Budget 2024 Analysis

April 22 2024

The federal government’s Budget 2024, titled Fairness for Every Generation, is a pre-election attempt by the federal government to make life easier and fairer for Canadians. Further to our initial analysis, this summary provides commentary on many of the issues important to NUPGE’s 425,000 members across the country.

Reducing income inequality requires a different approach

While the federal government has talked about reducing income inequality, progress has been limited. The introduction of the Canada Child Benefit (CCB) has helped reduce income inequality, and the Canada Emergency Response Benefit (CERB) had a temporary impact, but many other measures did far less than the federal government claimed they would.

One reason is that many of the assumptions the current federal government is operating on aren’t that different from previous Conservative and Liberal governments or from the assumptions that a Poilievre federal government would be operating under. Whether it was the Mulroney government, the Chrétien government, the Martin government, the Harper government, or the current Trudeau government, there is a reluctance to recognize the role that governments can play in building a stronger, fairer Canada.

As Budget 2024 acknowledges, some past federal governments were willing to use the tools they had to address problems like the housing shortage after the Second World War, instead of relying on the private sector. If the federal government is going to build a more secure, more equal Canada, it needs to rediscover that ability, instead of continuing to dangle gold-plated carrots in front of large corporations.

Baby steps on tax fairness

Even though fair taxation is essential for addressing income inequality, relatively little is being done.

The partial closing of the capital gains tax loophole in Budget 2024 is a step forward, and may be the biggest step the current government has taken to making the tax system fairer. But it is a baby step when leaps are needed.

Capital gains are currently taxed at only half the rate of earned income. Capital gains come from things like stock options or selling investment properties. This means taxing capital gains at a lower rate disproportionately benefits the wealthy, with an estimated 85% of the benefit going to the wealthiest 1%.

Budget 2024 raises the tax rate for capital gains, but only to two-thirds of the rate of earned income, and the first $250,000 of capital gains is exempt. This means that the wealthy individuals who receive much of their income from capital gains will continue to significantly benefit from the capital gains loophole.

Then there are the tax fairness measures that didn’t even make it into Budget 2024. A wealth tax would have been an important step in reducing wealth inequality. So would raising income tax rates for the wealthy and large corporations. A windfall profits tax would have helped discourage price gouging. 

Reportedly, the federal government was also considering a windfall profit tax on oil and gas companies, who have been seeing record profits. This tax on oil and gas companies has been called for by many climate change advocates. And the Parliamentary Budget Officer calculated in 2022 that such a tax would generate over $4 billion dollars—money that could be used to invest in climate action and to support workers and communities as we decarbonize our economy and tackle inequality. Sadly, the government abandoned the plan after lobbying by the fossil fuel industry, the Canadian Association of Petroleum Producers (The Globe and Mail).

Growing danger of public service cuts

While Budget 2024 avoids using the word cutback, it includes some significant cutbacks. Federal public service organizations are facing partial spending caps. And 5,000 positions are supposed to be eliminated through attrition.

The federal government claims that this won’t affect services to the public, but that response has become part of the script for any government making cuts. The reality is that, in any organization, major reductions in staff mean that services will be eliminated, or quality will suffer.

Towards universal child care

NUPGE welcomes the federal investment, first announced in March 2024, to provide loans and grants to help child care providers expand the number of child care spaces, of which there are shortages across the country. Funding support is crucial for expanding access to affordable child care in the public and non-profit sectors to ensure there are enough child care spaces available for all who need them.

Importantly, this budget allocates new funding to support training and student loan forgiveness for early childhood educators in rural and remote areas. We can’t expand child care access without expanding the workforce, which is experiencing critical shortages of qualified workers. We will need to see more coordination and investment to address recruitment and retention, particularly through fair wages—something we are glad to see recognized in the budget.

Care work

The government’s commitment to develop a National Caregiving Strategy and a Sectoral Table on the Care Economy, which would include child care and other types of care work, is overdue. We need a systematic approach to addressing worker shortages and working conditions, as well as tackling more complex care needs, to ensure that care workers and care recipients are treated with dignity and their rights respected.

Lack of action on climate

In the face of a climate crisis bringing increasingly volatile weather and rising costs and uncertainty for many workers and communities, we need meaningful government action. And yet, despite Minister Freeland touting its investment in expanding fossil fuel infrastructure, climate action is largely absent from Budget 2024.

Initial analysis from the CCPA found that the budget announced only $2 billion in net new climate spending over the next 5 years. This pales in comparison to other areas of spending and falls short of what is needed.

Despite the missed opportunities to invest in real action on climate change, there are still some positive announcements in this budget. We are pleased to see funding for a Greener Homes Affordability Program that will support low- and medium-income households in undertaking energy efficiency retrofits. Building retrofits can make a significant contribution to reducing our greenhouse gas emissions and improving energy efficiency, which also helps lower home heating costs.

We also welcome the commitment to develop a national green buildings strategy as part of the package of housing announcements. There was also new investment in VIA Rail, including funding for a high-speed rail in the Toronto-Quebec City corridor through a Crown corporation. Yet more federal leadership on greening the transportation sector is needed, including through public transit options within and between communities.

Notably, the budget also states the intention to launch a Youth Climate Corps, a long-standing demand of the Climate Emergency Unit and other allied organizations. Currently, there is no funding, and there are no details, but this signals a commitment to providing training for good, green jobs for young people. We will also be watching for federal funds to support the federal government’s Sustainable Jobs/Just Transition commitments.

