OTTAWA—If there is one overarching theme to the 2018 federal budget introduced last week by Finance Minister Bill Morneau, it is gender equality (gender is mentioned a whopping 348 times in this year’s budget), but this budget, which provides significant new spending initiatives for Indigenous peoples, families and workers also steps back from balancing the budget, leaving a projected $17.8 billion deficit on the ledger.
“We’ve put gender equality at the centre of government decision-making because it will ensure we boost economic growth for all Canadians,” said Minister Morneau during an online discussion of the budget on Monday.
“Even though the government says that their budget is aimed at improving gender equality, the measures in the budget leave many questions about how this goal could be achieved with what is indicated in the budget,” countered Algoma-Manitoulin-Kapuskasing MP Carol Hughes. “Basically, the 2018 budget is not a budget that reads as it is written and it is very short on the details.”
Ms. Hughes went on to say that although the government “refers to women between 600 to 700 times in the budget, it isn’t investing one dollar in pay equity in the public service, but rather says that it will eventually put in place legislation to force employers, subject to federal regulation, to respect the principle of pay equity.”
Ms. Hughes does say that the five-week leave for the second parent announced in the budget “is good news,” adding that “the Quebec experience has shown that this measure is effective and it is something that the NDP had been pushing for. However, there seems to be a missed opportunity to expand access to parental leave benefits given that too many parents are not eligible. Many people in precarious jobs will not be able to benefit from the measures in the budget because they will be unable to meet the required threshold—at least one third of women still cannot access Employment Insurance (EI) benefits.”
The government is proposing $1.2 billion over five years to create a new five-week “use-it-or-lose-it” incentive for new fathers to take parental leave. The Employment Insurance Parental Sharing Benefit would increase EI parental leave to a maximum of 40 weeks in cases where the second parent agrees to take at least five weeks off. The benefit covers 55 percent of the second parent’s income for as much as 12 months. In cases where families have opted for the extended parental leave of 18 months, the second parent would be able to take as much as eight weeks of additional parental leave, paid out at 33 per cent of their income. The benefit would also be offered to adoptive and same-sex couples and will be made available starting in June 2019.
Also on the EI front, the budget proposes $90 million over three years to ensure that claimants “continue to receive timely and accurate benefit payments,” plus another $127.7 million over the same period to improve EI call centre accessibility.
The government is also looking to increase the take-home pay of low-income workers through a revamped tax credit through something called the Canada Workers Benefit, to take effect in 2019. It is presented by the government as a “more generous” and “more accessible” version of the Working Income Tax Benefit. Under the proposal, maximum benefits are to increase, as well at the same time as the income level at which the benefit is phased out is to rise. Under this proposal, for example, a single parent or couple earning $25,000 a year could receive as much as $717 more from the program in 2019 than in 2018.
Funding for Indigenous issues was also a big winner in this budget. The government is proposing to invest $447 million over five years to create a new Indigenous Skills and Employment Training Program. The program will replace the Aboriginal Skills and Employment Training Strategy and aims to help close the employment and pay gap between Indigenous and non-Indigenous people by focusing on training for higher quality and better-paying jobs.
The budget also proposes more than $1.4 billion over six years for First Nations child and family services to help alleviate pressures on child and family services agencies and increase prevention resources in First Nations communities so families can stay together. Indigenous children under the age of 14 comprise 7.7 percent of all children in Canada but they represent more than half of all children currently in foster care.
The government also announced it will explore ways for news outlets to benefit from non-profit status and announced it would be providing $50 million over five years to one or more non-governmental organizations supporting local journalism in underserved communities—but stopped short of defining the terms and the funding is far less than what some groups had wanted. News Media Canada, an association representing more than 800 outlets across the country, has called for a journalism fund with $350 million of annual funding.
In this matter that is near and dear to the heart of newspapers, Ms. Hughes had little good to say about the announced funding slated to shore up local news. “The 50 million dollars for local media is a step in the right direction, but it is not nearly enough to make a real difference,” she said. “Ten million dollars per year for the whole country is unlikely to reverse current trends in the industry that employs thousands of Canadians. The government could have helped print media with the solution put forward by the Fédération Nationale des Communications, namely a 30 percent tax credit on salaries for Canadian businesses dedicated to written press.”
