The Liberals have completely abandoned their promise to run “modest deficits” and to balance the budget by 2019. Instead, this budget forecasts a $19.8 billion deficit for 2019; however, the independent Parliamentary Budget Officer predicts the deficit is around $26 billion. According to the Finance department, the budget will not return to balance until 2040, by then racking up an additional $271 billion of debt.
As well, Canada’s debt reached an all-time high of $705 billion, or $50,166 per Canadian family. In his first three years in power, Justin Trudeau has added $60 billion to our national debt.
The 2019 budget contains $41.3 billion in new spending. Since 2015, the Trudeau government has increased spending by 20 per cent, from $270 billion to $323 billion, with no evidence that it created any growth in the Canadian economy.
The budget included several new announcements relating to housing, training, seniors and pharmacare, among others.
Here’s a more detailed breakdown on some of these new announcements:
Housing (First-Time Homebuyer Incentive)
Through the Canada Mortgage and Housing Corporation (CMHC), the Liberals will provide up to $1.25 billion over three years (starting in 2019-2020) to match funding of five per cent for the down payment on an existing home or 10 per cent on the down payment of a new home. This money will have to be repaid to the CMHC when the home is sold, though it’s unclear how the figures will be calculated if the home appreciates or depreciates in value.
In order to qualify for the program, first-time home buyers must have the minimum down payment for an insured mortgage and have a household income of less than $120,000. However, the Liberals’ previously introduced mortgage stress test has made it much harder for young people to qualify for mortgages, and the increasing cost of living under this government makes it harder to save for a down payment.
The government will also now allow first-time home buyers to withdraw up to $35,000 from their RRSPs to use for a down payment. The previous limit was $25,000. This money must be paid back into the RRSP account within the following 15 years.
The Canada Training Benefit
The Liberals have pledged $1.7 billion over five years for the new Canada Training Benefit, a tax credit to help with the costs of retraining for new careers. All Canadian workers aged 25 to 64 will accumulate $250 per year up to a lifetime limit of $5,000 and can spend their balance against up to half the cost of training fees at colleges, universities and other institutions. Anyone using this program must pay their training fees up front and receive the benefit during tax time the following year. It is also only available to employed people making more than $10,000 a year.
As well, an EI Training Support Benefit will provide up to four weeks of paid leave that can be taken within a four-year period with a 55 per cent income replacement for workers who want to take new training.
In my opinion, this fails to hit the mark for many of our unemployed energy sector workers. This program costs a lot of taxpayer money to deliver but fails to help those who need it most. It’s difficult to imagine what Canadians can do with the extra $250 that will make much difference in their day-to-day finances. It’s interesting to note that the United Kingdom ran a similar program but cancelled it because of the high cost of delivery.
The budget will proactively enroll Canada Pension Plan contributors who are aged 70 or older in 2020 but have not yet applied to receive their retirement benefit. The maximum Guaranteed Income Supplement (GIS) will be increased by $947 per year for single seniors.
As well, the government will provide $150,000 over three years to the National Pension Hub to support pension research focused on improving retirement savings outcomes for Canadians. The budget also allocates an additional $100 million over five years, with $20 million per year ongoing, to the New Horizons for Seniors Program, which funds community-based projects that benefit seniors.
With the budget, the government announced the first step toward national pharmacare. The government will give $35 million over four years for the Canadian Drug Agency, a new national drug agency that negotiates better prices for prescription medicine.
The government has also allocated $1 billion to help Canadians living with rare diseases, but the money wouldn’t start going towards that program until 2022-23.
Infrastructure for municipalities
The Liberals’ 2019 budget proposes a one-term transfer of $2.2 billion through the federal Gas Tax Fund to address short-term priorities in municipalities and First Nations Communities.
