On the surface, the 2013 federal budget doesn’t appear to have much in it for investors. Other than a paragraph promoting the tax-free savings account and a brief update on the pooled registered pension plan, there was nothing in there about helping Canadians save. “It was a snoozer budget if you ask me,” says Darcy Briggs, a Calgary-based portfolio with Bissett Investment Management. “There were no little nuggets—no tax cuts to capital gains, interest or dividends.”
That’s not say that investors won’t benefit. The government did pledge $47 billion to infrastructure spending over the next 10 years and extended the accelerated capital cost allowance for manufactures—a tax relief program for investments in new machinery and equipment—by two years, which means stock holders could get a boost if public companies are able to take advantage of this spending and savings.
Bob Sewell, president and CEO of Oakville’s Bellwether Investment Management, does think that some companies, and their shareholders, could benefit from the infrastructure spending over time. “It won’t happen tomorrow,” he says. The most obvious beneficiaries, he says, are engineering companies such as SNC-Lavalin (TSX: SNC), Stantec Inc. (TSX: STN) and Aecon Group (TSX: ARE). Construction operations like The Churchill Group (TSX: CUQ) and Bird Construction (TSX: BDT) could benefit too. “There may be bit of a positive impact on a bunch of different companies for sure,” he says.
Generally, infrastructure spending is good for the economy, and when the economy is doing well, the market performs better, says Norman Raschkowan, executive vice-president of investments at Mackenzie Financial. While he would have liked to have seen more investor-specific changes—“it’s always nice to have more rather than less,” he says — he thinks it’s unlikely we’ll see any reductions in capital gain taxes or major increases in TFSA room until at least 2015, when the government says it can balance the budget by. “They’ll wait until they have greater confidence that they can hit that budget surplus target before they do something significant with the TFSA,” he says.
The government did pledge to close some tax loopholes, which could have an affect on high net-worth investors, and it also stated that it wanted more competition in the banking sector—that could reduce financial-related fees, says Sewell—but it’s not clear how or even if any of this will happen.
While Finance Minister Jim Flaherty may not have given much to investors, there is one thing people take comfort in: this mild budget won’t move the markets in the morning. “The market place is being driven by global events and has been for quite a while,” says Briggs. “The fact that this was a hold-the-course type of budget means that it probably won’t receive a lot of market attention.”