Canadian Federal Budget 2024

by Maj (ret'd) CORNELIU. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East As expected after the big spending Ontario 2024 budget with its 9 billion deficit, the Liberal’s big-government budget ups spending. It raises taxes, promising Canadians the world by spending their hard-earned money, to the tune of a 40 billion dollar deficit. The federal budget confirms the Trudeau government’s ongoing fiscal trajectory of higher program spending, more deficits and debt. It also sets out significant new tax increases, including a higher capital gains tax rate, intended to raise revenues to match the government’s higher levels of spending. Years ago, when the Trudeau government first took office in 2015, federal spending was roughly $250 billion (about 12.5 percent of GDP) per year. Although the incoming government intended to increase spending on the margins based on “modest,” short-term deficits, its overarching fiscal policy message was generally in continuity with its predecessor. Once in office, the Liberals’ first budget increased program spending by 6 percent and it never looked back. Program spending was up by 36 percent over just five years even before the pandemic hit. This trend of higher spending, systematic use of deficit financing that balloons the deficit, has continued in the post-pandemic years and is strongly reaffirmed in the new budget. This year’s projected spending is nearly double what it was in the Harper government’s final year in office. It’s projected to hit $534.6 billion for 2023-24 and set to increase every year thereafter. Spending as a share of GDP is now roughly three percentage points higher than it was when the Trudeau government was first elected, and the highest in 30 years. The budget’s tax increases start with the rich and end with the poor, in order to finance politically motivated projects. Using deficit financing this government has driven up government spending so high that it now needs to raise taxes to pay for its public expenditures. Rising borrowing costs and the government’s own spending habits will force taxes to increase more broadly to sustain the Trudeau government’s inexorable spending ambitions. Let’s look in detail at some of the major provisions in the 416 page recently tabled budget. Overall, the 2024 federal budget includes $52.9 billion in new spending plans, some of which is loan-based and reliant on provincial buy-in as well as an estimated $20 billion in new tax revenue, including tobacco and vaping taxes. Aiming to give Canadian millennials and Generation Z "a fair chance at a middle class life”, the budget outlines the Liberals’ plan to allocate $39.2 billion in net-new spending, while upholding the intended fiscal guardrails. Promising to build 3.9 million homes by 2031, the housing strategy includes a bevy of measures. Much of this spending is spread over the years ahead. Among the biggest ticket housing commitments are a $15-billion top-up to the Apartment Construction Loan Program; $6 billion for a Canada Housing Infrastructure Fund; as well as $1 billion in loans and $470 million in contributions for a new rental protection fund. The budget also includes $400 million to top up the Housing Accelerator Fund, plus $600 million for a series of new homebuilding innovation efforts aimed at scaling up modular and prefabricated homes. There are a series of chapters in the 2024 federal budget focused on various efforts to expand elements of Canada's social safety net. This includes $1.5 billion over five years to launch the new national universal pharmacare plan. The first phase, as pre-announced, will help cover diabetes and contraception medications starting this fiscal year. It includes funding for the Canada Disability Benefit: $6.1 billion over six years and $1.4 billion ongoing, with the first payments issued in July 2025. The budget includes more than a dozen new initiatives connected to the Liberals' longstanding commitment to Indigenous reconciliation. Among them: a promise to spend $927 million over five years on new on-reserve income assistance; $1.8 billion to help Indigenous people exercise their jurisdiction; $5 billion in loan guarantees related to energy projects. Further, the budget includes $1 billion over five years to fund a new national school food program intended to provide meals to 400,000 more kids. It earmarks $500 million for a new youth mental health fund; $1 billion in loans and $60 million in grants to build or renovate child-care centres; and $48 million to extend student loan forgiveness for early childhood educators. As part of a new small business-focused package, the budget earmarks $200 million over two years, starting in 2026-27, to increase access to venture capital for "equity-deserving entrepreneurs," and those outside of major hubs. Further, the Liberal budget promises a new "Canada Carbon Rebate for Small Businesses" that vows to rapidly return the proceeds from the federal pollution price from 2019-20 to 2023-24 to 600,000 businesses with fewer than 500 employees through a new refundable tax credit, estimated to cost $2.5 billion. A further, $3.5 billion is promised for strategic research infrastructure, investments in modernized facilities, including $2.4 billion for core research grants and to foster homegrown talent through improved scholarships and fellowships. The budget also includes $2.4 billion to build capacity in artificial intelligence, largely for computing capabilities and technical infrastructure. Lastly, the federal budget includes the promised billions in defence spending over the long-term. However, defence spending does not reach the NATO goal of 2% of GDP. On the safety front, the government notes it plans to move ahead with "additional penalties under the Criminal Code for those who commit an auto-theft related offence" and is earmarking $30.4 million for the buyback of assault-style firearms. Further, the budget includes $273.6 million for Canada’s Action Plan on Combatting Hate, and $16 million to help "create a safer and more welcoming sport environment" for all athletes. Related to the yet-to-be-passed online harms legislation, the federal government proposes to provide $52 million over five years, starting this year, to Canadian Heritage and the Royal Canadian Mounted Police to fulfill their obligations regarding protecting children, ensuring major online platforms are abiding by the coming new regulations, and to set up the promised Digital Safety Commission. An additional $7.5 million will be going to the Public Health Agency of Canada to support the Kids Help Phone over the next three years, while Public Safety Canada is getting $2.5 million to support the Canadian Centre for Child Protection. There are other provisions in the budget to finance foreign aid for up to 3 billion dollars. However, there is no projected budget balance and forecast deficits get bigger than previously projected, each year. The budget titled "Fairness for Every Generation" notes that federal public debt charges are on track to balloon to $64.3 billion in 2028-29. Canada’s total debt will reach more than $1.2 trillion this year. When Prime Minister Justin Trudeau took power in 2015, the total debt was $616 billion. So the debt has doubled during his tenure. It is time to better administer taxpayers’ money! Don’t you think?