The consensus about the 2017 federal budget is that it was long on talk, but short on action.
This budget provided more detail about where the government is planning to direct previously announced infrastructure funds, but didn’t increase the amounts. There’s very little increase in overall spending, less than a fraction of one per cent, but a lot of re-allocation and targeting of spending that had already been committed.
A lot of the newly directed spending is positive. This includes increased support for Indigenous communities, a multi-year commitment for affordable housing and homelessness, for public transit, more funding for training programs, and a multi-year commitment for early learning and child care, and several other smaller programs. However, a lot of it also falls short of what is needed, including funding for child care, health care and post-secondary education. And disturbingly, a considerable amount of the infrastructure investment for public transit and green infrastructure, including water and electrical grid, is expected to be through a Canadian Infrastructure Bank using private finance. This would mean higher costs, privatization, and higher user fees.
For the first time ever, the government has included a gender budget analysis and has committed to consider the impacts of its policies on women and under-represented groups and to include this type of analysis in future budgets. This is a positive step forward, but the analysis needs to be met with stronger action as well, such as stronger pay equity and employment equity rules and fair wages, living wages or at least a federal minimum wage.
The budget also includes a chapter on tax fairness, but it did little to close regressive and ineffective tax loopholes for the wealthy, as the Liberals had promised to do in the election. Doing this would not only provide the federal government with extra revenue to adequately fund programs, but would also benefit provincial finances as well. They backed away from doing so again, in part because of pressure from the wealthy who would be affected, but also because of concerns about what President Trump will do.
The Prime Minister and Minister of Finance continue to talk a lot about promoting inclusive growth and strengthening the middle class. They present their approach on the world stage as a progressive alternative to Trump. Trudeau also called on business leaders in Germany to pay their workers a living wage and ensure they have stable long-term employment contracts. These are all progressive sentiments, but they need to be met with stronger real action at home—and that was unfortunately lacking in this budget.
On the issues: what’s new and what’s missing
The budget provides more specifics about the increased $81 billion in infrastructure spending it announced in the Fall Economic Statement. Over the next eleven years this includes $25 billion for public transit, $21.9 billion in “green infrastructure”, $2 billion for rural and northern communities, $10.1 billion for trade and transport infrastructure and $21.9 billion for social infrastructure, including $11.2 billion over eleven years for affordable housing, $7 billion for childcare, and $1.3 billion for cultural and recreational infrastructure.
The infrastructure funding doesn’t add to what they had previously announced in the 2016 Budget and Fall Economic Statement, but they’ve provided more details on where it will be going. Under affordable housing it includes $5 billion for a National Housing Fund to be administered by the CMHC, $3.2 billion over 11 years to provinces and territories for affordable housing, and $2.1 billion over 11 years to expand and extend funding for the Homelessness Partnering Strategy. These are all positive measures. They meet the call from the Federation of Canadian Municipalities (FCM) to provide predictable, dedicated and flexible transfers for affordable housing.
However, the government expects the Canada Infrastructure Bank to invest at least $5 billion in public transit and to invest at least $5 billion for green infrastructure including clean air and safe water systems. This is disturbing because it will mean privatization and higher user fees.
There’s also $1 billion allotted over four years for provinces and territories for home care infrastructure to help provide care for patients at home or in the community outside of hospital settings. It remains to be seen what the provinces will do with this and whether it will lead to a substitution for hospital-based care.
In their election platform and ministerial mandate letters the Trudeau government promised to “establish the Canada Infrastructure Bank to provide low-cost financing (including loan guarantees) for new municipal infrastructure projects in our priority investment areas.”
Unfortunately, the federal government’s plan has taken a 180 degree turn and the focus has shifted from providing low cost financing to “leveraging higher-cost private sector financing”, as was outlined in the Fall Economic Statement. The 2017 Budget provides very few additional details on the proposed Canada Infrastructure Bank, except to say that they will soon propose legislation to establish it, to hire a CEO and chair with the goal of having it operational by the end of 2017. The budget allots $2.8 billion in federal funds to the infrastructure bank over the next five years, starting with $149 million in 2017/18 .
Proceeding with an infrastructure bank heavily reliant on private finance could double the life-time cost of infrastructure projects, lead to extensive privatization and higher user fees on Canadians. CUPE will continue to press the Trudeau government to establish an infrastructure bank consistent with their promises and that helps municipalities and others with low cost financing to support publicly owned and operated infrastructure.
