Reeling from the on-going SNC-Lavalin controversy and months before the next federal election, Justin Trudeau’s Liberal government is hoping a budget filled with promises for Canadians of all ages will be enough to earn your vote.
The federal Liberals are spending billions of dollars on everything from pharmacare to helping workers learn new job skills to easing the burden on first-time home buyers in its final budget before voters go to the polls in October.
“There’s a growing sense of uncertainty taking root around the world, and Canada is not immune to those worries,” Finance Minister Bill Morneau said while introducing the government’s fourth budget titled Investing in the Middle Class.
“A good job, the ability to make ends meet, the chance to build a life that’s at least as good as the one your parents had — that’s what we all want.”
The Trudeau government, which is bringing in more money than forecast, is projecting a $19.8-billion deficit for the 2019-20 fiscal year.
That’s $200 million more borrowing than anticipated in a year that was supposed to see the federal books deliver a surplus, according to the Liberal election platform from the 2015 campaign.
Morneau says the government needs to deal with what he calls growing concern around the world that good jobs won’t last, children will be worse off than their parents and that living longer will mean a crushing financial burden.
So it’s sprinkling billions of dollars across a variety of programs meant to help people at every stage of their lives.
WATCH: How the federal budget is targetting Canadians of all ages.
Thanks to higher than expected tax revenue this year, the budget sees more than $4 billion being spent immediately with over $2 billion going out to municipalities for much needed infrastructure repairs and other short-term projects.
“To give our communities the help they need, and to ensure that money earmarked for communities is invested as intended, we will be giving a one-time boost to municipalities through a municipal infrastructure top-up — doubling this year’s federal commitment through the Gas Tax Fund,” Morneau explained.
There’s also help on the way for millennial home buyers with the creation of the First-Time Home Buyers incentive which will see a reduction in the requirements for down-payments under mortgage insurance. The plan could effectively cut the monthly cost of a $350,000 mortgage by $280 per month.
“That’s real help for people who want to own their own home,” Morneau added. “For young people. For families. For Canadians who need just that little extra help to make their dream of owning a home a reality.”
There is also an increase to the amount you can take out of your RRSP for a first-time home purchase — going up from $25,000 to $35,000.
The government is not making any changes to the mortgage stress tests brought in last year, only saying it will adjust if necessary.
The government is setting up a new program called Canada Training Benefit, to provide skills training for Canadian workers and companies.
Workers aged 25-64 (with an income of less than $150,000 per year) will accumulate $250 per year in tax credits up to $5,000 which workers can claim as a tax credit on college or university tuition on skills upgrade programs.
“It’s a personalized, portable benefit that will help people plan for — and get — the training they need,” the Finance Minister said.
The budget is also lowering the costs of student loans, proposing a reduction in the floating interest rate, fixed interest rate and interest-free grace period on outstanding debt. The average student borrower would save about $2,000 over the lifetime of their loan.
There is also more support toward Indigenous Reconciliation, with an additional $4.5 billion over five years totaling $17 billion per year by 2021-22.
Morneau outlined how that money would be spent, saying: “It includes new support for Indigenous languages, for Indigenous entrepreneurs and businesses, for mental health and home care, and for emergency response — all critical parts of healthy and successful Indigenous communities. And most critically … it includes continued investments to make sure that these communities have clean, safe water.”
The budget’s single biggest-ticket item, however, is nearly $4 billion in aid for dairy and poultry farmers impacted by new free-trade deals.
The budget does not provide details for how or when the money will be doled out to farmers and producers, who have long railed against any move that would expand foreign involvement in their sectors.
But the promise of compensation could nonetheless salve such opposition and concerns about lost income, particularly in Quebec and Ontario, where many of Canada’s supply-managed farmers and producers operate.
“To ensure that Canada’s dairy, poultry, and egg farmers can continue to provide Canadians with high-quality products in a world of freer trade, we will make available an income protection program for supply-managed farmers, along with a measure to protect the value of quota investments these farmers have already made,” Morneau said.
The Trudeau Liberals say they are moving toward national pharmacare by creating a new national drug agency to lower medication costs.
The federal government says the new agency will help negotiate better drug prices and drive down the cost of medication for Canadians by up to $3 billion in the long term.
The plan, contained in the federal budget, also involves creating a central list of drugs considered cost-effective and a strategy to lower the price of high-cost drugs used to treat rare diseases.
“Parents of children with rare diseases know these costs all too well,” Morneau said. “It’s not just dollars and cents to these moms and dads … It’s nights spent sleeping by a hospital bedside. It’s a constant worry that never goes away. And it’s knowing how much happier and healthier their kids could be, if they could just get the treatment they need.”
The federal government says prescription-drug spending in Canada has spiked over the past 30 years — up from $2.6 billion in 1985 to $33.7 billion in 2018.
The Liberals say the measures in today’s fiscal blueprint will help build a system to ensure Canadians get prescription drugs they need.
The plan comes after a federally struck expert panel issued a report laying out what it called the “building blocks” of pharmacare, including the recommendation that Ottawa oversee an agency to roll out a national drug plan.
Highlights from the federal Liberal budget:
- $1.7 billion over five years, and $586 million a year after that, for a Canada Training Benefit to help workers upgrade skills and acquire new ones while keeping their jobs. The benefit includes a $250-a-year tax credit to pay for training programs and access to employment insurance to cover living expenses for up to four weeks away from work.
- $1.18 billion over five years to toughen border security, including hiring more judges to handle judicial reviews of asylum applications.
- Measures to make housing more affordable, especially for first-time buyers, by letting them borrow $35,000 from RRSPs (up from $25,000) and having the Canada Mortgage and Housing Corp. contribute a small share of equity for down payments.
- A federal deficit of $19.8 billion, including a $3-billion “risk adjustment,” an increase of $200 million from last year’s forecast. The Liberals’ forecast again includes a gradual reduction in the deficit, but not quite as quickly as anticipated last year. By 2023-2024, the projected federal deficit is $11.4 billion.
- $3.9 billion for farmers in supply-managed industries affected by new trade agreements with the United States and Asian countries.
- $2.2 billion for municipalities’ and First Nations’ infrastructure projects, through a one-time boost to the amount distributed through the federal gas-tax transfer.
- $1.2 billion over three years to enhance social services for Indigenous families and children, the main element in a package of spending aimed at Indigenous Peoples.
- Lowering the interest rate on Canada Student Loans to the prime rate, from the current prime-plus-2.5-percentage-points.
- Creating a new Canadian Drug Agency to centralize the evaluations of the effectiveness and efficiency of new drugs and buy in bulk nationwide, instead of province-by-province.
- $500 million a year, starting in 2022, to subsidize the costs of drugs for rare diseases, whose high costs are distributed among very few patients.
- $300 million over three years for rebates of up to $5,000 on electric or hydrogen-fuel-cell vehicles (with a maximum purchase price of $45,000).
- $950 million for municipal governments to refit their own buildings for energy efficiency and to provide their own subsidy programs for private homeowners to do the same.
- $50 million over five years to devise a new national dementia strategy.
– With files from Mike Eppel and Nigel Newlove