I. Introduction
It is evident that the Liberal government sees Budget 2024 as an
opportunity to restore “fairness for every generation.”
Overall, the budget includes $52.9 billion in new spending plans in
the next five years, of which $39.2 billion represents net-new
spending, as well as an estimated $20 billion in targeting new tax
revenue, including tobacco and vaping taxes.
The government’s projections for the deficit are largely in
line with previous predictions. The federal deficit is projected to
be $39.8 billion in 2024-25, $38.9 billion in 2025-26, and
declining over the three years following, to $20 billion by
2028-29.
After years of high spending, with a possible recession on the
horizon and the cost of living straining Canadians’ finances,
Deputy Prime Minister and Finance Minister Chrystia Freeland has
set three very specific fiscal guideposts: maintain the 2023-24
deficit at or below $40.1B, lower the debt-to-GDP ratio in 2024-25,
and keep deficits below 1 per cent of GDP in 2026-27.
II. Notable proposals
- Building affordable homes
Budget 2024 includes the comprehensive package of housing policy
initiatives Prime Minister Justin Trudeau and his cabinet have been
announcing in recent weeks.
Promising to build 3.9 million homes by 2031, the housing plan
includes a range of measures and $8.5 billion additional spending
for building more homes. This includes a minimum of 2 million new
homes in addition to the 1.87 million new homes expected to be
built by 2031. Much of this spending is spread out over the years
ahead.
Among the biggest commitments are a $15-billion top-up to the
Apartment Construction Loan Program, including at least $500
million to homebuilders that use innovative construction
techniques, such as modular housing for new rental projects. Budget
2024 also includes $6 billion for a new Canada Housing
Infrastructure Fund, $1 billion for the Affordable Housing Fund and
$400 million to top up the $4 billion Housing Accelerator Fund.
Budget 2024 is also making significant investments to encourage
more people to pursue a career in the skilled trades and breaking
down barriers to foreign credential recognition, particularly for
construction workers. The budget has allocated $90 million for the
Apprenticeship Service, creating apprenticeship opportunities to
train and recruit the next generation of skilled trades workers;
$10 million for the Skilled Trades Awareness and Readiness program
to encourage high school students to enter the skilled trades; and
$50 million in the Foreign Credential Recognition Program, with a
focus on residential construction to help skilled trades workers
build more homes.
The budget offers more details on plans to enact a “public
lands for homes” strategy. According to the government, this
initiative intends to “unlock 250,000 new homes” by
converting unused office towers, parking lots, Canada Post and
National Defence properties, into residential land.
Specifically, $1.1 billion is being earmarked over 10 years to
convert 50 per cent of the federal government’s office space
into housing, saving $3.9 billion over that same period of time. It
remains to be seen what the pricing strategy will be for this
federal effort to sell off, or re-zone, this land. The government
proposes to introduce legislation, as required, to facilitate the
acquisition and use of public land for homes, in partnership with
other levels of government.
In the meantime, the initial opportunities to be addressed will
be five federal properties leased to housing providers in Calgary,
Edmonton, Ottawa, Toronto, and Montreal, amounting to 800 new
homes.
- A stronger social safety net
Key measures in Budget 2024 include:
- Delivering $200 billion over ten years to strengthen universal
public health care. - Launching the new National Pharmacare plan with $1.5 billion
over five years to cover contraception and lifesaving diabetes
medication and devices. - Delivering the Canadian Dental Care Plan as announced in Budget
2023. - Launching the new Canada Disability Benefit with $6.1B over six
years and $1.4B ongoing, seeing the first payments issued in July
2025. The maximum benefit will amount to $2,400 per year for
low-income individuals with disabilities between the ages of 18 and
64. - Launching, as pre-announced, $1 billion over five years to fund
a new national school food program intended to provide meals to
400,000 more kids. - Launching a $1 billion Child Care Expansion Loan Program.
- Extending increased student grants and interest-free loans at
an estimated total cost of $1.1 billion this year. - Enhancing the Canada Pension Plan, including a working group
led by Stephen Poloz (former Governor of the Bank of Canada) to
explore how to catalyze greater domestic investment opportunities
for Canadian pension funds.
- Lowering everyday costs
While no details are provided, Budget 2024 states that it will
be “continuing to help bring down the cost of groceries by
implementing measures to strengthen competition in the grocery
sector, monitor grocers’ work to stabilize prices, and tackle
shrinkflation to uphold food sizes and qualities Canadians
expect.”
Other measures include:
- Intended amendments to the Telecommunications Act, to
enable Canadians to renew or switch between home internet, home
phone, and cell phone plans while avoiding unnecessary fees. - Consultations, beginning this June, to develop a right to
repair framework so Canadians can repair their broken appliances or
devices at a fair price. - Capping non-sufficient funds fees charged by banks to $10 per
instance, with regulation-making occurring in the coming
months. - Increasing access to $0 per month fee bank accounts.
