The 2024 federal budget will provide 鈥済enerational fairness鈥� to younger Canadians by raising taxes on those who have already capitalized on Canada鈥檚 economic strengths, Finance Minister Chrystia Freeland said Tuesday as she tabled the document in the House of Commons.
The budget comes as the Liberals have watched their once-healthy voting base among young people evaporate in favour of the Conservatives, largely as younger Canadians feel like the economic deck is stacked against them.
Freeland denied Tuesday that her latest budget is mainly a political exercise 鈥� but nonetheless acknowledged that for anyone under 40 in Canada, it鈥檚 鈥渏ust harder to establish yourself鈥� than it was for the generations that came before.
A middle-class income and a good job is no longer enough to feel economically secure, she said.
鈥淚t really isn鈥檛 fair what they are struggling with right now,鈥� Freeland told a news conference earlier in the day prior to her budget speech in the House.
Freeland said the 2024 budget is designed to fix that problem, to 鈥渦nlock the door to the middle class鈥� for more Canadians. The budget document itself uses the word fairness 50 separate times.
There is $8.5 billion in new spending over the next five years to build millions of new homes and nearly $2.6 billion to enhance student aid and grant programs and open up new job opportunities.
鈥淲e are acting today to ensure fairness for every generation,鈥� Freeland said.
Overall, the budget鈥檚 projected spending will rise to $535 billion in 2024-25, compared with $497.5 billion in 2023-24. The deficit is projected at $39.8 billion, compared with $40 billion last year.
There is $11.5 billion in new spending this year and $53 billion over the next five years.
Freeland said she is maintaining the fiscal anchors she set for the government, keeping the deficit below $40 billion and to less than one per cent of GDP starting in 2026-27.
Ottawa is paying for some of that with better-than-expected economic growth, but also with targeted changes to the capital gains tax that are expected to raise more than $19 billion over the next five years.
Currently Canadians only pay taxes on 50 per cent of the money they make from capital gains, which refers mainly to profits made from selling an asset like a stock.
Freeland is adjusting that to 66 per cent for all capital gains made by corporations and trusts, and for those that exceed $250,000 for individuals.
She said the change should affect 0.13 per cent of Canadians who have an average annual income of $1.4 million. She said she knows the tax increase will generate blowback.
鈥淏ut before they complain too bitterly, I would like Canada鈥檚 one per cent 鈥� Canada鈥檚 0.1 per cent 鈥� to consider this: what kind of Canada do you want to live in,鈥� she asked in her speech.
The budget includes money for new national dental care and pharmacare programs, and also includes previously announced spending for a new national school lunch program.
鈥淒o you want to live in a country where you can tell the size of someone鈥檚 paycheque by their smile?鈥� Freeland asked.
鈥淒o you want to live in a country where kids go to school hungry? Do you want to live in a country where a teenage girl gets pregnant because she doesn鈥檛 have the money to buy birth control?鈥�
James Orlando, director of economics at TD, said while it鈥檚 true the budget keeps the government within its fiscal anchors on paper, the new tax hike is not helpful for productivity and said the new spending is 鈥済reater than we ever thought.鈥�
The budget, he said, is more about thinking ahead to the economy the government believes Canadians want in the future.
鈥淭his isn鈥檛 spending just to boost the economy today, but rather improve the trajectory of the Canadian economy going forward,鈥� he said.
鈥淭hey would say that they鈥檙e focused on the long-term benefit of their spending right now, not just necessarily having an immediate impact on the Canadian economy.鈥�
NDP Leader Jagmeet Singh, who has a supply-and-confidence deal with the Liberals to support them on key votes like the budget, nevertheless would not immediately promise to back the government鈥檚 latest spending plan.
The budget embraces multiple NDP ideas, including a protection fund for renters and pharmacare, but fails to go after 鈥渃orporate greed,鈥� Singh said.
Conservative Leader Pierre Poilievre was less equivocal.
鈥淐onservatives will vote against this wasteful, inflationary budget that is like a pyromaniac spraying gas on the inflationary fire that he lit,鈥� Poilievre said in the House.
鈥淚t is getting too hot and too expensive for Canadians, and that鈥檚 why we need a carbon tax election to replace him with a common-sense Conservative government.鈥�
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Some key budget highlights:
Housing
In hopes of building nearly 3.9 million new homes across Canada by 2031, the government plans to:
鈥� increase the capital cost allowance rate for apartments from four to 10 per cent, allowing builders larger tax writeoffs;
鈥� extend the mortgage amortization period to 30 years for first-time homebuyers purchasing new builds;
鈥� make more public lands available for home construction, including Canada Post and National Defence properties, and lease land to developers;
鈥� spend $250 million over two years to address the 鈥渦rgent issue鈥� of encampments and a shortage of shelter space for homeless people.
Taxes
High-worth individuals, corporations and trusts will pay more in capital gains taxes. The inclusion rate increases to 66 per cent, up from 50 per cent, on capital gains above $250,000 for individuals and on all capital gains for corporations and trusts. The change is expected to yield an additional $19.4 billion over four years.