Only small Band-Aid for health human resources crisis

The federal government is missing an opportunity to play a much-needed leadership role in creating a pan-Canadian health human resource strategy. While Budget 2024 acknowledges that there are severe staff shortages for many health care professions, the government’s response is underwhelming. Eligibility for the Canada Student Loan forgiveness program is being extended to 8 health and social services professions and teachers working in remote and rural areas.

While expanding eligibility for the Canada Student Loan forgiveness is positive, there are over 100 health care professions, and there are staff shortages in cities and towns, as well as in remote and rural areas. This means most health care professionals will see no benefit.

Questions around Pharmacare funding

While Budget 2024 provides funding for a National Pharmacare Plan, there are concerns that the allotted $1.5 billion over 5 years is not enough. It had been suggested that $1.5 billion would be needed in the first year alone. NUPGE and others who have pushed for a National Pharmacare Plan will be seeking answers.

Focus on quantity won’t fix affordable housing shortage

The problem facing Canadians isn’t just a housing shortage. It’s a shortage of housing that people can afford. And the best way to make sure housing is affordable is for the federal and provincial governments to build public housing, or to help housing co-ops and non-profit housing providers.

Measured against what needs to be done, Budget 2024 provides only limited help. $976 million will be provided to the Canada Mortgage and Housing Corporation over 5 years, starting in 2024 to 2025, to build housing for people who aren’t able to afford housing built under existing programs. This is in addition to the 7,000 non-profit, co-op, and public units to be built over 3 years that were funded in the 2023 Fall Economic Statement. By way of comparison, in the 1980s, the federal government was funding an average of 18,688 new public, non-profit, and co-operative housing units every year.

The plans to use public lands for affordable housing are encouraging, as is the plan to try to retain ownership of the land as a way of keeping the housing at least somewhat affordable. But without additional funding for public, non-profit, and co-op housing, new units on public lands will be built by for-profit developers, and there will be a risk that new units won’t stay affordable for long.

Mixed message on Indigenous Issues

According to the latest departmental plans, Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada intend to cut a combined $417 million from their budgets over 3 years. Meanwhile, Indigenous Services alone forecasts a broader $4.1 billion decrease in spending over the same period, as cash from past budgets runs out, or sunsets, including cash for child and family services, infrastructure, Jordan’s Principle, and the Inuit Child First Initiative.

Yet the federal budget states, “an infusion of $1.6 billion will help ensure First Nations children receive the support they need under Jordan’s Principle.” Another section of the budget mentions allotting $2.3 billion over 5 years to renew existing Indigenous programming, but it is unclear what those programs are. Programs are already underfunded, and the systems are overburdened. The government needs to commit more money to services and programs for First Nations, not less. 

Budget 2024 proposes investments of $918 million over 5 years, starting in 2024/25, to both Indigenous Services Canada and to Crown-Indigenous Relations and Northern Affairs Canada to accelerate work in narrowing housing and infrastructure gaps for First Nations, Inuit, and Métis. This funding comes with a promise to close the gap in Indigenous infrastructure by 2030. The Assembly of First Nations recently released a report that estimates that the baseline amount needed to close the gap and properly fund infrastructure for First Nations alone is $349.2 billion. National Indigenous organizations estimate it would cost more than $425 billion to close the overall gap in Indigenous infrastructure. 

Budget 2024 states that the government has spent over $6.3 billion to address critical infrastructure gaps related to water and wastewater and to accelerate progress to end long-term and short-term drinking water advisories in First Nations communities on reserve. $6.3 billion is insufficient to address the decades of underfunding, as evidenced by the Liberals moving the deadline back and the existence of 32 water advisories. But Budget 2024 doesn’t mention any new funding to end drinking water advisories in First Nations communities. It instead relies on Bill C-61, the First Nations Clean Water Act, legislation which is currently in the second reading stage. 

It’s encouraging to see the federal government commit money to combatting anti-Indigenous racism in health care. We also see as positive the federal government’s investment in policing to reduce hate crimes; however, there should also be funding to combat racism within police forces. Black and Indigenous people are overrepresented in incidents of police violence and in Canada’s prison systems. This will not change without intervention, including significant investment in combating systemic anti-Black and anti-Indigenous racism in policing. 

Budget 2024 also proposes to provide $5 million over years, starting in 2025/26, to Crown-Indigenous Relations and Northern Affairs Canada to establish a program to combat Residential School denialism. This is a good and necessary investment. Yet, as with any program or service impacting Indigenous people, Indigenous people must be involved in every step of the process. 

Funding won’t lift people with disabilities out of poverty

While it’s great to see the Canada Disability Benefit included in Budget 2024, a maximum of $2,400 a year will not lift most people with disabilities out of poverty. There are approximately 8 million (27%) people in Canada that have a disability, and 1.5 million (16%) people with disabilities live in poverty. Furthermore, 41% of people who live in poverty have a disability. With people paying more than $1,000 in monthly rent payments in most cities across Canada, a maximum of $2,400 a year will barely make a dent.

Furthermore, since people with disabilities can only be eligible for the Disability Benefit by using the Disability Tax Credit, many will miss out. The tax credit is underutilized due to its confusing application process and vague criteria for determining who is eligible. 

Review of private colleges will help protect students

We are pleased to see the government recognize the need to address exploitation of students by reviewing the status of private post-secondary institutions for the purposes of the Canada Student Financial Assistance Program. This is in addition to the new Recognized Institutions Framework to address the treatment and support of international students. NUPGE has raised concerns about the need to stop predatory behaviour by for-profit post-secondary institutions, particularly towards international students, so we will be following these developments.