In their election platform the Liberal party promised to:
- invest $500 million more each year in provincial and territorial Labour Market Development Agreements (LMDAs)
- invest an additional $200 million in training programs led by the provinces and territories through the Labour Market Agreements (LMAs)
- invest $50 million to renew and expand funding to the Aboriginal Skills and Employment Training Strategy (ASETS), and provide $25 million each year for training facilities, delivered in partnership with labour unions.
The 2016 Budget provided some funding in these areas, but only a quarter of what had been promised in most of these areas.
This budget increases the funding provided through the LMDAs with an additional $1.8 billion over six years, starting with an additional $200 million in 2017/18. When combined with the amounts promised in the 2016 Budget, this fulfils their election commitment. They also plan to expand eligibility for LMDA programs to allow more Canadians, especially under-represented groups to access EI-funded skills training and employment supports. This is a positive measure.
This budget also announces that they will combine LMA funding through the Canada Job Grants, Targeted Initiative for Older Workers and LMAs for persons with disabilities into a new combined program, Workforce Development Agreements, with an additional $900 million over six years, meeting their election commitment. It also includes an additional $50 million for the Aboriginal Skills and Employment Training Strategy, but only for one year, which suggests that they’ll be changing this program in future years.
The Canada Job Grant program has been problematic and functioned more of a subsidy for employers. CUPE urged the federal government to restore and maintain core funding for literacy and essential skills programs and organizations across Canada, including the Office of Literacy and Essential Skills (OLES). Literacy and essential skills should be integrated in pre-apprenticeship and skills training and be core parts of a well-funded pan-Canadian training strategy and of the Poverty Reduction Strategy. Unfortunately, there are no additional commitments to literacy and essential skills in this budget, except for a digital literacy exchange program and to expand eligibility for the Tuition Tax Credit to include occupational skills programs below the post-secondary level.
The budget includes $225 million over four years to establish a new organization to support skills development and measurement in Canada, based on the recommendations of the Advisory Council on Economic Growth to establish a “FutureSkills Lab”. This organization will work in partnership with willing provinces and territories, the private sector, educational institutions and not-for-profit organizations to identify the skills sought and required by Canadian employers, explore new and innovative approaches to skills development, and share information and analysis to help inform future skills investments and programming. Further details will be available in coming months.
This will mark some re-engagement of the federal government in this area after the Chrétien government started gradually devolving labour market skills and training to the provinces and national multi-stakeholder bodies were eliminated. However, there needs to be a prominent role for labour and unions in these organizations, which there hasn’t been in Morneau’s economic advisory council.
There’s nothing in this budget mandating apprenticeships on federal infrastructure projects or on establishing a representative workforce or employment equity. In fact, none of these words appear in the document except one instance of apprenticeship appearing in a footnote.
There is much more emphasis in the budget on a “global skills strategy” to attract top talent from around the world, including changes to the Temporary Foreign Worker Program, and preparing for the digital economy. This includes a modest $13 million over five years to make home internet access more affordable for low income families.
Additional funding for training can be positive, but it also implies that people are jobless because they don’t have the right skills. In fact, surveys by Statistics Canada continue to show that skills and labour shortages and job vacancies are a smaller share of total unemployment. What’s needed is stronger job growth. This now needs to come from increased public and household spending, which requires higher wages and incomes. This budget hasn’t done a lot more to stimulate that.
The Trudeau government has always identified its top priority as strengthening the middle class. That’s what they called their election platform—A new plan for a strong middle class—and it was also the title of their first budget, Growing the Middle Class. This responded to a real concern as working Canadians have seen their wages stagnate, cuts to funding for public services and a rise in precarious work.
The Liberals promised in their platform to restore fair and balanced labour laws, to support and protect workers’ rights, and reinstate a modernized and inclusive fair wages policy for federal procurement. In his recent high-profile speech in Hamburg, Prime Minister Trudeau emphasized how much he recognized the insecurity people are feeling and told employers they should pay their workers a living wage and to give their workers “the benefits – and peace of mind – that come with stable, full-time contracts.”
After the ongoing attacks on unions and workers’ rights under Harper, Prime Minister Trudeau’s statements of support for labour and for the concerns of working people have been welcomed, as have their following through on their election commitments to repeal anti-labour legislation, to expand the CPP and to restore the age of eligibility for Old Age Security to 65.
