Federal budget looks modest up close

We’ve stopped going backwards, but this government missed a number of opportunities to take some major steps toward building a more equal society and making life easier for the average Canadian.

Ottawa (29 March 2016) — When you take a close look at the budget, the “real change” promised by the federal government starts to look like a modest improvement on Stephen Harper’s last budget. We’ve stopped going backwards, but this government missed a number of opportunities to take some major steps toward building a more equal society and making life easier for the average Canadian.

Long wait for many of the measures in the budget

While many of the spending announcements in the budget sounded like good news, funding is spread over many years. This means the annual impact for many measures is minimal.

In areas like First Nations education or child welfare, much of the additional spending won't be in place until after the next election. Given how often governments claim that changing circumstances are forcing them to renege on previous commitments, many people are rightly worried we will never see that funding.

Child care an example of missed opportunity

The benefits of quality affordable child care for children and their families are well documented. What doesn’t get discussed as often is that the economic impact is bigger than any other measure governments can take to encourage growth.

Public spending on child care produces far more jobs than spending in other areas. The impact on the GDP is also very high. There is the long-term economic benefit as children in quality child care are more likely to do well later in life than those in substandard facilities.

Then there is the impact on families. For families with children under five, child care is the largest expense they face. It can easily be half of their take home pay. Putting funding into a national child care program would have ensured help goes to families most in need.

Harper Conservatives' cuts to support for provincial programs unchanged

Support from the federal government is what makes it possible for programs like Medicare to exist across the country. By reducing the federal share of funding for health care, the Harper Conservatives made it more difficult for poorer provinces to provide the access to quality health care that all Canadians deserve. Coming at a time when economic conditions are hitting hard provinces like Newfoundland and Labrador and New Brunswick, the Conservative cuts to health care funding are particularly dangerous.

This budget was an opportunity for the Liberals to undo much of the damage done by the Harper Conservatives. Reversing the cut to the Canadian Health Transfer and increasing equalization payments would have ensured provinces facing tough times would be able to cope. Instead, the budget leaves in place the Harper Conservatives plan for cuts to health care funding.

Small steps on tax fairness

Canadians for Tax Fairness suggested several measures the federal government could take to improve tax fairness. Together, these measures would generate $50 billion — enough to put the government back into a surplus position. 

In that regard, this budget did provide some good news. There is additional funding for the Canada Revenue Agency to deal with tax havens and tax cheats — though it’s still not clear if that funding will be enough. Income splitting, that primarily benefited the wealthy, is also gone.

But most tax fairness measures suggested to the federal government were not in the budget. The budget didn’t even close the stock options loophole, even though the Liberals promised they would during the last election.

This means that large corporations and the very wealthy will continue to pay less than their share. And until the federal government starts to collect the additional revenue that real tax fairness would provide, there is a danger that we will face a repeat of the 1990s when the federal government drastically reduced funding for health care, post-secondary education, community services and social assistance in the name of deficit reduction.

Hands-off approach to the economy largely unchanged

For the most part, the budget continues the hands-off approach to the economy of previous governments. Even though industrial strategies have been an effective tool for countries that have experienced sustained growth, the federal government is still not making full use of the tools governments have to build a strong economy.

While there were announcements in the budget that sound encouraging, much of the proposed funding is far enough into the future that there is good reason to question whether we will ever see it. Missing as well is a key first step in an industrial strategy – bringing all stakeholders, including the labour movement, together to ensure that an industrial strategy will meet the needs of all Canadians.

Making sure public funds are used for public services

In recent years, privatization has resulted in large amounts of money that were meant to fund public services being diverted to increase the profits of private companies. For example, the Ontario Auditor General found that using public-private partnerships increased the cost of infrastructure projects by $8.2 billion.

While the current government deserves some credit for removing the requirement that P3 privatization schemes be used as a condition for some federal infrastructure funding, PPP Canada is continuing to promote these schemes. Private, for-profit housing developers will be able to access over half of the funding announced for affordable housing, even though the for-profit sector does not have a good track record when it comes to meeting long-term affordable housing needs.

Instead, the federal government could have taken steps to ensure Canadians get value for money by requiring that, if privatization is being considered for projects and services funded by the federal government, a truly independent review take place and that all contracts and related documents be made public.

Debate just starting on direction Canada will take 

What the budget did show is that the debate on which the direction Canada will take did not end last election. While an overwhelming majority of Canadians voted to reject the policies of the Harper Conservatives, this budget is only a cautious step in the other direction. The measures in it can, and will, be reversed if the federal government thinks doing so will be popular.

This means it is important that those of us concerned about building a fairer, more prosperous Canada need to continue to be heard. And a first step is making sure people realize that, far from providing sweeping change, what’s in the budget are a few cautious steps.


The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 360,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE