Canadians will learn the full extent of the federal Liberal government’s new spending plans — and how they intend to pay for them — on Tuesday when Deputy Prime Minister and Finance Minister Chrystia Freeland presents the 2024 federal budget.
Vowing not to increase the deficit by maintaining other fiscal barriers, heading into budget day there are strong signs that to help fund what has been a weeks-long blitz resulting in nearly $40 billion in promised measures, the Liberals will unveil taxes new or higher. for the wealthiest Canadians or Canadian businesses.
Commenting on the expectation of some form of individual wealth tax or excess profits taxes in the current budget, former Bank of Canada Governor David Dodge said the fiscal document “will probably be the worst” in decades and “will point us in the wrong direction.” ,” when it comes to economic growth.
However, Prime Minister Justin Trudeau was emphatic on Monday, while speaking to a group of business owners about what is to come, that his government believes now is the time to invest in housing, job growth and other affordability measures that worry many struggling millennials. and Generation Z.
“Millennials and Generation Z now make up the majority of Canada’s workforce. They are our economy… They now feel that the stability of the middle class is out of reach. We need to confront this moment, because it cannot be allowed make that happen.” Trudeau said.
The Liberals have ruled out raising taxes on the middle class and have stated that they are mindful of not diverting the Bank of Canada from its goal of lowering interest rates.
The fall economic statement projected the deficit for 2023-24 would be $40 billion, declining slightly in 2024-25 to $38.4 billion and then holding steady at $38.3 billion in 2025- 26.
What have the liberals promised?
Deciding to offer Canadians a preview of large portions of what will be in today’s budget, the prime minister and members of his cabinet have cherry-picked snippets through a series of near-daily announcements since late March, with a specific focus on “generational justice.” “.
About half of the tens of billions of dollars previously promised for housing, health and child care are loan-based and will require provincial buy-in.
The most important element that was previously announced was a series of housing measures that were integrated into a new “plan to solve the housing crisis”, revealed on Friday.
The housing strategy, which promises to build 3.9 million homes by 2031, includes a series of measures and billions of dollars to build more homes and make it easier to own or rent.
Among the biggest bill hosting commitments:
- A $15 billion supplement to the Apartment Construction Loan Program;
- $6 billion for a Canada Housing Infrastructure Fund;
- $1 billion in loans and $470 million in contributions for a new rent protection fund; and
- Complete the Housing Accelerator Fund with $400 million, plus $600 million for a series of new housing innovation efforts aimed at expanding modular and manufactured housing.
In terms of policies, this package also promises:
- Enact “public lands for housing” and industrial housing construction strategies;
- Launch a Canadian Tenants’ Bill of Rights and a Tenant Protection Fund;
- Allow 30-year mortgage amortizations for first-time homebuyers purchasing new construction; and
- Allow landlords to add secondary suites, among other tenant and RRSP cap reforms.
Regarding spending increases on social programs, the Liberals have also promised:
- $1 billion over five years to fund a new national school feeding program aimed at providing meals to 400,000 more children;
- $500 million for a new youth mental health fund to help community organizations provide more care; and
- $1 billion in loans and $60 million in grants to build or renovate child care centers, as well as $48 million to expand student loan forgiveness to early childhood educators.
Regarding national defense and intelligence, the budget will include:
- $8.1 billion over the next five years as part of the long-term defense policy update aimed at increasing military spending to 1.76 percent of GDP by 2030; and
- $2.4 billion to build capacity in artificial intelligence, largely for computing capabilities and technical infrastructure.
The next budget will also be a key political document.
This budget’s deliberate focus on younger Canadians is an indication that the Liberals are seeking to win back the lost voters who helped elect them, while shoring up other centrist supporters with promises to spend wisely.
Conservative Leader Pierre Poilievre has maintained a double-digit poll lead over the Liberals with his partisan attacks largely focused on the economy and his efforts to pressure the NDP to continue propping up the minority government with confidence votes.
Once the budget is tabled – a key confidence issue – debate over it and accompanying implementing legislation is expected to take center stage.