US$13 billion but may vary as a result of
movements in foreign interest rates and exchange rates.
Foreign debt is used exclusively to provide funding for Canada’s ocial
international reserves. The anticipated rise in foreign funding in scal year
2023-24 is required to fund the increase in the reserves level and to renance
maturing liabilities.
The mix of funding sources used to nance the liquid reserves in 2023-24 will
depend on a number of considerations, including relative cost and market
conditions. Potential funding sources include a short-term US-dollar paper
program (Canada bills), medium-term notes, cross-currency swaps involving the
exchange of Canadian dollars for foreign currency to acquire liquid reserves,
and the issuance of global bonds.
Further information on foreign currency funding and the foreign reserve assets
is available in the Report on the Management of Canada’s Ocial International
Reserves (https://www.canada.ca/en/department-nance/services/publications/
ocial-international-reserves.html) and in The Fiscal Monitor (https://www.
canada.ca/en/department-nance/services/publications/scal-monitor.html).
Bond Buyback Programs
The government announced the resumption of the Government of Canada
Cash Management Bond Buyback program in November 2022. This treasury
management operation is intended to eectively manage Government of
Canada cash ows ahead of large bond maturities.
The government plans to continue conducting cash management bond
buybacks in 2023-24.
Cash Management
The core objective of cash management is to ensure that the government has
sucient cash available at all times to meet its operating requirements.
As part of a general shift in the return to normal government operations
outlined in last year’s Debt Management Strategy, the higher cash balances
maintained during the COVID-19 pandemic were reduced during 2022-23 from
$90 billion to $40 billion.
At this time, the government’s cash is entirely on deposit with the Bank of
Canada, including operational balances and balances held for prudential liquidity.
Periodic updates on the liquidity position are available in The Fiscal Monitor.
246 Annex 2
Prudential Liquidity
The government holds liquid nancial assets in the form of domestic cash
deposits and foreign exchange reserves to safeguard its ability to meet
payment obligations in situations where normal access to funding markets may
be disrupted or delayed. The government’s overall liquidity levels are managed
to normally cover at least one month of net projected cash ows, including
coupon payments and debt renancing needs.
Legislative Measures 247
Annex 3
Legislative Measures
This annex includes a number of measures (other than tax-related measures)
that would be implemented through legislation.
Subject of the
Measure
Proposed Legislative Action
Cracking Down on
Predatory Lending
In Budget 2023, the government proposes to amend the
Criminal Code to (i) move from an eective annual rate
to an annual percentage rate (APR), (ii) lower the criminal
interest rate to 35 per cent APR, and (iii) adjust the
payday loan exemption to cap interest charged.
Canada Health
Transfer
In Budget 2023, the government proposes to amend the
Federal-Provincial Fiscal Arrangements Act to provide a
$2 billion CHT top-up to all provinces and territories to
address immediate pressures on the health care system.
Strengthening
Regulatory
Oversight of Natural
Health Products
In Budget 2023, the government proposes to amend the
Food and Drugs Act to extend powers conferred by the
Protecting Canadians from Unsafe Drugs Act (Vanessa’s
Law) to natural health products. These changes would
protect the health of Canadians by enabling regulators
to take stronger action when health or safety issues are
identied with natural health products on the market.
Introducing
Reporting
Requirements for
Employer Provided
Dental Coverage
In Budget 2023, the government proposes to introduce
legislation to support the implementation of the new
Canadian Dental Care Plan, which will provide dental
care to uninsured Canadians with family income less
than $90,000 annually. The legislation would compel
employers and employer pension plans to report dental
coverage oered to their employees and plan members
through T4/T4A reporting. This requirement would ensure
that the new Dental Care Plan is limited to Canadians
with an unmet need for dental care who don’t have
access to private insurance. The legislation would also
authorize Health Canada to collect and use the Social
Insurance Number of a person who applies under the
Dental Care Plan, for purposes of plan administration
and enforcement.
248 Annex 3
Subject of the
Measure
Proposed Legislative Action
Canada Growth Fund In Budget 2023, the government proposes to introduce
legislation and legislative amendments to deliver
the Canada Growth Fund, a new arm’s-length, public
investment vehicle to help attract private capital to
build Canada’s clean economy.
Public Sector Pension
Plan Governance
In Budget 2023, as previously announced in Budget
2022, the government proposes to amend the Public
Sector Pension Investment Board Act to increase the size
of the board of directors of the Public Sector Pension
Investment Board, and will propose other technical
amendments.
Clean Fuel
Regulations Fund
In Budget 2023, the government proposes to introduce
amendments to the Canadian Environmental Protection
Act, 1999 to provide the enabling authorities for
the Minister of Environment and Climate Change
Canada to establish a compliance fund to collect
contributions from parties regulated under the Clean
Fuel Regulations.
