Budget 2016 and its Impact on the Future of Government Funding

ByAlex Barlow Reading Time: 4 minutes
Canadian Government Funding Details from Budget 2016 Canadian Federal Budget

Editor’s Note: Details of the Canada Summer Jobs program are subject to change at any time; details on this page were accurate as of the posting date. To learn about current program details, please contact Mentor Works or visit canada.ca/en/employment-social-development/services/funding/youth-summer-job.

The first budget tabled by a new Canadian federal government always presents a lot of interest; budgets finally put meat on the bones and give more detail on the many election promises made during the election campaign.

We all want to know how will they deliver and how promises will be paid for, even more so with this new government that has promised increased investment. Sluggish GDP growth in the Canadian energy sector has contributed to reduced revenues, which makes the issue of the deficit and its anticipated size even more relevant in the 2016 Budget.

Canadian Government Funding Outlook in the 2016 Canadian Federal Budget

The budget provides details on the size and breadth of the 2016 – 2017 Canadian government funding programs, and outlines how the various departments and agencies will look to support productivity, innovation, and exports. We already know about some of this government’s top priorities, as they were outlined by the Ministerial Mandate Letters for each federal department on November 13, 2015. These letters outline 4-year priorities, while the budget indicates top priorities and strategies the government has identified for 2016 to support national objectives.

Two federal Ministries are of most interest: Innovation, Science and Economic Development (ISED) and Employment, Workforce Development and Labour (EWDL).

Innovation, Science and Economic Development:

Major developments for research and development and business expansion funding will be provided through:

  • Increased support for innovation, scientific research, & entrepreneurship, with specific mention of the Industrial Regional Assistance Program (IRAP);
  • A continued focus on growing and encouraging Canadian companies to pursue exports;
  • Support for incubators, accelerators, and clusters;
  • Continued support of the Regional Development Agencies to make strategic investments in key regions, including Federal Development Agency for Southern Ontario (FedDev Ontario) , Western Economic Development, Atlantic Canada Opportunities Agency and the Canada Economic Development for Quebec Regions; and
  • Developing strategies to adjust to TPP – particularly to offset negative impacts to the automotive industry.

Employment, Workforce Development and Labour

Likewise, developments will be made to support the strengthening of Canada’s workforce, especially youth workers, through:

  • Expanding Labour Market Agreements and the Canada Job Grant to support skills training;
  • Programs supporting youth hiring supports and incentives;
  • Providing a 12-month break on Employment Insurance premiums for firms that hire new younger workers into permanent positions; and
  • Working with provinces, territories, and post-secondary institutions to develop or expand pre-apprenticeship training.

By the Numbers: How Federal Funds will Bolster Government Initiatives

Canada’s 2016 Federal Budget provided a dollar value around a number of priorities with a projected $24.9B deficit, and continued deficits until 2020. Some key investments that will be made include:

Building Canada’s Infrastructure

$120B will be available for infrastructure projects over the next 10 years. This marks one of the country’s most ambitious infrastructure investments in the history of the country.

Youth Employment Strategy

Funding has been doubled for the Canada Summer Jobs program ($339M over 3 years), supporting the employment of youth currently enrolled in school and returning at the end of the summer.

National funds for youth employment initiatives are typically around $330M per year, however Budget 2016 proposes $165.4M in addition to support youth employment, and improved wage subsidies in cultural and environmental industries.

$73M will be provided over 4 years for the Post-secondary Industry Partnership and Co-operative Placement Initiative. The program will support partnerships between employers and post-secondary education institutions to align education programs with industry needs. The Initiative will also support new co-op placements and work-integrated learning opportunities for young Canadians, with a focus on high-demand fields, such as science, technology, engineering, mathematics (STEM) and business.

New Innovation Agenda

The Government of Canada will develop and launch a new Innovation Agenda to define the optimal way to support innovation and growth across all sectors, agencies and provinces. The agenda includes:

  • $95 million in new funding for Canada’s Granting Councils (NSERC, SSHRC) to support post-secondary research and development programs;
  • $2 billion over three years, starting in 2016–17, for a new Post-Secondary Institutions Strategic Investment Fund. In collaboration with provinces and territories, this initiative will support up to 50% of the eligible infrastructure project costs at post-secondary institutions and affiliated research and commercialization organizations;
  • $30 million over six years, starting in 2016–17, to Agriculture and Agri-Food Canada to support advanced research in agricultural genomics;
  • $800M over four years to support innovation networks and clusters such as Communitech, including an additional $50M in 2016-2017 support for initiatives delivered under the Industrial Research Assistance Program (IRAP). This is one of the largest new investments in the program since its announcement of new funding in 2012-2013 where $110M was allocated for that fiscal year; and
  • $4M over two years, starting in 2016–17, to renew the Canadian Technology Accelerator Initiative to support Canadian ICT, life sciences and cleantech firms by providing mentorship, introductions to potential clients/partners, and desk space in business accelerators abroad.

Other Changes to Canadian Government Grants and Loans

Canada’s cleantech, automotive, and manufacturing industries will also be benefitted by:

  • Several programs supporting clean technology research, including the Pan-Canadian Framework on Clean Growth & Climate Change;
  • The Automotive Innovation Fund, which was scheduled to expire at the end of 2017–18, expanding to the end of 2020–21; and
  • The Canadian government eliminating tariffs on about a dozen manufacturing inputs, providing an estimated $9 million in tariff savings over the next five years to Canadian manufacturers in the consumer goods and transportation sectors.

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