There’s an additional $395.5 million over three years for the federal government’s Youth Employment Strategy, which they say will help more than 33,000 vulnerable youth develop the skills they need to find work or go back to school, create 15,000 new green jobs and over 1,600 new job opportunities for youth in the heritage sector.
However, much more action is needed to ensure their actions live up to their rhetoric and empathy they’ve expressed and to the priority they’ve put on helping “the middle class and those working hard to join it.”
The Trudeau government has also made a commitment to develop a Poverty Reduction Strategy. This is welcomed, but developing a strategy shouldn’t hold up immediate action.
The Liberal government should start by following through on their platform commitment to make sure that Employment Insurance is accessible to precarious workers, including setting a universal qualifying period of 360 hours and extending the eligibility period. It should also change the Canada Labour Code to eliminate two-tier contracts and mandate equal pay for equal work for federally regulated workers, introduce a federal minimum wage of at least $15 an hour or more, eliminate loopholes which allow for unpaid internships, and address the abuse of temp agencies to staff positions which are not temporary.
And just as Prime Minister Trudeau told his tuxedoed Hamburg audience that they should pay their workers a living wage and provide them with stable, full-time employment, the federal government should also ensure all their workers—and those they contract with—are also paid living wages and provided stable full-time employment contracts.
The budget includes just $12 million to “modernize service delivery” for Employment Insurance and speed up application processes . It also indicates that they’re planning targeted amendments to the Canada Labour Code to strengthen compliance and enforcement, limit unpaid internships, and give federally regulated employees the right to request more flexible leave.
Unfortunately, there’s no mention of the federal government providing living wages or even fair wages in this budget, let alone requiring federal contractors to provide them. There’s also no mention of employment equity, pay equity or measures to achieve a more representative workforce.
Innovation was expected to feature prominently in this budget and it does, at least in the language, with the word mentioned more than 200 times!
There are a lot of innovative strategic initiatives mentioned in the budget intended to get the economy growing in newfangled ways. These include:
- $950 million over five years to accelerate innovation through industry “Superclusters”
- a new $1.26 billion five-year Strategic Innovation Fund to consolidate and simplify existing industry support including auto and aerospace industry support funds
- A Strategic procurement initiative, up to $50 million in 2017/18.
There’s also funding for stem cell research, space exploration, artificial intelligence, agri-food innovation, clean tech, digital learning and other advanced technology areas.
Some of these are good ideas, but it also feels like the government is going off in a lot of directions without having a coherent sense of their approach to a sectoral economic growth strategy. They’re caught with one foot in a pro-free trade neo-liberal approach and a realization that this hasn’t led to inclusive growth, but instead has led to a hollowing out of the middle class, growing income inequality and to growing populist surge on different ends of the political spectrum. So, for instance, they’ll sign trade and investment agreements that limit local procurement but then provide some limited funding to redress this. Their attempts to be inclusive so far involve patches, transfers and programs instead of addressing the fundamental structural problems that are causing growing inequality, precarious work and slower economic growth.
Budget 2017 makes a multi-year funding commitment to early learning and child care, with an additional $7 billion over ten years from the social infrastructure envelope. A portion of this funding will be for indigenous children living on and off reserve. It is positive to see a multi-year funding commitment; however, almost 70 per cent of the funding will only roll out as of 2022-2023 – two full election cycles away.
The funding still falls far short of the internationally-recognized minimum funding benchmark of one per cent of GDP. Child care advocates had called for an initial federal contribution of $600 million that would then grow by $1 billion over each of the next five years.
The Liberals are negotiating a National Early Learning and Child Care Framework with provinces and territories, which is expected to be released shortly. A separate framework is being negotiated with Indigenous peoples. The 2016 Budget included $500 million for 2017/18 as a line item to develop the frameworks, including $100 million for Indigenous communities. An evidence-based framework should ensure public funding supports high-quality public and non-profit child care rather than for-profit delivery.
Outside of Quebec, Canadian families face high costs for child care. There’s broad agreement that affordable and quality child care is critical for promoting equality, and would also give a strong boost to women’s labour force participation and economic growth. Research has shown that public investments in quality child care can even pay for themselves.
The budget includes $691 million over five years for a new EI caregiving benefit of up to 15 weeks, that will allow those providing care to an adult family member who requires significant support to recover from a critical illness or injury. This is a positive measure.
The Trudeau government has also promised to provide more generous and flexible leave for caregivers and more flexible parental leave. This budget proposes to allow parents to choose to receive EI parental benefits over an extended period of up to 18 months at a lower rate of 33 per cent. They are also proposing to allow women to claim EI maternity benefits up to 12 weeks before their due date.