Continuing to
Support Seasonal EI
Claimants
In Budget 2023, the government proposes to amend
the Employment Insurance Act to extend the rules of a
temporary measure that provides up to ve additional
weeks of Employment Insurance regular benets to
seasonal claimants in 13 regions, until October 2024.
Protecting Federally
Regulated Gig
Workers
In Budget 2023, the government proposes to amend
the Canada Labour Code to improve job protections
for federally regulated gig workers by strengthening
prohibitions against employee misclassication.
Prohibiting the Use
of Replacement
Workers
In Budget 2023, the government proposes to introduce
amendments to the Canada Labour Code to prohibit the
use of replacement workers during a strike or lockout in
federally regulated sectors and to improve the process
to review and certify activities that must be maintained
during a strike or lockout.
Improving the
Recourse Process
for Employment
Insurance Appeals
In Budget 2023, the government proposes to
introduce amendments to the Employment and Social
Development Act (and consequential amendments to
other Acts) to establish a new independent tripartite
Board of Appeal to hear cases where claimants
disagree with a Service Canada decision regarding their
Employment Insurance claims.
Legislative Measures 249
Subject of the
Measure
Proposed Legislative Action
Strengthening Data
Sharing in Trade
Corridors
In Budget 2023, the government proposes to introduce
legislative amendments to the Canada Transportation
Act to provide the Minister of Transport with the
authority to compel data sharing by shippers using
federally regulated transportation services to improve
the eciency of existing transportation infrastructure.
Supporting Rail
Competition
In Budget 2023, the government proposes to introduce
legislative amendments to the Canada Transportation
Act to enable a temporary extension, on a pilot basis,
of the interswitching limit in the prairie provinces.
This would support competition among rail carriers
by enabling rail companies to access tracks owned
by another rail provider within the limit, under rates
regulated by the Canadian Transportation Agency.
Canada Innovation
Corporation Act
In Budget 2023, the government proposes to introduce
legislation to establish the Canada Innovation
Corporation, a new Crown corporation with a mandate
to increase Canadian business expenditure on research
and development across all sectors and regions
of Canada.
Amendments to the
Patent Act
In Budget 2023, the government proposes to make
legislative amendments to the Patent Act. Under the
Canada-United States-Mexico Agreement, Canada
agreed to provide patent term adjustments as
compensation to patent applicants who experience
unreasonable delays in the issuance of their patent. The
government remains committed to ensuring patents are
issued in a timely manner and will continue to support
a robust and ecient patent system.
Gottfriedson Band
Class Settlement
In Budget 2023, the government proposes to amend
the Income Tax Act to exclude the income of the
trust established under the Gottfriedson Band Class
Settlement Agreement from taxation.
Pregnancy Loss In Budget 2023, the government proposes to introduce
amendments to the Canada Labour Code to create
a new paid leave for workers in federally regulated
sectors who experience a pregnancy loss.
250 Annex 3
Subject of the
Measure
Proposed Legislative Action
Death or
Disappearance of a
Child
In Budget 2023, the government proposes to introduce
amendments to the Canada Labour Code to improve
eligibility for leave related to death or disappearance of
a child for workers in federally regulated sectors.
Banning Cosmetic
Testing on Animals
In Budget 2023, the government proposes to amend
the Food and Drugs Act to ban cosmetic testing on
animals. The proposed amendments would prohibit:
testing cosmetics on animals in Canada; selling
cosmetics that rely on animal testing data to establish
the product’s safety, with some exceptions; and false
or misleading labelling pertaining to the testing of
cosmetics on animals.
Citizenship Act
Modernization
In Budget 2023, the government proposes to
amend the Citizenship Act to enable: the electronic
administration of the citizenship program; automated
and machine-assisted processing; and the collection
and use of biometric information. This would allow
for faster and more ecient citizenship application
processing.
Better Protecting
Immigration and
Citizenship Clients
In Budget 2023, the government proposes to amend
the College of Immigration and Citizenship Consultants
Act, the Immigration and Refugee Protection Act and the
Citizenship Act to strengthen the regime governing the
profession of immigration and citizenship consultants.
These amendments would allow the College of
Immigration and Citizenship Consultants to better
function as a public interest regulator, including
by implementing a more eective complaints and
discipline process, improving overall governance and
enhancing protection from unethical or fraudulent
representation.
Improving Client
Service in the Private
Sponsorship of
Refugees Program
In Budget 2023, the government proposes to amend
the Immigration and Refugee Protection Act to
improve application intake in the Private Sponsorship
of Refugees Program, resulting in shorter and more
predictable processing times, helping sponsors to plan
and prepare for the arrival of refugee families.
