Finance Minister Bill Morneau tabled a pre-election budget today designed to calm Canadians worried about retiring with financial security, getting the skills they need to land new jobs, or being able to afford a first home.
Morneau’s fourth budget — a springboard for the Liberal platform heading in to the fall election campaign — delivers few big-ticket, signature programs but offers several new lower-cost programs that target key electoral constituencies: millennials, workers, businesses and seniors.
“There’s a growing sense of uncertainty taking root around the world, and Canada is not immune to those worries,” Morneau said in a prepared speech.
In all, the budget includes $22.8 billion in new spending.
The single biggest investment is in Indigenous services: $8.1 billion over five years for improving health care, ending boil water advisories on reserves and settling land claims.
A national pharmacare program has been a marquee Liberal promise for years. This budget doesn’t earmark major money to create one — but it does set aside $35 million to create a Canadian Drug Agency that will build on work already done by provinces and territories on bulk drug buying, and negotiate better prices for prescription medicine.
There’s also $1 billion to help Canadians with rare diseases access the high-cost drugs they need, though that money doesn’t kick in until 2022.
Boosts to RRSPs
The budget targets two major voting blocs: millennials and senior citizens.
Morneau said many hard-working young people see buying a home as an “impossibility.” The government wants to change that with a new shared mortgage program that could offset the purchase price by up to 10 per cent.
The budget also boosts the amount that can be withdrawn from RRSPs for a first-time home purchase — to $35,000 from the current $25,000.
Low-income seniors will see changes to the Guaranteed Income Supplement which will allow them to keep more of their income if they choose to stay in the workforce.
The budget also introduces safeguards to protect pensions in the event of company bankruptcies, and offers supports to community projects that improve the lives of vulnerable seniors.
“Women and men who have worked hard their entire lives … deserve a secure and dignified retirement, free of financial worries,” Morneau said.
Morneau’s 460-page budget, titled Investing in the Middle Class, offers no timeline for erasing the deficit.
The Liberals had pledged to run deficits to finance a massive infrastructure program, but broke their promise to return to balance by 2019.
Former Saskatchewan finance minister Janice MacKinnon predicts that could be a problem for many voters.
“I think this one is going to go beyond the numbers to a trust issue. It was a fundamental promise of this government to handle finances carefully, limit deficits and balance the budget,” she said.
“They’ve broken other promises, (like) electoral reform, but at least they tried. They gave it a shot. There was never, in the term so far of this government, an attempt to restrain spending.”
The budget projects a $20 billion deficit next year, which is scheduled to fall to $15 billion two years later, then again to $10 billion in 2023-2024.
Morneau said Canadians are also nervous about the labour market and the mismatch between their skills and those employers are seeking. The budget introduces a new, non-taxable Canada Training Benefit designed to help Canadians plan and pay for skills training. It includes a benefit with income supports covering the worker’s training period.
“Canadians at all stages in their working lives should have the opportunity to learn new skills to take control of their future,” Morneau said.
But MacKinnon said there’s no data to show exactly which skills are being sought by emerging job sectors. She said the government has failed to collect that crucial data, leading to a “mismatch” between skills training and what employers need.
Other highlights of the budget include:
- The creation of dedicated real estate audit teams at the Canada Revenue Agency to tackle tax non-compliance and money laundering in the housing market.
- An additional $739 million over five years to repair water systems on First Nations reserves.
- $1.2 billion over three years to help First Nations children access health and social services.
- A commitment to ensure access to high-speed internet by 2030 across the country.
- A federal purchase incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with a sticker price of less than $45,000.
- Working with the Federation of Canadian Municipalities to offer funds to support retrofits, such as hot water systems or rooftop solar panels, that make homes and businesses more energy efficient.
As he rolled out his budget, Morneau also took time to tout the government’s past accomplishments, including the Canada Child Benefit that he said has helped to lift 280,000 children out of poverty. He said the federal government’s “historic investment” in infrastructure has funded 33,000 projects and created well-paying jobs across the country.
In a news conference, Morneau defended the government’s decision to continue running deficits, arguing the Conservative plan to “balance the budget at any cost” would mean deep cuts that harm Canadians.
“We are convinced that if we took their approach, we’d be back in the situation in 2015 that they left us with — stubbornly high rates of unemployment and, as we came into office … two quarters of negative growth, which economists will tell you is a recession,” he said.
Sahir Khan, executive vice-president of the Institute of Fiscal Studies and Democracy at the University of Ottawa, said it’s hard to give credit to any one government for a strong economy, just as it’s not always fair to blame a government when the economy goes sour.
“I think they’ve made certain investment decisions, certain expenditure decisions that should position Canadians for the economy going forward, particularly an innovative economy,” he said.
“But this budget isn’t it. I think this is a fairly modest budget that is politically focused and moves their agenda forward, but not in a particularly ambitious way. It’s a way that focuses on the upcoming election.”
This story originally appeared on CBC