CUPE and other unions haven’t supported this extended period for benefits and have instead called for the government to expand access to maternity, parental and newly created second parent leave either through a lower eligibility threshold, to increase the wage replacement rate for maternity, parental and second parent leaves to 70 per cent, and introduce 12 additional weeks of non-transferrable second parent leave.
The Liberals promised to negotiate a multi-year health accord, including a long-term funding agreement with the provinces, to expand mental health services, to provide $3 billion over four years for improved home care, including in-home caregivers, financial supports for family care, and palliative care to support an aging population, and to join with provinces to reduce the cost of prescription drugs through bulk buying.
Their first budget included almost nothing for health care and instead of negotiating a new health accord with adequate long-term funding with the provinces, they’ve negotiated bilateral deals with nearly all the provinces except for Manitoba that provide only a minimum three per cent annual escalator, well below the six per cent increases that were part of the previous accord. This falls short of what is needed to protect our public health care system. Federal funding now only provides 23 per cent of each public health care dollar spent down from a 50 per cent share when our Medicare system was established fifty years ago. With an aging population, we can expect costs to increase by 5.2 per cent annually just to maintain the level of services we have.
While the bilateral agreements include an additional $11 billion for the provinces over ten years in specific targeted funding for home care, mental health and other areas, this funding for expanded services should be in addition to higher annual transfers.
CUPE has also called for the federal government to better enforce Canada Health Act standards, the phasing out of for-profit delivery, and the expansion of publicly-provided and funded continuing care, including residential long-term care, community and home care, and palliative care. We have also called for expanded networks of community and primary health centres, and for the federal government to work with the provinces to create a national pharmacare program to make prescription drugs accessible and affordable for all Canadians.
There isn’t much in this budget for health care beyond what was announced in the bilateral agreements. These include $6 billion over ten years for home care and $5 billion over ten years for mental health. There’s $140 million over five years in funding for improving access to prescription medicine and additional funding for CIHI and another $100 million over five years for a Canadian Drugs and Substances Strategy and additional funding for a territorial health investment fund, but little else in direct funding. There’s more emphasis on improving tax credits for caregivers and the new EI benefit program for caregivers.
The Liberal government promised to “make post-secondary education more affordable for students from low and middle-income families,” including by expanding the Canada Student Grant, improving the Registered Education Savings Plan (RESPs) and Canada Learning Bonds programs, and increasing the annual funding for the Post-Secondary Student Support Program (PSSSP) for Indigenous students by $50 million annually.
The 2016 Budget addressed their promises on improving student financial assistance, except for increasing funding for Indigenous students through the PSSSP program. Because of the significant underfunding and the two per cent cap imposed on Aboriginal spending programs by a previous Liberal government, there is now a large backlog of Indigenous peoples who want to attend post-secondary education but were denied the necessary funding to attend and the program is funding about 20 per cent fewer students every year compared to 1997.
This budget increases funding for the PSSSP program by $90 million over two years, but this falls far short of what is needed when less than ten per cent of Indigenous people aged 25-64 have a university degree, compared to 26.5 per cent of non-Indigenous people.
The improvements to the Canada Student Grants in the last budget were welcomed, but the maximum grant of $3,000 is still well below the average university tuition of $6,373, without taking into account additional fees and living expenses.
The high cost of tuition has led to an average student debt upon graduation of $26,819 while more students are turning to foodbanks and being left homeless with the high cost of housing. The RESP program has largely benefited higher income families while take up of the CLB program has been poor.
CUPE and the Canadian Federation of Students (CFS) have called for the federal government to work with the provinces to eventually make university and college tuition free and accessible for all students from all income groups. Restoring post-secondary transfers to the provinces and eliminating tuition could cost the federal government less than $10 billion, an amount that is less than the cost of the capital gains tax loophole.
Prime Minister Trudeau made significant promises to Indigenous peoples, stating time and again, “No relationship is more important to me and to Canada than the one with Indigenous peoples. It is time for a renewed, nation-to-nation relationship with Indigenous Peoples, based on recognition of rights, respect, co-operation, and partnership.”
The Trudeau government promised to remove the 2 per cent cap on increases to funding instituted by the Chrétien Liberal government in 1996 for on-reserve basic services, to ensure that First Nations children on reserve receive a quality education, to improve essential physical infrastructure for Indigenous communities, to promote economic development and create jobs for Indigenous peoples and much more.