It’s worth noting the Liberals’ infrastructure plan, which was a huge part of their 2015 election platform, has been a failure. A recent Parliamentary Budget Officer report found, since the introduction of the $188 billion Investing in Canada Plan, provinces have decreased their overall spending commitments in the past two years. Because of the lower provincial contributions, the report found almost 10,000 jobs failed to materialize. The Liberals have not met a single GDP target since the development of the program; in fact, it has under delivered for both the economy and in creating jobs.
The infrastructure plan was developed without considering the importance of working with the provinces and territories to ensure that infrastructure was developed to create the growth the Liberal government promised Canadians.
Western Economic Diversification
The budget pledges $100 million over three years, starting in 2019-20, to increase Western Economic Diversification Canada’s programming in British Columbia, Alberta, Saskatchewan and Manitoba. However, there is no explanation of how this money will be used.
The budget states: “The government is presently working with business, industry, academia, Indigenous communities and organizations, and other levels of government, to develop a Western Canada Growth Strategy, which will reflect the unique regional advantages of each province, and help to stimulate economic growth, incent innovation, increase the participation of under-represented groups and attract investment” (page 113).
Other budget pledges:
- $10 billion over nine years in financing through the Rental Construction Financing Initiative to build more affordable rental options;
- $5 million over five years, starting in 2019-20, to have Employment and Social Development Canada develop a strategy and improve capacity to better measure, monitor and address gender disparity and promote access of under-represented groups across skills programming;
- $147.9 million over five years to promote international work and study opportunities and to promote Canadian universities abroad;
- $5 million over five years to Transport Canada to work with auto manufacturers to secure voluntary zero-emission vehicle sales targets;
- $300 million to introduce an incentive that gives a tax credit of $5,000 to Canadians who purchase a zero-emissions vehicle with a retail price of less than $45,000;
- $1.01 billion to increase the energy efficiency in residential, commercial and multi-unit buildings;
- $15.2 million over five years to establish a virtual Canadian Centre for Energy Information delivered by Statistics Canada;
- $5 billion in new investments in rural broadband over the next 10 years;
- $35 million over five years to make the Global Talent Stream a permanent program. This gives Canadian businesses access to global talent when Canadian workers are unavailable;
- $40 million over five years to First Nations to help research and develop claims;
- $1.4 billion over seven years to forgive all outstanding comprehensive claim negotiation loans and reimburse Indigenous governments that have already repaid these loans;
- $78.9 million over seven years to permanently fund surveys on Indigenous peoples and the First Nationals Regional Health Survey;
- $48 million over two years to directly support Indigenous communities in greatest need to obtain the expertise, advice and tools required to govern their communities;
- $4.5 billion over five years to continue efforts to close the gap between the living conditions of Indigenous Peoples and the non-Indigenous population;
- $126.5 million to establish a National Council for Reconciliation and endow it with initial operating capital;
- $60 million over five years to support capital infrastructure investments in Friendship Centres for Indigenous peoples living in urban areas;
- $50 million over five years to support the implementation of Canada’s first National Dementia Strategy, expected to be released in spring 2019;
- $36.5 million over five years to develop a pan-Canadian data and performance system for organ donation and transplantation, in collaboration with provincial and territorial partners;
- $30.5 million in additional funding to address the opioid crisis;
- $134.4 million over five years to support food policy priorities, including helping Canadian communities access healthy food, making Canadian food the top choice at home and abroad and reducing food waste;
- $160 million to support the Department for Women and Gender Equality in advancing gender equality;
- $1.18 billion over five years to support implementation of the Border Enforcement Strategy, which will process 50,000 asylum claims per year and facilitate removal of failed asylum claimants in a timely manner;
- Introducing new tax measures to support Canadian journalism, including a refundable tax credit for journalism organizations, a tax credit for subscriptions to Canadian digital news and access to charitable tax incentives for not-for-profit journalism. The government will also establish an independent administrative body that will be responsible for identifying journalism organizations as being eligible for the tax measures;
- Lowering the floating interest rate of student loans to prime, from its current rate of prime plus 2.5 percentage points, starting in 2019-2020.