The latest federal budget has been pitched as a plan to support “fairness for every generation,” with a focus on new housing.
At 430 pages, this year’s budget, “Fairness for Every Generation,” is not a quick read. With it, the government is hoping to sway voters back into the Big Red Tent — especially millennials and Gen Z — through a mixture of honouring traditional progressive political goals and trying to blunt the opposition by poaching their ideas, as federal budgets often do. And Budget 2024 might actually get its programs running before the writ is dropped in October 2025, if the NDP maintain their agreement and support it.
With $52.9 billion over six years in promised new spending, the deficit is now projected at $39.8 billion.
The principal item that the Liberals have been telegraphing loudly the last few weeks is building more housing. The second ones are big social programs like dental care and limited pharmacare, and the third area is focused on growing the economy through innovation and productivity boosts for businesses.
But first, a few bits of pension policy made it to the budget. Canadian pension funds hold over $3 trillion in assets, and Budget 2024 announces the creation of a working group to find more ways for Canada’s largest pension funds to invest more of that lolly at home.
In an open letter last month, 92 business leaders from across the country urged federal and provincial finance ministers to do just that. They argued that the rules governing pension funds should be amended to encourage them to “invest in Canada,” and suggested government “has the right, responsibility and obligation to regulate how these savings regimes operate.” Former pension execs have denounced the idea, citing the stellar success of Canadian pension funds thanks to their ability to invest and grow without political interference.
"This could be the start of a slippery slope to political interference in pension-fund investments," says Association CEO Anthony Pizzino. “This is not about investing in Canada to boost the economy, as those 92 letter writers say; it’s about these business leaders seeing money they want spent on their corporations, which would amount to a business subsidy using Canadians’ hard-earned retirement savings — and Canadians do not want governments to play politics with their pensions.”
On another pension front, the government’s largest program, Old Age Security (OAS), is projected to deliver $80.6 billion to more than seven million seniors this year.
As the last of the boomer generation retires, the OAS, CPP and health-care costs will multiply in the years to come. OAS annual program expenditures alone are projected to grow by close to 24 per cent to almost $100 billion by 2028-29 — representing 18 per cent of federal program spending that year — and almost threefold from 2024-25 levels by 2055-56, to about $234 billion.
Budget 2024 proposes to provide a total of $2.9 billion over five years, starting in 2024-25, on a cash basis, to Employment and Social Development Canada to migrate OAS and Employment Insurance onto a secure, user-friendly platform. Ensuring the new platform meets the needs of a diverse population of older persons will be key.
One controversial headline from this mammoth document is the government’s intention to increase the inclusion rate on capital gains realized annually above $250,000 by individuals, and on all capital gains realized by corporations and trusts. They’re going from one-half to two-thirds effective June 25, 2024. This will not apply to principal residences. Entrepreneurs get a lifetime maximum of a 33 per cent inclusion rate on their first $3.25 million when selling all or part of a business. Income from tax-sheltered savings accounts, pension plans, and the first $250,00 earned every year from selling cottages, investments properties and other taxable investments are not impacted either.
When rich people start screaming about the unfairness of this, remember that only 40,000 people or 0.13 per cent of Canadians, with an average income of $1.4 million, are expected to pay more personal income tax on their capital gains in any given year.
And they won’t be able to hide their money in cryptocurrencies with the new OECD common reporting standard Canada is adopting, starting in 2026.
Budget 2024 proposes to provide $1.5 billion over five years, starting in 2024-25, to Health Canada to support the launch of the National Pharmacare Plan, which will cover eligible diabetes medicines and contraceptives. The national dental care program was re-announced, with the provinces still yet to sign on. Notably, 1.7 million people have been enrolled in the new dental care plan.
If you or a loved one is living in care, the government plans to introduce new national long-term care standards in the Safe Long Term Care Act — reiterating a three-year-old promise that hasn’t been delivered yet.
“Federal Retirees has urged the government to fix long-term care for years and this act was first promised by this government in 2021,” notes Pizzino. “More than 80 percent of Canada’s COVID-19 related deaths in the first wave occurred in long-term care , and those were due to the deplorable conditions both residents and workers were subjected to in many long-term care residences. Our members have not forgotten this, and we’re going to ensure this government doesn’t forget about it either. People have waited long enough. Action is needed now for safer, better long-term care.”