However, actions so far have fallen short of these promises. The two per cent cap on funding is still in place, which means that funding has barely kept up with inflation and has not accounted for the Indigenous population boom over the last two decades. While the Trudeau government added over $8.4 billion over five years in funding for Indigenous peoples, much is back-ended with $1.8 billion earmarked for the year after the next federal election. Operational funding for First Nation governments and organizations were reduced by 65 per cent under the Harper government and that funding hasn’t been restored. First Nation, Métis and Inuit organizations have consistently called for long-term, multi-year, predictable operational and program funding.
In their first budget, the Liberal government committed $206 million for on-reserve housing, but the Assembly of First Nations estimates that at least $1 billion per year for ten years is needed.
The Trudeau government promised to address all unsafe drinking water advisories on reserve within five years. In the 2016 budget, they committed $1.8 billion over five years for water infrastructure and $141.7 million for water quality monitoring, but estimates state that at least $5 billion over ten years is needed.
The Liberal government agreed to properly fund on-reserve social services for First Nations children. But despite multiple rulings by the Canadian Human Rights Tribunal that the federal government’s underfunding for on reserve social services for First Nations children is discriminatory, this budget offers no new funding to address this on-going crisis.
This budget does commit an additional $3.4 billion for Indigenous people, spread over a wide array of programs and services. But these allocations still fall far short of the investments needed in First Nations, Métis and Inuit communities. For First Nation students, $90 million over two years was committed to Post Secondary Student Supports. But this falls short of what was promised during the last federal election campaign. There is a significant increase to funding for Heritage Canada’s Aboriginal Languages Initiative, increasing from $5 million per year to almost $23 million. Exactly how this money will be used won’t be known until the Liberal government unveils a recently promised Indigenous Languages Act this spring.
New funding targeted at improving off-reserve housing, $225 million over the next eleven years, will replace the Urban Native Housing Program. Another $300 million over the next eleven years will be earmarked for housing in the North. Much of this funding, however, is once again back-ended to after the next federal election, and falls far short in addressing the crisis shortage of affordable housing for Indigenous people.
This budget commits new funding to build the capacity of Indigenous governments. This includes $13.7 million over two years to support the bilateral relationships between Ottawa and First Nations, the Inuit and Metis through their respective representative organizations like the AFN, the Inuit Tapiriit Kanatami and the Métis National Council.
Following a Supreme Court decision recognizing the federal government has jurisdiction for Métis and non-status Indians, the Métis National Council, and its affiliated provincial organizations, this budget allocates over $85 million over the next five years for these organizations to build governmental capacity. This budget also commits to increasing this capacity funding to $28 million per year after the next federal election. While this is a significant gain for Métis organizations that have long sought predictable, multi-years funding, it is unclear what, if any, new or improved programs and services will reach Métis people.
The Trudeau government also made many promises to improve the environment and address climate change. These include investing $6 billion on green infrastructure over the next four years, putting a price on carbon, establishing a pan-Canadian framework to combat climate change with national emission reduction targets, investing in cleantech, restoring a robust environmental assessment process, protecting freshwater and reversing cuts to national parks.
The 2016 Budget provided $400 million over two years for clean tech and $2 billion for a low carbon economy fund as well as more funding for national parks, including making them free for this year.
This budget includes more support for the “Clean Technology” sector, including access to financing, R&D support and tax incentives. It also includes some additional funding for parks, to protect freshwater ecosystems, and improve air quality. It allots additional funding to different programs to reduce greenhouse gas emissions and for climate change adaptation, says they’ll phase out fossil fuel subsidies a little faster, and recommits governments to have a minimum carbon price in effect in all provinces and territories by 2018. There are also commitments on funding for specific public transit projects.
However, the budget also involves a delay of previously promised funding through the Low Carbon Economy Fund. There’s also nothing specific about Just Transition or support for workers who will be displaced by the shift to a low-carbon economy. The bottom line is that while there are a few positive steps environmentally in the budget, more needs to be done much sooner to deal with the challenge, impacts and growing costs of climate change.
The Green Economy Network, which CUPE supports, has developed a plan to help transform Canada’s economy and create one million person years of employment with investments in greening homes and buildings, public transit and inter-city transit, and public renewable energy. The Alternative Federal Budget has developed a plan for progressive carbon pricing that would ensure most Canadian families are better off. This would provide adequate additional funding for these investments in renewable energy, retrofits, public transportation and resilient municipal infrastructure and adaptation programs.
