Who cares? It is not an unreasonable question to ask about the relevance of Budget 2024. With so many of the measures already announced and its rollout effectively being run as a series of Liberal campaign promises, a little skepticism is in order. But, regardless of the Trudeau government’s weak public opinion numbers, there are measures in the budget and things not done that will impact your reality.
Here is how. Barring exceptional circumstances and an unlikely NDP retreat from their supply and confidence agreement with the Liberals, the budget will pass and many of the initiatives announced will take hold. Read the fine print, of course, to see when, and for how much. But with no election expected until mid 2025 or later, this budget (designed to win back Liberal support) will have a pronounced policy footprint. It will impact you. The question is, do Canadians have sufficient confidence left in this government’s ability to deliver for it to improve their polling numbers.
Housing is the hottest ticket and biggest expense item in this year’s federal budget. The federal housing plan is the main highlight of the Liberal government’s latest efforts to address the affordability crisis being faced by many Canadians. In particular, Millennials and Gen Z who may be struggling to pay rent, let alone purchase a home. The budget commits to narrowing the housing gap by building nearly four million homes by 2031 with the support of major tax incentives for home building.
The prime minister’s bold parlay into provincial jurisdiction was amplified in Budget 2024, which placed significant emphasis on policies outside the federal government’s purview. Despite resistance from premiers, especially on the carbon tax, Trudeau continues to stand firm, challenging provinces to come up with an effective alternative. Trudeau has now upped the ante with major dollars for housing, infrastructure, and a new national school food program. The Liberals are daring provinces to say “no” to considerable federal cash on the table. The question is: can federal money reconcile the issues between the prime minister and the premiers?
With over $39B in spending announced pre-budget ($17B loan-based and $21B hitting the bottom line), all eyes were on the Liberals’ plan to pay for their new programs. The government used media leaks yesterday to flag that any new tax measures would fall on the wealthiest Canadians and corporations. This drew the ire of many economic observers who warned that it would stifle growth, business investment, and harm Canada’s competitiveness. Increases to the capital gains tax and modernizing the Alternative Minimum Tax are just some of the measures to increase revenue for new programs. Liberal strategists likely saw this as an opportunity for budget day coverage to focus on populist tax increases that may be less likely to face backlash from voters. While this approach might serve as a typical political wedge with the opposition Conservatives, don’t expect Poilievre to deviate from branding the government as tax-and-spend Liberals.
Trudeau had a tightrope to walk when it came to defence spending in this year’s budget. A rise in geo-political tensions, as well as the threat of a more isolationist U.S., has Canada’s NATO allies calling for increased defence spending. At the same time, the government has an overwhelming number of domestic issues that require significant capital. Budget 2024 has attempted to shoot straight down the middle, with the government proposing modest short term defence spending increases that still leaves Canada shy of NATO’s target of two percent of GDP.
Consultations with researchers and the tech industry on the new AI Compute Access Fund will determine how the $2B in AI computing infrastructure will be used. AI academics had asked for a $1B investment in public supercomputers to keep pace with other countries and private investment in this space. The consultation may serve as an opportunity for industry to address thorny issues with the government around the Digital Charter and the Artificial Intelligence Data Act (AIDA), which have been debated in the House since the Fall.
The Liberals are trying to win back Millennials and Generation Z with Budget 2024, employing the frame of fairness for every generation in pre-budget announcements. According to the latest Abacus poll, the Conservatives are now leading by 19 points among 18 to 29 year olds, and by 20 points among Millennials. Those numbers are a far cry from the wave of youth support that helped bring the Trudeau Liberals to power in 2015. Budget 2024 measures to support renters, make home-ownership more attainable, and investments in a more innovative, tech-driven economy are all designed to appeal to these voters. Expect the NDP, who also have their sights set on courting back the youth vote, to claim credit for many of these initiatives and trumpet recent wins including the establishment of a national school food program and steps towards national pharmacare.
The budget speech comes with a ways and means motion which gives Parliament four days to debate its contents. That is followed by a confidence vote.
The government will advance legislative items by tabling omnibus budget implementation acts. The Liberals will want to be strategic in their priorities for the first budget bill, if they hope to pass before the summer break.
After a second reading vote in both the House and the Senate, the budget bill is referred to the finance committee to hear from officials and stakeholders. This is an opportunity for them to consider amendments to the bill.
House and Senate finance committees can engage in pre-studies of the budget bill before it’s referred. They can also split the bill so it can be studied in other committees.
A draft version of the budget bill will be available in advance of official tabling.
The government will likely table a second budget implementation act targeted for Royal Assent in the fall. The finance minister will also spend the summer and fall preparing for the Fall Economic Statement. This is an opportunity to course correct on budget policy, if necessary.
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