7 things to watch for in today's federal budget

Finance Minister Bill Morneau's second federal budgetisn't expected to match last year's big-ticketspending commitments.

Thebig Liberalmoves for the middle class rolled out for2016. The12-year infrastructure plan was the headlineof the fall economic statement.

The cupboard isbare now. Liberals areborrowing for the foreseeable future.

So, what's likely in2017? Smaller, strategic moves. Here's what to lookfor.

A rosier economic outlook, but ...

There's wind liftingMorneau'ssails heading into this budget. It's never a bad thing to have headlines about the Canadian economy "beating expectations."

His challenge now? Keeping thingsup.

Despiteambitious spending plans, Liberals said they'dkeep the federal debt manageable relative to the strength of the economy, as measured by its gross domestic product. They aim toreturnthe federal debt-to-GDP ratioto 31 per cent in five years, whereit was when they took over in 2015-16.

But the globaleconomy offers little reassurance. So one of the themes Wednesday may be"wait and see." Expect some decisions to be puntedto the fall economic update, or beyond.

• Economic unknowns to play a big role in federal budget plans

Morneaubuilt a largecontingency reserve ($6 billion) into the 2016 budget calculations, and thentook flak for eliminating thatrisk amountfrom his deficit calculations last fall. Will a large contingency reservereturn for the 2017 budget projections?

Revised infrastructure figures

The 12-year, $180-billion infrastructure plan needs updating.

The parliamentary budget officer's recent work suggests that, so far, less money made it out the door than originally anticipated.

• Budget office says Liberal spending estimates short $2.5B on infrastructure spending

There's an upside to this asmaller deficitfor 2016-17, for starters. But funding canbe reallocated for future years.

Federal finance minister chooses Edmonton shoemaker for budget attire

8 years ago

Duration 1:11

Poppy Barley spokesperson Caroline Gault reacts to the news that a shoe made by the company was chosen for Finance Minister Bill Morneau's budget address.

We may also learn more about theproposedCanada Infrastructure Bank, and how it differs from the public-private partnershipsinprevious infrastructure plans.

Jim Leech, the high-profile adviser named to get it up and running, has suggested some projectsmay not even need governmentmoney.

International Trade Minister Franois-Philippe Champagne is pitchingto investors as far awayas the United Arab Emirates.

Progress with provinces

Since the last budget, Liberals have completed negotiations with the provinces on Canada Pension Plan reformand health-care funding (almost, anyway).

• Manitoba prepared to stand alone in health-care fight with Ottawa

Up next arenew labour market agreements with the provinces to renew or replace the more than $2 billion the federal government contributes toskills training.

Morneau's economic advisory council has proposed a new arm's-length organization to research and lead a new workplace skills development strategycalled the FutureSkills Lab, similarto the independent Canadian Institutefor Health Information.

What role will provinces play?

• How the budget could spare Trudeau some difficult conversations
• High-tech sector looks to budget to spark innovation
• Ottawa warned about job losses that stem from automation

The federal government also needs provinces on board for its social infrastructure plans.

A shortage of child care, for example, can be a barrier to joining the workforce, limitingproductivity and economic growth.

• Child-care sector expects multi-year funding

But the federal government can't act alone, though Social Development Minister Jean-YvesDuclosmentioned rising child-care costs during his pre-budget tour earlier this month.

'Innovation' strategy

Beyond skills training, the second report from Morneau's economic advisory council focused on promoting "innovation."

Some work is already underway. InJune, anew visa systemwillmake it easier for top talent to immigrate.

The last budget earmarked $800 million to helpindustriesform "clusters" in specific geographic areas. Today'sbudget may expand on this.

Itmay also offer moreventure capital, either renewing an existing program or replacing it with one that matchesprivate sector investments for greater impact.

Capital gains, stock optionchanges

The capital gains inclusion rate, currently at 50 per cent, may rise to where it was in the 1980sor '90s, taxingover 60 per cent or even up to 75 per cent of investment income. A higher rate would becloser to how corporate dividends are taxed.

• This tax perk for wealthy CEOs will cost Canada $840M this year

The Ontario government is among those urging Morneau to helpcool hot housing markets by cappinghow much investment income is tax-free when a non-primary residence is sold.

• Ontario wants Ottawa to boost tax on real estate speculators

Prior to last year's budget, the startupcommunity deterred the Liberals from keeping an election promise to cap the tax deduction for employee stock options at $100,000, arguing that stock options helpnew and growing companies attract and keep top employees.

Liberals also deferred plans to lower the small business tax rate to nine per cent. Some wealthy Canadians form small businesses for their families in order to be taxed at a lower rate, so ifthis promise makes a comeback, watch for measures to make sure it doesn't offera bigger tax dodge for the wealthy.

Close the boutique?

Morneaualso has a tax reviewpanel that's studiedthe effectiveness of various credits and deductions.

Their advice has not been made public, but several panelists are on the record as favouring an end to so-called "boutique" tax credits thatmake the tax system complex, less efficient and more regressive.Morneau'sfirst budget cut some, and more may be on the way out.

• What your tax breaks cost on the finance minister's books

• 5 reasons to cutthe children's fitness and arts tax credits

Non-refundable tax credits forseniors disproportionately help the wealthy. Will this government shift to spending more on seniors' benefits that are income-tested?

Gender-based analysis

The fall economic statement promised that this year's budget will be the first to include a "rigorous analysis" to measure how the budget affects men and women differently. Spending proposals now need to show evidence these outcomes were considered.

Will there be a noticeable policy shift as a result?

• Add women, change budgets? Underused gender policy tool finds fans in Trudeau's cabinet

CBC coverage of budget 2017

CBC budget coverage begins at 2 p.m. ET with a special pre-budget Power & Politics on CBC News Network and with our live blog at cbcnews.ca.

Coverage continues at 4 p.m. ET with CBC News' budget special with Peter Mansbridge on CBC Television, cbcnews.ca and Facebook, and on CBC Radio with Susan Bonner and Chris Hall.

Watch post-budget analysis on Power & Politics with Rosemary Barton at 5 p.m. ET on CBC News Network and cbcnews.ca, On the Money on CBC News Network at 7 p.m. ET and The National at 10 p.m. on CBC-TV.