Electronic Submission
of Asylum Claims
In Budget 2023, the government proposes to amend
the Immigration and Refugee Protection Act to allow
Immigration, Refugees and Citizenship Canada to
require electronic submission of asylum claims.
Legislative Measures 251
Subject of the
Measure
Proposed Legislative Action
NATO Climate Change
and Security Centre of
Excellence
In Budget 2023, the government proposes to amend
the Privileges and Immunities (North Atlantic Treaty
Organisation) Act to grant the standard NATO privileges
and immunities to this NATO Centre of Excellence and
its personnel.
Indenite Withdrawal
of Most-Favoured-
Nation Tari
Treatment from Russia
and Belarus
In Budget 2023, the government proposes to amend
the Customs Tari to indenitely withdraw eligibility to
the Most-Favoured-Nation preferential tari treatment
for Russian and Belarusian imports, resulting in the
application of the 35 per cent General Tari on virtually
all imports from these countries.
Supporting the
Economic Growth of
Developing Countries
In Budget 2023, the government proposes to introduce
amendments to the Customs Tari to renew Canada’s
General Preferential Tari (GPT) and Least Developed
Country Tari (LDCT) until the end of 2034, as well as
update the programs to align with Canada’s progressive
trade agenda and simplify administrative requirements
for Canadian importers.
Combatting Money
Laundering and
Terrorist Financing
In Budget 2023, the government proposes to amend
the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act and the Criminal Code, with
consequential amendments to other statutes, to
strengthen Canada’s anti-money laundering and anti-
terrorist nancing framework.
Modernizing Financial
Sector Oversight to
Address Emerging
Risks
In Budget 2023, the government may amend the Bank
Act, the Insurance Companies Act, the Trust and Loan
Companies Act, the Oce of the Superintendent of
Financial Institutions Act, and the Proceeds of Crime
(Money Laundering) and Terrorist Financing Act to
provide additional tools to protect the integrity and
security of federal nancial institutions and to address
risks of foreign interference.
The government may also make technical amendments
to the Bank Act, the Insurance Companies Act, the Trust
and Loan Companies Act, and the Green Shield Canada
Act.
The government may also amend the Canada Deposit
Insurance Corporation Act to provide expanded
authorities to increase deposit insurance and related
measures in the event of a market disruption.
252 Annex 3
Subject of the
Measure
Proposed Legislative Action
Special Economic
Measures Act
In Budget 2023, the government proposes targeted
changes to the Special Economic Measures Act and
Justice for Victims of Corrupt Foreign Ocials Act
(Magnitsky Act) to support the eectiveness of the
seizure, forfeiture and disposal framework introduced
in 2022 as a means of holding Russia accountable for
its illegal invasion of Ukraine. The government also
proposes to make related amendments to the Proceeds
of Crime (Money Laundering) and Terrorist Financing
Act to require the Financial Transactions and Reports
Analysis Centre to disclose information to the Minister
of Foreign Aairs, in certain circumstances.
FINTRAC Funding In Budget 2023, the government proposes to amend
the Budget Implementation Act 2021, No. 1 to introduce
a technical legislative amendment respecting the
coming into force of the assessments scheme under
the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act.
Traveller
Modernization
In Budget 2023, the government proposes to introduce
amendments to the Customs Act that will allow the
Canada Border Services Agency to transform how
low-risk travellers are processed when entering Canada
through enhanced use of technology.
Strengthening Air
Passenger Rights and
Data Sharing
In Budget 2023, the government proposes to introduce
legislative amendments to the Canada Transportation
Act to strengthen air passenger rights, and to convert
the Canadian Transportation Agency's quasi-judicial
adjudication process to a mediation-arbitration
process to help deliver more timely resolution of air
passenger complaints. The government also proposes
amendments to the Act to provide the Minister of
Transport with the authority to implement a regulatory
charge to enable the Canadian Transportation Agency
to recover from airlines the cost of adjudicating
passenger complaints, and to require data sharing
between air sector operators and the public disclosure
of performance data.
Legislative Measures 253
Subject of the
Measure
Proposed Legislative Action
Timely Sharing of
Death Information
in Employment and
Social Development
Canada (ESDC)
In Budget 2023, the government proposes to amend
the Department of Employment and Social Development
Act to permit a greater number of ESDC programs to
access death information from the Social Insurance
Register in a timely way, supporting program delivery
and integrity.
Allowing Use of
Canada Revenue
Agency-collected Data
for Canada Pension
Plan Analysis and
Evaluation
In Budget 2023, the government proposes to make
legislative amendments to the Canada Pension Plan
legislation to allow the use of Canada Revenue Agency-
collected data by Employment and Social Development
Canada when performing policy analysis, reporting,
and evaluation functions for the Canada Pension Plan.
Access to this data would support the government’s
commitment to evidence-based policy development
and GBA Plus analysis.