Just as it exposed and aggravated problems with the long-term care system, the pandemic deeply affected caregiving, both paid and unpaid, including home and community care.
Budget 2024 delivered a win for Federal Retirees, with the proposal of a sectoral table that will consult and provide recommendations on how to better support the care economy. The budget also committed to launch consultations on the development of a National Caregiving Strategy.
“Caregivers, both paid and unpaid, do meaningful work and contribute to the well-being of millions of Canadians every day,” says Pizzino. “The care economy sectoral table and consultations on a National Caregiving Strategy signal a start to improving caregiving in Canada, but we know there is a long way to go to ensure caregivers are better supported for the incredible work they do.”
Budget 2024 proposes funding of $6.1 billion over six years, beginning in 2024-25, and $1.4 billion per year ongoing, for a new Canada Disability Benefit, including costs to deliver the benefit.
Budget 2024 also announces the government’s intention to amend the Income Tax Act to make additional expenses eligible for the Disability Supports Deduction, for such things as guide dogs, computer devices and specialized chairs and beds.
For veterans, Ottawa proposes to provide an additional $6 million over three years, starting in 2024-25, to Veterans Affairs Canada (VAC) for the Veteran and Family Well-Being Fund. A portion of the funding will focus on projects for Indigenous, women and 2SLGBTQI+ veterans. There’s also $9.3 million over five years, starting in 2024-25, to VAC to extend and expand the Veteran Family Telemedicine Service pilot for another three years. Commemoration commitments include $3.8 million for the Juno Beach Centre and $4 million in 2024-25 to celebrate milestones like the 80th anniversary of D-Day, the Battle of Normandy and the 60th anniversary of the beginning of the Cyprus peacekeeping mission.
When it comes to veteran well-being, what is missing from the budget is as notable as what is in the budget. There are no funds to enable improved mental health and operational stress injury supports, nor any funding to improve transition and release from service. The budget is also absent any commitment to permanently fix unrelenting VAC backlogs by making temporary staff permanent.
Housing has been the budget showstopper for weeks. Budget 2024 plans to drum up new housing by repurposing underutilized government buildings, reimagining single-storey post offices (while maintaining postal services) and redeveloping DND properties to accommodate use by both the public and CAF members — but for CAF members, there are no concrete timelines that will address that group’s pressing need for housing. That equals $1.1 billion in spending over 10 years to transform 50 per cent of the federal office portfolio into housing alone. Announced last week, this strategy is projected to unlock 3.87 million new homes by 2031, which includes a minimum of 2 million net new homes on top of the 1.87 million homes already expected to be built by 2031.
They’re also anticipating provincial and territorial governments will chip in to create an additional 800,000 net new homes.
To spur the economy and the private sector to build, Budget 2024 offers a $15 billion top-up to the Apartment Construction Loan Program, hoping for 30,000 new homes across the country. And to help students being squeezed by those high current rental costs, 79,000 students each year would be eligible for better financial aid at an estimated cost of $154.6 million over five years.
Budget 2024 also proposes to provide $6 billion over 10 years, starting in 2024-25, to Infrastructure Canada to launch a new Canada Housing Infrastructure Fund. One billion of this is earmarked for municipalities, with the other $5 billion going to provinces, if they play nice with the federal government’s “key actions” to accelerate housing, like allowing fourplexes, implementing a three-year freeze on development charges and allowing pre-approval of their upcoming Housing Design Catalogue.
Small businesses will benefit from incentives intended to stimulate growth, and industries like real estate and companies involved in the EV supply chain have a few boons in Budget 2024. In a forward-looking move, the government wants to financially help innovative industries like artificial intelligence (AI) with a monumental increase in targeted AI support of $2.4 billion. There’s also a plethora of scientific research funds being doled out for big-ticket science programs, academics and post-grads. CSIS also gets $655.7 million over eight years to enhance its non-AI capabilities.
“An unprecedented 8,000 of our members shared their priorities for the 2024 federal budget, and our volunteers did a fantastic job communicating those priorities during the budget consultations,” concludes Pizzino. “There are some promises and concerns in this year’s budget for older persons and for members of Federal Retirees. Our work is cut out for us -- we will be here to ensure older persons’ and veterans' interests are represented in the policies that flow from here.”