There’s nothing additional on pensions or retirement security in this budget, following the changes made in the last budget and expansion of the CPP.
However, the CPP expansion act, Bill C-26, excludes the child rearing and disability drop out provisions that exist for CPP now. These ensure parents raising children aren’t penalized for time out of the workforce raising children and people with disabilities aren’t penalized for time they are unable to work due to their disabilities and collecting CPP disability benefits. CUPE has urged the federal government to correct this problem, but they haven’t acted yet, despite all the attention given to gender and equity in this budget. The Liberals also promised to develop and apply a Seniors Price Index, that could be used to more accurately index pensions to the cost of living experienced by seniors, but there’s no mention of it in this budget.
The Liberal party platform and statements since then have included commitments to:
- develop a proactive pay equity regime for federally-regulated workplaces
- subject the 2017 budget and all following budgets to a gender-based analysis
- develop a National Disabilities Act to eliminate systemic barriers and deliver equality of opportunity to all Canadians living with disabilities
- increase the workforce participation of women and underrepresented groups
- give more support to survivors of domestic violence, sexual assault, and sexual harassment, and ensure that more perpetrators are brought to justice, and ensure that federal workplaces are free from harassment and sexual violence
- improve the temporary foreign worker program so it meets the needs of migrant workers and Canadian workers and employers, including developing a pathway to permanent residency for foreign workers
- among other commitments to improve equality, reduce discrimination and promote “inclusive growth”
We applaud the federal government for opening the door to discussing equality within the context of the budget by engaging in a gender-based analysis. We also applaud them for recognizing the limitations of gender-based analyses and for naming the need to look at intersecting identities and how that may impact one’s overall experience of oppression. With that said, the government failed to name and interrogate the role of race, in particular, anti-Black racism and Islamophobia and the experiences of transgender communities across Canada.
This budget does include a gender-based analysis and it commits to using it in policy development and future budgets. This is an important first step and the government is to be commended on this, but it would be much better if the analysis were matched by action. There’s no action or even mention of pay equity, employment equity or introducing fair wages or living wages in this budget, for instance.
Last fall the Trudeau government announced their intention to introduce pay equity legislation for federally regulated sectors, but not until 2018, and after further public consultations. Budget 2017 notes that Canada continues to have one of the highest gender wage gaps yet makes no mention of pay equity. CUPE as well as the Special Committee on Pay Equity has called on the federal government to immediately implement proactive legislation without further delay modeled on the recommendations of the 2004 Pay Equity Task Force.
The Liberal government held consultations ending in February 2017 on developing a National Disabilities Act. CUPE’s submission on this included many recommendations, including reinstating employment equity regulations to their previous standard. Unfortunately, the Trudeau government has done little on employment equity, outside of having women make up half the cabinet. There’s been no improvement to the federal Employment Equity legislation and little action in increased hiring of Indigenous peoples.
The Trudeau government launched an independent inquiry into missing and murdered indigenous women as it promised, but otherwise has done little to address domestic and workplace violence, assault and sexual harassment.
Budget 2017 proposes to invest $100.9 million over five years, starting in 2017–18, and $20.7 million per year thereafter, to establish a National Strategy to Address Gender-Based Violence. We applaud the government for recognizing the importance of investing in services that target sexual assault and gender based violence. We trust that the government will seek direction from community organizations and institutions that have been leading this work and that funding will go directly to these organizations.
In this budget, Temporary Foreign workers have been forgotten. The federal government promised to expand pathways to citizenship and the 2017 Budget made investments into the Temporary Foreign Worker Program but it is unclear how this will directly benefit the lives of temporary foreign workers and migrant workers. Budget 2017 proposed to invest $279.8 million over five years, starting in 2017–18, and $49.8 million per year thereafter, to support the continued delivery of the Temporary Foreign Worker Program and the International Mobility Program. The government has not addressed the very real concerns around permanency, mobility and job safety made clear by migrant workers and migrant worker organizations. We applauded the government for removing the “4 in, 4 out” rule in December 2016 but the government should also follow up on demands made by migrant workers and migrant worker organizations to introduce regulatory changes to make it easier for migrant workers to move between jobs. This would improve working and living conditions for Canadian-born and migrant workers, and specifically to provide transition from tied work permits to open work permits and permanent resident immigration status upon arrival for migrant workers.