Excise taxes on tobacco and vaping products are going up: $4 on a carton of cigarettes and by 12 per cent on vape supplies 鈥� for a total of nearly $1.7 billion in revenue over five years.
Students
The government will spend $48 million over four years and $15.8 million thereafter to forgive the loans of early childhood educators.
Another $253.8 million over four years, plus $84.3 million a year thereafter, will go towards loan forgiveness for a host of health and education workers, including hygienists, pharmacists, teachers and social workers.
Public safety and justice
The government plans to amend the Criminal Code to create new criminal offences for auto theft involving violence or with links to organized crime.
They also plan to take steps to criminalize the possession or distribution of electronic devices used to steal cars and regulate such devices.
It will cost $52 million over five years to enact and enforce the new Online Harms Act, which requires large online platforms to act responsibly, and creates a new commission and ombudsperson for digital safety.
There鈥檚 new money to combat hate, including:
鈥� $273.6 million over six years for community outreach, law enforcement, counter-radicalization and victim support;
鈥� $32 million over six years and $11 million a year thereafter for the Security Infrastructure Program, which funds physical security for community and religious hubs;
鈥� $7.3 million over six years for each of the Special Envoy on Preserving Holocaust Remembrance and Combatting Antisemitism and the Special Representative on Combatting Islamophobia.
Environmental policies
More than $900 million over six years for greener homes and energy efficiency programs.
Ottawa also plans a national flood insurance program by 2025, providing $15 million to the Canada Mortgage and Housing Corp.
And it is creating several new parks and wildlife preserves, including in British Columbia, Prince Edward Island and Windsor, Ont.
For businesses:
鈥� A 10 per cent tax credit for the cost of buildings used for key parts of the electric-vehicle supply chain over the next 10 years;
鈥� A 15 per cent tax credit over the same period for eligible investments in new equipment or refurbishments for clean electricity;
鈥� A new tax credit for about 600,000 small and medium-sized businesses worth $2.5 billion that disburses fuel charge proceeds dating back to 2019.
Health care
The first programs to cover contraceptives and diabetes medication and supplies, part of the government鈥檚 new pharmacare plan, are expected to cost $1.5 billion over five years.
The budget also includes $150 million over three years for an Emergency Treatment Fund to help municipalities and Indigenous communities deal with the opioid crisis.
It also provides $6.1 billion over six years and $1.4 billion a year thereafter for the Canada Disability Benefit and related costs.
On mental health, the government will:
鈥� set up a $500-million fund to help community health organizations give more mental-health care to young people;
鈥� legislate a 鈥渞ight to disconnect鈥� for federally regulated workplaces;
鈥� put $630 million towards access to mental-health services for Indigenous Peoples.
Indigenous Peoples
The budget includes up to $5 billion in 鈥渟ector-agnostic鈥� loan guarantees for resource projects undertaken by Indigenous communities.
It鈥檚 spending close to $1.2 billion on primary and secondary education and infrastructure in First Nations reserves, and $918 million for housing and infrastructure.
The government is also developing an alert system for missing Indigenous women, girls and gender-diverse people.
Foreign policy and defence
The Liberal government plans to boost military spending to 1.76 per cent of GDP by 2030, including $8.1 billion over the next five years and $73 billion by 2044.
The budget earmarks $1.6 billion over five years for lethal and non-lethal military aid for Ukraine.
It includes $350 million over two years to respond to large-scale humanitarian crises and $159 million over five years to support the 鈥渢ransformation鈥� of Global Affairs Canada.
Foreign credentials
An additional $50 million over two years will bolster the foreign credential recognition program to help workers in construction and health care.
Ottawa also plan to spend $77.1 million on integrating internationally educated health-care professionals with new training positions.
Asylum claimants
The budget includes $1.1 billion over three years to extend a housing assistance program for asylum claimants, plus $274 million over five years for immigration and refugee legal aid.
It also includes $743.5 million over five years to strengthen the asylum system and streamline the claims and removal processes .
Artificial intelligence
Ottawa is setting aside $2.4 billion in the upcoming budget to build capacity in artificial intelligence.
The bulk of the money 鈥� $2 billion 鈥� is going towards improving access to computing capabilities and technical infrastructure.
Another $50 million over five years will support workers who could be affected by artificial intelligence, including in the creative industries.
The government also plans to fund a new AI Safety Institute of Canada and Transport Canada technology to use AI to screen Canada-bound air cargo.
School food program
Ottawa is spending $1 billion over five years on a national school food program that aims to provide meals for 400,000 additional children.
Loans for child-care centres
The Liberal government plans to provide more than $1 billion in low-cost loans, grants and student loan forgiveness to expand child care across Canada.
Public service
The federal workforce will shrink by about 5,000 full-time employees because of 鈥渘atural attrition鈥� over the next four years, part of an effort to cut costs.
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