Will this federal budget address the angst of millennials and Gen X?

The winter weather is moderating in Canada, which can only mean one thing: federal budget season is approaching. He April 16 release coincides with multiple challenges for this minority government.

Polls consistently show that more Canadians are open to a Pierre Poilievre government, including a new Léger survey That reports that 48 percent of respondents say they live paycheck to paycheck, especially people under 55.

Is this a budget to address the angst of millennials and Gen X?

Sometimes we forget that budgets are not economic documents, but fundamentally political ones. Right now, affordability is the central concern for Canadians, and that’s having political repercussions for Justin Trudeau’s Liberal government.

One specific cost – housing – continues to skyrocket, almost entirely because the Bank of Canada raised interest rates in its attempt to control inflation.

Mortgage interest costs have risen 55 per cent since the Bank of Canada began raising rates and rents have risen 12 per cent. Landlords also have mortgages and pass on additional interest costs to tenants through rent increases. Meanwhile, renters can’t afford to buy a home because the costs are too high, so they stay in rentals longer.

Last year, the inflation rate may have been declining, but prices themselves are now permanently higher.

These crushing increases in housing costs are not borne equally. Millennials are especially affected.

Canadians under the age of 45 who are lucky enough to own a home are now saddled with large mortgages and large mortgage interest payments. Millennials used to pay seven percent of their income in interest. Two years later, it’s almost 12 percent.

A federal budget that addresses the affordability challenges of young Canadians will likely have to focus on additional pocketbook issues, such as transportation and post-secondary education, writes @DavidMacCdn @ccpa #cdnpoli @cafreeland #Budget2024

Comparatively, baby boomers have smaller mortgages (if any), making them more resilient as interest rates soar. Additionally, boomers have seen historic appreciation in home values, with surprisingly little decline due to rising interest rates.

Since the 1950s, homeownership has been a symbol of middle-class prosperity in Canada, but that ship appears to be sailing toward younger generations. A federal government seeking re-election must substantially address the millennial affordability crisis.

What’s probably frustrating for the federal government is that many of its other major initiatives will have big benefits for millennials. The federal implementation of a $10 a day childcare The program, for example, benefits young families, many of whom were spending the amount of a monthly mortgage payment on child care fees.

But the federal government will need to work with provinces to expand the number of child care spaces to meet demand. It must also guarantee decent working conditions for the early childhood educators who staff these expanded spaces.

Younger generations will likely benefit from the new federal dental care plan because they do not have covered dental benefits in their workplaces. The only catch is that the current dental plan is not available for households earning more than $90,000. Two people making $45,000 each are strapped for cash, especially if they’re raising kids and getting crushed by mortgage interest rates.

Younger women will benefit from new pharmaceutical scheme to make contraceptives free.

But all those savings of younger Canadians are being overwhelmed by housing costs.

What more could this government do for millennials and Gen X in this spring’s budget?

First, we must recognize that the fastest way to reduce housing costs is to lower interest rates, something the federal government cannot control; that’s in the Bank of Canada.

If you take the interest on the mortgage and the rent on the Consumer’s price index (CPI), inflation has been within the Bank of Canada’s desired target range since May. So high interest rates not only keep housing costs high, they also keep the CPI high.

The federal government is also constrained in this regard: conditions are certainly being set to build more housing through zoning changes, but interest rates are also crushing new housing construction because Developers face higher interest rates and are unsure about moving new units..

Even if we were building more, it takes time to generate supply. Housing costs will get worse before they get better.

And the mortgage water pumps are about to fall: there are still months to go Half of mortgage holders in Canada renew at higher rates.

Therefore, a federal budget that addresses the affordability challenges of young Canadians will likely have to focus on other things. Child care, dental and pharmaceutical care are certainly a step in the right direction. In fact, any improvement in the accessibility of public services (transportation, post-secondary education and more) is a pocketbook issue for young people.

The government could also consider student loan forgiveness programs as the Biden administration has done in the US.

The bottom line is this: The ability of this budget (and the next) to target millennials and Gen

There are many other key areas that need attention, but the government is likely to fail to deliver. Employment insurance reform and a Canada disability benefit immediately come to mind, but there is no sign of movement in these files.

He The budget will be announced on April 16.. There is only one sitting week in march, surrounding the federal government. This will be one of, at most, two budgets between now and the fall 2025 elections.

There is no indication at this time that this is an electoral budget, but only time will tell. Whatever the case, it has to resonate with young voters or the writing will be on the wall for the Liberal government.

David Macdonald is a senior economist in the national office of the Canadian Center for Policy Alternatives.

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