The federal budget is maintaining Ottawa’s cautious, wait-and-see approach to 2 crucial international issues: the continued existential threat to the North American Free Trade Agreement (NAFTA) and a new, more competitive U.S. corporate tax regime. But the government is proposing some changes that, if enacted, will underline some of the dramatic domestic differences between Canada and the U.S.

First steps toward pharmacare

In its 2018-2019 budget, tabled February 27, the government is proposing the creation of an Advisory Council on the Implementation of National Pharmacare, to be led by former Ontario health minister, Eric Hoskins. Hoskins was behind the introduction of the province’s child and youth pharmacare program, OHIP+, earlier this year. The council will be tasked with recommending options for a national pharmacare program, to be announced later in the year.

Until the council makes its recommendations, it’s too soon to tell how a national program might affect those Canadians who have prescription drug coverage as part of their workplace benefits. As the leading provider of group health insurance in Canada, Sun Life Financial will be watching the work of the council closely. “Sun Life looks forward to working together with the government on this initiative to ensure any pharmacare program ultimately enables all Canadians, including our clients, to live healthier lives,” says Dave Jones, Senior Vice-President of Group Benefits at Sun Life. “Sun Life believes prescription drugs should be affordable and accessible to all Canadians. By working together to leverage the strengths of the private and public systems, health insurers and government can deliver cost effective, innovative and accessible prescription drug coverage for all Canadians.”

Enhancements to parental leave

As part of its stated goal of removing barriers to full economic participation by women, the budget proposes a new EI Parental Sharing Benefit: 5 additional weeks of leave when both parents agree to share parental leave, for a total of 40 weeks. This measure is meant to provide more flexibility for families and allow women to return to work sooner, if they so desire, and to share the parental leave career timeout more fairly between men and women.

What about the economy?

“With the recent tax changes, the U.S. has made it more attractive for companies to do business there,” says Sun Life Global Investments Chief Investment Officer Sadiq S. Adatia. “We hope there will eventually be a policy response from Ottawa aimed at maintaining a competitive environment, but we recognize that an effective plan will take time and focus. In the meantime, companies – and investors – will just need to live with some temporary uncertainty.”

Other budget highlights

  • A forecast deficit of $19.4 billion for the current 2017-18 fiscal year, gradually narrowing to $12.3 billion by 2022-23
  • $3.2 billion for science and technology, including measures to help women advance in these fields
  • A cost-of-living increase for the Canada Child Benefit, starting July 2018
  • Consultations on how to protect the retirement security of employees whose companies enter the insolvency process with substantial unfunded pension liabilities
  • Improved service from Canada Revenue Agency, through more money for training and digital services, and more customer service agents
  • More money for cyber-security
  • A commitment to the elimination of drinking-water advisories on reserves by March 2021, and significant additional spending for indigenous housing, health, social services and education

Adatia says he expects 2 main trends to continue for at least the rest of the year: higher stock market volatility compared to the last couple of years, and the continued outperformance of foreign markets compared to our own.

“Our relatively negative view toward Canadian stocks has been a theme for many years now, with just a few short periods of optimism sprinkled throughout,” explains Adatia. “We believe an overheated housing market and high consumer debt pose a risk to Canada’s economy and stock market.”

Higher interest rates and inflation are also hot subjects these days, but Adatia remains generally unfazed. “What we’re experiencing now in the bond markets is what we’ve been waiting a long time for. We all knew the days – the years! – of record low interest rates would eventually come to an end. We’re not there yet. But the process is underway.”


This document is published by Sun Life Global Investments (Canada) Inc. and contains information in summary form. This document is provided for information purposes only and is not intended to provide specific individual financial, investment, tax or legal advice. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any mutual funds managed by Sun Life Global Investments (Canada) Inc. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.

Information contained in this document has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to its timeliness or accuracy. This document may contain forward-looking statements about the economy and markets, their future performance, strategies or prospects. Forward-looking statements are not guarantees of future performance and are speculative in nature and cannot be relied upon. Please speak with your professional advisors, such as your financial advisor or tax specialist, and refer to the Budget as published by the Government of Canada for details before acting on any of the information.

© Sun Life Global Investments (Canada) Inc., 2018.
Sun Life Global Investments (Canada) Inc. is a member of the Sun Life Financial group of companies.