The 2018 budget is notable for a significant amount of policy pilfering from the NDP, particularly on the issue of pharmacare, something that was anticipated to be a significant plank in the 2019 NDP election platform. But aside from absconding with the headlines, Ms. Hughes is sceptical about the Liberal approach.
Eric Hoskins, who recently resigned his position as Ontario’s health minister, will chair an advisory council to perform an economic assessment and perform consultations on the feasibility of a national pharmacare program. National pharmacare could represent significant savings for both patients and the government. The 2016 Parliamentary Budget Office analysis estimated that of the $28.5 billion spent on prescription drugs in 2015, $24.6 billion would be eligible for coverage under the national pharmacare program and that a truly national prescription drug program could cost as much as $20.2 billion. National pharmacare could represent a savings of roughly $4.2 billion annually as governments would have a stronger bargaining power when it comes to price negotiations.
“We welcome the fact that the budget refers to a universal pharmacare plan, which the NDP has been pushing for,” she said. “(But) instead of immediately introducing a universal drug program and helping Canadians who struggle with having to choose between buying food or their prescriptions, the Liberals choose instead to put in place an advisory council which is supposed to explore ways to establish a national drug program by consulting with Canadians.”
Ms. Hughes said that “it should be noted that there is already a parliamentary committee which has already been working on this for the past two years and their findings have yet to be tabled and previous studies have also been done on this. We are left questioning why the government is pre-empting the work of the committee.”
Missing from the budget was the government’s aggressive stance on passive income sheltered within small business corporations, a trial balloon of which was floated earlier this year and immediately shot at by business and health professionals who make use of the lower tax rate on small businesses to grow their retirement and other investments at a faster rate than that normally available to the general public.
Under the revamped proposal, when companies earn between $50,000 and $150,000 in any given year from passive investments a reduced amount of their active business income will be eligible for the small business tax rate. That rate will be set at nine percent in 2019.
Research and innovation are also big winners in this budget, which commits $3.8 billion more to support science over the next five years. A large proportion of these funds be in the physical and life sciences, social sciences and health, and geared toward fundamental research at universities and other institutions. At 25 percent, this represents the largest budget increase to fundamental science in recent history.
More than $600 million of the new science funding go toward the government’s own laboratories and will help build bridges between federal scientific activities across departments—a key aspect identified as important to leveraging modern research efforts.
But other groups were more upbeat on the budget, especially environmental organizations which saw a significant boost in focus and dollars in this budget.
“Yesterday was a historic day for nature conservation in Canada,” said Bob Barnett, executive director of the Escarpment Biosphere Conservancy. “The 2018 federal budget, with $1.3 billion dedicated to nature conservation, is tremendous news for nature and the land trusts working hard to protect it. We are extremely pleased with the announcement. So far land trusts in Canada have protected over 250,000 acres (101,000 hectares) of ecologically significant land and with the budget announcement EBC and other land trusts are will be in position to nearly double this amount within the next five years, protecting a potential 200,000 additional acres (81,000 hectares) of critical habitat. Details will emerge, but we hope this with the help of our loyal supporters will allow EBC to complete a number of projects that have been tantalizing us with their importance.” One of those projects highlighted by the Nature Conservancy of Canada (NCC) is the acquisition of more land on Cockburn Island where the NCC has already purchased a significant portion of the land base.
On the pot front, Ottawa will spend an additional $62.5 million on public education campaigns warning of the dangers of drug use and will put an additional $10 million into research, including assessing the impact of legalization on mental health. The new funding for public education is in addition to a previously announced investment of $46 million and will target communities at risk and Indigenous organizations.
The government will spend $191 million over five years to help to defray the cost of NAFTA and World Trade Organization legal challenges related to the ongoing softwood lumber dispute—a number that may prove somewhat inadequate as the drumbeats of an impending trade war grow louder with each passing week.
With an election coming in 2019, this budget has been criticized as being more of a political document than a fiscal blueprint and, with containing new spending and a significant deficit during economic “good times,” irresponsible. But with the Liberal penchant for under-predicting economic performance and projected revenues time will tell.
The bottom line is that it is projected that it will cost $311.3 billion to run Canada in 2018.