Equalization and TFF
Renewal
In Budget 2023, the government proposes to amend
the Federal-Provincial Fiscal Arrangements Act to:
renew the authority to make Equalization and Territorial
Formula Financing (TFF) payments and make technical
changes to improve accuracy and transparency; and
make a technical change to the Fiscal Stabilization
program.
Yukon Act
Amendments
In Budget 2023, the government proposes to amend
the Yukon Act to give the federal Minister responsible
for Northern Aairs the same powers with respect to
a contaminated site on federal land as the responsible
Minister in the Yukon government.
International Tax
Reform: Sharing
Revenues with
Provinces and
Territories
In Budget 2023, the government proposes to introduce
legislation, including as appropriate, amendments
to the Federal-Provincial Fiscal Arrangements Act
and its regulations, to share a portion of revenues
with provinces and territories from the OECD-led
international tax reform.
Modernizing the
National Research
Council
In Budget 2023, the government proposes to introduce
legislative amendments to the National Research
Council Act, as well as any other consequential,
coordinating or transitional amendments as necessary,
to provide the National Research Council operational
exibilities that will better ensure it can provide hands-
on support to Canada’s innovators through timely
access to specialized facilities and expertise.
254 Annex 3
Subject of the
Measure
Proposed Legislative Action
Amending the Canada
Post Corporation Act
In Budget 2023, the government proposes to introduce
amendments to the Canada Post Corporation Act to
limit Canada Post Corporation’s authority to open
parcels to instances where the inspection is based
on a “reasonable grounds to suspect” standard. This
amendment would enable postal inspectors to continue
inspecting parcels in a manner that respects the
Canadian Charter of Rights and Freedoms, and keep
dangerous goods and illicit substances out of the mail.
Supporting
Procurement of Zero-
Emission Vehicles for
Federal Fleets
In Budget 2023, the government proposes to amend
the Revolving Funds Act to increase the drawdown
authority under Public Services and Procurement
Canada’s (PSPC) Optional Services Revolving Fund by
$10 million. The government also proposes to add a
new business line item to allow PSPC to procure zero-
emission vehicles on behalf of client departments and
agencies.
Amendments to the
Service Fees Act
In Budget 2023, the government proposes to amend
the Service Fees Act to provide greater consistency in
how user fees are applied by government departments
and institutions and to streamline the administration of
fees.
Canada Elections Act In Budget 2023, the government proposes to amend
the Canada Elections Act to establish a uniform
federal approach in respect of federal political parties’
collection, use, and disclosure of personal information
in a manner that overrides overlapping provincial
legislation.
Bank of Canada
Negative Equity
In Budget 2023, the government proposes to introduce
legislative amendments to allow the Bank of Canada
to temporarily withhold remittances until negative
equity associated with the Government of Canada Bond
Purchase Program has been restored.
A Fairer External
Complaints Handling
System for Banking
In Budget 2023, the government proposes to introduce
targeted legislative measures to strengthen the external
complaints handling system for banks and to designate
a single, not-for-prot, body corporate to be the sole
external complaints body, following a selection process
led by the Financial Consumer Agency of Canada.
Legislative Measures 255
Subject of the
Measure
Proposed Legislative Action
Corporate
Governance: Diversity
Disclosure and Virtual
Meetings
In Budget 2023, the government proposes to introduce
legislative amendments to the Bank Act, Insurance
Companies Act, and Trust and Loan Companies Act that
will adapt and apply Canada Business Corporations Act
diversity disclosure requirements for board directors
and senior management at federally regulated nancial
institutions. The government also proposes to introduce
legislative amendments to permit virtual-only meetings
and allow for the introduction of conditions ensuring
participation.
Strengthening the
Federal Pension
Framework
In Budget 2023, the government proposes to amend
the Pension Benets Standards Act, 1985 and the Pooled
Registered Pension Plans Act to improve retirement
security for plan members and retirees through new
frameworks for variable payment life annuities and
technical housekeeping amendments.
Royal Titles In Budget 2023, the government proposes to amend
the Royal Style and Titles Act.
Enhancing the
Management of
Marine Emergencies
and Pollution
In Budget 2023, the government proposes to introduce
amendments to the Canada Shipping Act to deliver
on commitments related to the Oceans Protection
Plan, including to enable the proactive management
of marine emergencies and to cover more types of
pollution, and to the Marine Liability Act to clarify the
liability and compensation regime for ship-source
incidents.
Establishing a Vessel
Remediation Fund
In Budget 2023, the government proposes to introduce
amendments to the Wrecked, Abandoned or Hazardous
Vessels Act to establish and fund an owner-nanced
Vessel Remediation Fund, which would be used to
address abandoned and wrecked vessels, to extend
certain authorities under the Act, and to clarify other
sections of the Act.