The Trudeau government committed to refocus international aid priorities on poverty reduction and ensure that every dollar committed to international development actually gets spent. However, the Liberals didn’t make any commitments to increase funding for international assistance, nor does this budget increase development assistance, although it does highlight the $650 million Canada will provide in funding for sexual and reproductive rights in the world’s poorest and most vulnerable communities after President Trump indicated the US would cut their funding in this area. The budget also provides $63 million in legal aid for refugees and asylum seekers, which is a positive step.
The Canadian Council for International Cooperation, the umbrella organization for international development groups, is calling for the Trudeau government to increase international development assistance above its current low level of 0.28 to reach the target of 0.7 per cent of Gross National Income (GNI) by 2016/17, a target that the previous Chrétien government promised to meet by 2011.
There’s a whole chapter in this budget devoted to Tax Fairness for the Middle Class and, while it involves a lot of talk, it doesn’t amount to a lot of action in this budget in terms of actual changes to the tax code that will increase taxes on top incomes.
On the contrary, the specific tax changes they’ve announced in this budget—higher taxes on alcohol, tobacco, an elimination of the public transit tax credit, and higher employment insurance premiums—will increase taxes on lower and middle income households by a little more.
Specific changes announced include:
- A 2 per cent increase in the federal excise tax on alcohol. This will mean just a few cents more on a case of 24 beers and about a cent more for a bottle of wine.
- A 2.5 per cent increase in the federal excise tax on tobacco, which will mean 53 cents more per carton of 200 cigarettes
- Introducing a new caregiver tax credit
- Adding nurse practitioners as eligible medical practitioners for the disability tax credit
- Extending eligibility for the tuition tax credit
- Eliminating the public transit tax credit
- Eliminating the deduction for home relocation loans
- Speeding up the phase out of fossil fuel subsidies, and
- Amending the definition of a taxi business to ensure that ride-sharing services are subject to GST/HST.
But there’s nothing in terms of substantive tax measures to close loopholes such as the stock option deduction and capital gains loophole, or ensuring that digital services such as “Netflix” and other multinational digital tax avoiders. The federal government should be doing much more to crack down on tax avoidance and evasion by these multinational businesses that are both robbing our governments of badly needed revenues and undermining Canadian businesses and quality jobs.
The budget expects a mere $60 million per year over the next five years from “closing tax loopholes”, a more substantial $1.9 billion over five years from cracking down on tax evasion and tax avoidance, and $1.3 billion over five years from eliminating inefficient tax measures (mostly from eliminating the public transit tax credit).
The government is planning to release a paper in coming months on aggressive tax planning using private corporations and will invest an additional $524 million over five years to prevent tax evasion and improve tax compliance.
This is the second budget in which the Trudeau government has backed away from making substantive changes to eliminate regressive and ineffective tax loopholes that largely benefit the wealthy, in part because of heavy pressure from those quarters. CUPE and our other allies, including Canadians for Tax Fairness, will pressure the government even more forcefully to take action and to fulfill their election commitments in this area.
Despite all the talk about never-ending deficits, there’s very little additional spending committed in this budget, no net new spending in the next two years and only $4.5 billion in additional spending over five years in addition to what was announced in the last budget. This amounts to less than a third of a per cent increase in spending per year. Instead, what they’ve done is shift around existing spending.
The projected deficit for 2017/18 is slightly lower than what they had projected in last year’s budget. Future deficits are higher in part because they’ve increased the contingency/cushion amount, because of slower economic growth, as well as lower revenues and higher spending as a share of the economy.
Despite the slightly higher rates, federal spending and revenues are still projected to be lower as a share of the economy than they’ve been for most of the past half century.
More of a concern should be the slower economic growth and higher unemployment rates that are forecast in this budget, with unemployment remaining above 6.5 per cent through to 2020. In contrast, when Canada was celebrating its 100th anniversary in 1967, the unemployment rate was 3.5 per cent, half of what it is today. Job and wage growth were strong and there was a much stronger sense of optimism across our land.
Low interest rates and infrastructure stimulus spending will have a limited impact if working and middle class families continue to fall behind with wage growth below inflation and increasingly precarious jobs. Federal and provincial governments need to do much more to stimulate the growth of good jobs, increase real wages, and expand public services. That’s the only way we’ll achieve stronger and truly inclusive growth, which the Prime Minister so frequently talks about. But talk is cheap and much more action is needed.