- Limitations on / transparency regarding some so-called junk
fees, such as baggage and seating fees when booking airline
tickets.
- Growth and productivity
Budget 2024 proposes the largest-ever financial commitment to
artificial intelligence. To secure Canada’s AI advantage Budget
2024 announces a monumental increase in targeted AI support of $2.4
billion, including:
- $2 billion over five years, starting in 2024-25, to launch a
new AI Compute Access Fund and Canadian AI Sovereign Compute
Strategy, to help Canadian researchers, startups, and scale-up
businesses access the computational power they need to compete and
help catalyze the development of Canadian-owned and located AI
infrastructure. - $200 million over five years, starting in 2024-25, to boost AI
startups to bring new technologies to market, and accelerate AI
adoption in critical sectors, such as agriculture, clean
technology, health care, and manufacturing. This support will be
delivered through Canada’s Regional Development Agencies. - $100 million over five years, starting in 2024-25, for the
National Research Council’s AI Assist Program to help Canadian
small- and medium-sized businesses and innovators build and deploy
new AI solutions, potentially in coordination with major firms, to
increase productivity across the country. - $50 million over four years, starting in 2025-26, to support
workers who may be impacted by AI, such as creative industries.
This support will be delivered through the Sectoral Workforce
Solutions Program, which will provide new skills training for
workers in potentially disrupted sectors and communities. - The government is committed to guiding AI innovation in a
positive direction, and to encouraging the responsible adoption of
AI technologies by Canadians and Canadian businesses.
To bolster efforts to ensure the responsible use of AI:
- Budget 2024 proposes to provide $50 million over five years,
starting in 2024-25, to create an AI Safety Institute of Canada to
ensure the safe development and deployment of AI. - Budget 2024 also proposes to provide $5.1 million in 2025-26 to
equip the AI and Data Commissioner Office with the necessary
resources to begin enforcing the proposed Artificial
Intelligence and Data Act. - Budget 2024 proposes $3.5 million over two years, starting in
2024-25, to advance Canada’s leadership role with the Global
Partnership on Artificial Intelligence, securing Canada’s
leadership on the global stage when it comes to advancing the
responsible development, governance, and use of AI technologies
internationally.
In addition to making a significant investment in AI, Budget
2024:
- Unveiled a new 10 per cent tax credit on the capital cost of
buildings used for EV manufacturing — if companies make a
significant bet on locating other portions of their supply chains
in Canada. That tax credit, projected to cost $1B by 2035, can be
stacked on top of a 30 per cent tax credit for the equipment costs
of EV manufacturers.
- Temporarily allowing businesses to immediately write off the
full cost of investments in patents, data network infrastructure
equipment, computers, and other data processing equipment to help
them boost productivity and compete in the economy of
tomorrow. - Boosting support for student and postgraduate researchers,
including Indigenous researchers and their communities, through
increases to core research grant funding and scholarships and
fellowships. - Increasing access for the next generation of First Nations
university, college, and post-secondary students with an investment
of $242.7 million over three years. - Launching a $5 billion Indigenous Loan Guarantee Program to
unlock access to capital for Indigenous communities, enabling them
to share in the benefits of natural resource and energy projects in
their territories and on their own terms. - Delivering a $93 billion suite of major economic investment tax
credits, on a priority basis, to drive clean growth, secure the
future of Canadian businesses in Canada. - Supporting clean fuels projects by retooling the Clean Fuels
Fund to deliver funding, faster, and extending the Fund for an
additional four years, until 2029-30.
To complement the housing plan, Budget 2024 is committed to
building projects faster through a suite of measures to improve the
regulatory and permitting processes, focused on clarifying and
reducing timelines, working towards “one project one
review,” and improving engagement and partnerships, including
those with Indigenous partners.
In an effort to cut red tape and boost innovation and business
growth in Canada, the Liberal government is also revitalizing its
commitment to break down the barriers to internal trade that are
preventing Canada from reaching its full economic potential, and
holding back businesses from trading across provincial and
territorial borders. National regulatory alignment could increase
Canada’s GDP per capita by as much as 4 per cent, according to
the International Monetary Fund (IMF)—and the federal
government is taking action to get this done.
Federal public service organizations will be required to cover a
portion of increased operating costs through their existing
resources, which may save $4.2B over four years, starting in
2025-26. Most of these savings will be achieved through natural
attrition as the ranks of the public service are expected to
decline by 5,000 permanent positions over the next four years.
Worthy to note that observers warn not enough is being done in
this massive financial document to address the productivity issues.
Fred O’Riordan, the national leader for tax policy at EY, told
CTV News that in his view, it was the “missing element”
of the budget. “There are very few measures that are designed
to increase capital investment and enhance labour
productivity.” For Canadian Chamber of Commerce CEO Perrin
Beatty, “what’s still missing is a clear plan to promote
productivity and restore economic growth in Canada.”
