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CANADA’S ECONOMIC ACTION PLAN YeAR 2 Built to keep our economy growing

A seventh RePORt tO CAnADIAns

© Her Majesty the Queen in Right of Canada (2011) All rights reserved All requests for permission to reproduce this document or any part thereof shall be addressed to Public Works and Government Services Canada. www.actionplan.gc.ca Cette publication est aussi disponible en français. Cat. No.: F2-189/7-2011E ISBN 978-1-100-17676-5

Table of Contents 1 Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 Progress Achieved to Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.1 Reducing the Tax Burden for Canadians. . . . . . . . . . . . . . . 31 2.2 Helping the Unemployed. . . . . . . . . . . . . . . . . . . . . . . . . . 49 2.3 Building Infrastructure to Create Jobs. . . . . . . . . . . . . . . . . 61 2.4 Advancing Canada’s Knowledge Economy and Creating Better Jobs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 2.5 Supporting Industries and Communities. . . . . . . . . . . . . . 111 2.6 Improving Access to Financing and Strengthening Canada’s Financial System. . . . . . . . . . . . . . . . . . . . . . . . . 135

Annex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

Chapter 1 Overview

This report incorporates data available up to and including January 28, 2011, unless otherwise indicated.

Canada’s Economic Action Plan

A Seventh Report to Canadians

Highlights

 The first phase of Canada’s Economic Action Plan, a $60-billion



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fiscal stimulus package, is steering the economy on a recovery from the deepest global recession since the 1930s and is positioning Canada to succeed in a highly competitive global economy. Canada’s labour market is performing better than its Group of Seven (G-7) peers, with Canada posting the strongest employment growth among G-7 countries since June 2009. In addition, Canada has now more than fully recouped all of the loss in output experienced during the recession. This strong economic performance reflects the timely and effective implementation of Canada’s Economic Action Plan. On average, the Economic Action Plan is estimated to have boosted Canada’s gross domestic product (GDP) growth by 1.3 percentage points per quarter since the second quarter of 2009. In its first year of implementation, the Economic Action Plan delivered close to $32 billion in timely stimulus to the economy. The Action Plan is on track to deliver $28 billion in further stimulus in its second year. More than 26,000 projects have been completed or are underway under the Economic Action Plan. These projects are putting Canadians across the country to work, contributing to the strong labour market recovery. The Government has demonstrated flexibility in responding to the needs of Canadians: − The Government acted to strengthen Employment Insurance (EI) benefits and limit the increase in EI premiums to 5 cents per $100 of insurable earnings for 2011 and 10 cents for subsequent years. This will help businesses, particularly small and medium-sized enterprises, to continue to create jobs in the recovery. − The Government has extended the deadline for infrastructure projects under four Economic Action Plan funds, from March 31, 2011 to October 31, 2011. This extension should allow sufficient time for the completion of remaining infrastructure projects, and will also extend construction activity and the associated economic benefits into the next fiscal year.

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Chapter 1

 Because of the Economic Action Plan’s emphasis on temporary

measures, Canada is well-placed to retain its fiscal advantage and is on track to return to balanced budgets over the medium term.  Although the global economic recovery remains fragile, Canada’s domestic economy is performing well and priv