Canada's Performance 2006: The Government of Canada's Contribution

1. Economic Affairs

Context

A central role of government is to foster an environment where citizens can prosper, and creating a strong and competitive climate is fundamental to achieving this objective. Productivity is a key driver of the long-term progress of Canadians' standard of living and real incomes. Experience and education, innovation and know-how, a competitive marketplace and tax system, efficient allocation of resources, and strengthened fiscal arrangements and policies–these are all important factors affecting the productivity of the Canadian economy.

The Canadian economy is one of the strongest and healthiest among the seven leading industrial countries of the G-7, which consists of the United States, the United Kingdom, France, Germany, Italy, Canada, and Japan. In 2005, the Canadian economy created 254,700 new full-time jobs and 2006 got off to a good start with a total of 101,500 new positions created in the first quarter. With strong job creation, the unemployment rate fell to 6.3 per cent in March 2006–the lowest level since December 1974 (Budget 2006). Additionally, for 2005, real gross domestic product (GDP) increased 2.9 per cent, slightly below 2004 growth of 3.3 per cent (Statistics Canada, 2006). After growing an average of only 0.3 per cent in 2003 and 2004, productivity growth rebounded in 2005, growing at a rate similar to the 2.1 per cent recorded over the 1997–2002 period (Budget 2006).

Canada's economic performance has remained strong in spite of major ongoing structural changes to the economy. Increased inter-regional labour mobility, restructuring within the resource and manufacturing sectors, and the rise of the service sector have significantly changed the composition of employment over the past two decades and, hence, the drivers of the Canadian economy. High commodity prices, particularly energy prices, and the appreciation of the Canadian dollar since 2003 have also spurred significant economic adjustments over the past three years (OECD, Economic Summary of Canada 2006). To date, the economy has shown resilience in its ability to cope with the ongoing changes. However, Canada must not lose sight of the additional challenges that lie ahead. An expected slowdown in the rate of growth of the working age population, coupled with the fiscal pressures created from an aging population, will require a boost in productivity growth in order to maintain the high living standards that Canadians have come to enjoy.

Maintaining and building a flexible and productive economy is an enduring priority for the Government of Canada, which encourages continued prosperity by creating favourable conditions for growth through the establishment of a fair, efficient, and competitive marketplace and by forging solid links between a robust economy and a sound fiscal framework. A competitive and efficient economic union will also require that the federal government collaborate with its provincial and territorial counterparts to address the economic and fiscal challenges that arise from regional variations in needs and priorities.

This section tracks the Government of Canada's contribution to five outcome areas related to economic affairs:

1. income security and employment for Canadians;

2. strong economic growth;

3. an innovative and knowledge-based economy;

4. a clean and healthy environment; and

5. a fair and secure marketplace.

Income Security and Employment for Canadians

Performance context

To set its programs, expenditures, and performance in context, the Government of Canada is tracking key measures of long-term progress in the area of income security and employment for Canadians. In the electronic version of the report, clicking on indicators in the Performance Highlights table will lead you to detailed information about current performance and trends.

The Government of Canada's contribution to income security and employment for Canadians

An important element of quality of life is the ability to adequately support oneself financially. Budget 2006 addressed this issue through measures that reduce the tax burden and improve the financial situation of seniors, students, and families.

The Government of Canada is also committed to making strategic investments in building an educated and skilled labour force. The difficulty Canadian employers have in finding skilled tradespeople is becoming an impediment to economic growth. This situation is expected to continue over the coming years and is occurring at a time when many industries reliant on skilled trades workers are experiencing significant growth. Meanwhile, many Canadians find themselves in low-paying positions and either are not encouraged to consider the trades or are unable to do so because of financial barriers. Budget 2006 highlighted Canada's new government's plan to encourage Canadians to pursue opportunities in skilled trades and hence meet the future need for skilled tradespeople that is crucial to the sustained growth of the economy. To encourage employers to hire new apprentices, Budget 2006 introduced the Apprenticeship Job Creation Tax Credit, which provides eligible employers with a tax credit equal to 10 per cent of the wages paid to a qualifying apprentice in the first two years of his or her contract, to a maximum credit of $2,000 per apprentice per year. In addition, Budget 2006 also established the new Apprenticeship Incentive Grant Program that will provide a cash grant of $1,000 per year to apprentices in the first two years of an apprenticeship program, starting in 2007. Expenses incurred by tradespeople for the cost of tools in excess of $1,000 that they must acquire for work will also be recognized, in addition to general recognition of their employment expenses through the new $1,000 Canada Employment Credit.

Enhancing the potential for Aboriginal peoples and communities to take advantage of economic opportunities is essential to securing their place in Canada's economy. Two major economic challenges faced by Aboriginal communities are business and market development, and fostering sustainable economic development. Aboriginal communities have relied heavily on natural resources harvesting to provide economic development opportunities. Communities often face many challenges, however, in translating these resources into economic opportunities. Sustainable economic opportunities provide long-term employment and stable sources of revenue, which, in turn, are critical to improving the quality of life for Aboriginal peoples.

The federal programming suite supports economic development opportunities for Aboriginal peoples along several streams. For example, skills development for increased participation in existing and emerging economic opportunities is supported through the Aboriginal Skills and Employment Partnership (ASEP) program. The Government of Canada also supports development in resource industries and capacity building within First Nations, Métis, and Inuit communities to enable participation in community economic development projects. Depending on the community, support may involve employment, business development, development of land and resources under community control, or accessing opportunities from land and resources beyond community control, and developing effective regulatory regimes. The Aboriginal Fisheries Strategy, the First Nations Forestry Program, the First Nations Oil and Gas and Moneys Management Act, and the First Nations Commercial and Industrial Development Act are examples of resource development programs and initiatives.

Liaising with provincial and territorial governments and professional associations towards the establishment of a Canadian agency for the assessment and recognition of foreign credentials will be an immediate priority of the Government of Canada. The Government of Canada plans to invest $18 million in a Canadian agency for the assessment and recognition of foreign credentials over 2006–07 and 2007–08.

The government is also working to address the challenges associated with the mobility of skilled labour between provinces. The recognition of professional qualifications nationwide will be an important step in creating employment opportunities for Canadians and addressing labour shortages in several regions across the country. Budget 2006 also supports the creation of new jobs and investment by reducing taxes for small businesses and large corporations.

Links to detailed departmental information

Several departments, agencies, and Crown corporations that receive appropriations contribute to income security and employment for Canadians through their respective strategic outcomes and program activities. This document serves as a road map to facilitate navigation through the departmental and agency performance reports. Clicking on the links in the electronic version of the following table will lead you to planning, performance, and resource information that is contained in the organizations' departmental performance reports and reports on plans and priorities, as well as in the Annual Report to Parliament on Crown Corporations and Other Corporate Interests of Canada. The Strategic Outcomes database, which can be found at http://www.tbs-sct.gc.ca/rma/krc/cp-rc_e.asp, also leads to relevant audits and evaluations.