- Protecting Canadians and defending democracy
As announced previously, Canada will invest $8.1 billion over
the next five years and $73 billion over the next 20 years on
national defence projects with a commitment to meet Canada’s
defence spending to 1.76 per cent of the gross domestic product by
the end of this decade. Whether the Liberal government meets this
commitment will be determined in the context of other anticipated
political issues in the coming months.
As the controversial threat of foreign election interference
continues to concern Canadians, the Liberal government is also
committing more money to bolster Canada’s spy agency. The
Canadian Security Intelligence Service is expected to receive
$655.7 million over eight years, starting this fiscal year, to
enhance its intelligence capabilities and its presence in
Toronto.
To support research operations in Canada’s North, the budget
also proposes $46.9 million over five years starting in 2024-25,
with $8.5 million in remaining amortization and $11.1 million
ongoing to Natural Resources Canada.
To support Ukraine, the Liberal government also announced that
Canada intends to provide Ukraine with $2.4 billion in loans for
2024, and $1.6 billion over five years to the Department of
National Defence, starting in 2024–25, for the provision of
lethal and non-lethal military aid.
III. Tax fairness
Budget 2024 is framed as pursuing tax fairness to level the
playing field for young people – the Millennials and
Generation Z. The Government has introduced a new revenue stream in
the budget, an increase in taxes on capital gains for Canada’s
highest earners, which is projected to generate revenues of $19.3
billion over the next five years.
Budget 2024 proposes to increase the inclusion rate for capital
gains from 50 per cent to two-thirds for corporations and trusts,
and to two-thirds for capital gains above a $250,000 threshold for
individuals. The inclusion rate for capital gains below the
$250,000 threshold for individuals will continue to be 50 per cent.
According to Minister Freeland, only 0.13 per cent of Canadians
with an average annual income of $1.4 million will pay more on
their capital gains.
The new inclusion rates will apply to capital gains realized on
or after June 25, 2024.
IV. Opposition responses
Unsurprisingly, the Conservatives will not support Budget 2024.
Pierre Poilievre, when rising in the House of Commons to address
Budget 2024, as the Leader of the Official Opposition and
Conservative Party of Canada Leader, aimed his criticisms at the
broad concept of deficit spending. This was, he said, the Liberal
government’s ninth deficit budget and he blames government
spending for a multitude of problems, including high mortgage
rates, high rents and homelessness.
In a press conference following the tabling of Budget 2024, NDP
Leader Jagmeet Singh claimed the NDP forced the Liberals to include
protection for renters with the introduction of the renters’
protection fund, the national school food program, and free birth
control, diabetes medication and devices under the national
pharmacare program. He notes, however, that the Liberal government
ignored the need to take on corporate greed. His concerns addressed
a disability benefit that only offers $200 a month, the absence of
a plan to address gaps in infrastructure and housing funding for
Indigenous communities, and the loss of 5,000 public service
employees.
As expected, Bloc Québécois leader
Yves-François Blanchet stated his party would not support
the budget because of “intrusions” in Québec’s
provincial jurisdiction, the government’s continued support of
the oil industry, and insufficient support for seniors.
V. Next steps
At the beginning of Minister Freeland’s budget speech, she
put forward the customary motion for approval of the Budget. The
debate on the Budget will occur over the next four sitting days of
Parliament (April 17, 18, 19, and 29) with the Official Opposition
Conservatives and Bloc Québécois proposing amendments
to the Minister Freeland’s motion. The vote on the
Minister’s motion to approve the Budget will occur Tuesday,
April 30. Each vote on those Motions is a confidence measure, so
the minority Liberal government will require opposition support to
retain power. Given the current strength of the Liberal – NDP
Confidence and Supply Agreement, the odds of the Liberal government
being defeated on a budget vote appear unlikely.
Once the Budget has been passed, the government can move forward
with the first of the two Budget Implementation Acts
(BIA). At the same time, the Senate will commence its pre-study of
the proposed legislation. Since the NDP are once again supporting
the Liberals to impose time allocation on debates in the House of
Commons, the first BIA may be passed before Parliament adjourns in
June.
There is, however, an important procedural matter to consider.
The government has still has not passed the necessary legislation,
Bill C-59, to make portions of the fall economic update a reality.
Bill C-59 is still in Committee. The government will soon to be
looking to table Bill C-59 in the House on the heels of presenting
the 2024 federal budget, and introducing the 2024 budget
implementation bills. The government has created a situation where
the number of priority pieces of legislation competing for House
time as grown exponentially.
There are 27 fixed sitting days in the House of Commons with a
potential 10 days to be added to deal with priority legislation
before it adjourns for the summer. The House of Commons is not
sitting the week of April 22 and the week of May 20. The House of
Commons traditionally adjourns before June 24, in advance of
St-Jean-Baptiste Day celebrations in Québec. The last day of
sitting for the Senate is Friday, June 28, 2024. We can expect
interesting days ahead in both chambers of Parliament before the
summer recess.
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