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Despite record low unemployment and relatively strong economic fundamentals, pocketbook issues still dominate voter concerns. The Liberal government’s pre-election budget seeks to ease these economic anxieties by addressing cost of living issues with new measures impacting a wide swath of key voter demographics. The government is wagering that these groups will make up a winning electoral coalition come October:

  • Millennials: Greater housing affordability via the First Time Homebuyer Incentive, making up to $1.25 billion over three years available to fund new shared equity mortgages.
  • Students: Lowering the interest rate for Canada Student Loan repayment to the prime lending rate and creating 84,000 new student work placements.
  • Rural Canadians: $5-6 billion over 10 years to secure broadband internet for 95% of Canadian homes by 2026 and 100% by 2030.
  • Low-income seniors: $1.76 billion over four years to reduce the clawback of the Guaranteed Income Supplement for seniors who earn employment income, starting in 2020.
  • Workers: The new Canada Training Benefit, a personalized training account that will grow by $250 annually and up to $5000 to support the cost of job skills upgrading, and a new Employment Insurance Training Support Benefit to cover the living expenses of four weeks of training every four years.
  • Climate conscious voters: A new Zero Emission Vehicle (ZEV) incentive of up to $5000 for electric battery or hydrogen fuel cell vehicles costing under $45,000 MSRP, as well as a full tax write-off of up to $55,000 plus tax for each ZEV purchased by businesses. The government also committed to work with automakers to help ensure they meet voluntary ZEV targets.

In addition to these measures, here are some of the budget initiatives that caught our attention:

Climate Change

With the two main parties on track to make carbon pricing a key ballot box question, the Liberals used the budget to fend off Conservative critiques that the government’s plan to price carbon will increase electricity bills.

The budget includes an immediate $1 billion investment in 2018-19 to support energy efficiency in the residential, commercial and multi-unit buildings. This includes $183 million in seed funding for Low Carbon Cities Canada, modeled on Toronto’s successful Atmospheric Fund, to demonstrate, de-risk and commercialize local low-carbon solutions in seven urban regions across Canada. The government is providing additional funding for the Federation of Canadian Municipalities to deliver this program to all cities across Canada.

The government also called out the Canada Infrastructure Bank’s existing $5 billion green infrastructure fund, with a focus on improving transmission of clean electricity between provincial and territorial energy grids.

Pharmacare

The government used the budget to help lay the foundation for national pharmacare, but stopped short of allocating funding for a full national program. The budget funded the creation of a new Canadian Drug Agency to negotiate lower drug prices, targeting a hefty $3 billion in annual savings, and to develop a national drug formulary to serve as the basis of national pharmacare coverage. The government will need to walk a fine line, as overly deep cuts to drug spending may delay the introduction of new medicines to Canada and harm Canada’s attractiveness as a destination for life science research investment.

The government also committed $1 billion in 2022-24 at the end of the next mandate to improve access to high-cost drugs for patients with rare diseases – a measure that looks like an incentive to encourage provincial governments to participate in a future national pharmacare program.

First Nations

The budget dedicates a full chapter in the budget and $4.7 billion in new investments over five years to advance Indigenous reconciliation. This includes $1.3 billion to forgive loans to allow for comprehensive land claim negotiations, $1.2 billion to implement Jordan’s Principle for Indigenous child services, $739 million to eliminate boil water advisories, and $259 million to improve emergency response on reserve (including wildfire evacuation).

Rental Housing

The government is providing an additional $10 billion over nine years through the Rental Housing Construction Initiative, for low-cost loans to build 42,500 new units for low to middle income renters, targeted to areas of low rental supply.

Women & girls

The Liberals are building on on their support for gender equality through an additional $160 million over five years in the Women’s Program, to better support the sustainability of women’s organizations and equality-seeking groups, with a particular focus on vulnerable women.

The opioid crisis

The budget provides an additional $30.5 million over five years to combat the opioid crisis, with support for targeted measures to address persistent gaps in harm reduction and treatment, including protecting people with problematic opioid use from the risks of overdose and death.

In particular, the government committed to support better access to opioid overdose response training and to Naloxone – a life-saving medication that can stop or reverse an opioid overdose – in underserved communities.

Visible minorities

The government invested $45 million to create a new Anti-Racism Strategy and Secretariat, which has taken on new importance following last week’s horrific events in Christchurch, New Zealand, sparking renewed fears about white nationalist terrorism in Canada.

The red ink

New spending in budget 2019 is based on stronger than forecast economic growth, resulting in an estimated $38.1 billion windfall over the next four years relative to last year’s budget.

The Liberals continue to believe that voters will not demand a balanced budget at the polls. The deficit is projected to decline from $19.8 billion in 2019–20 to $9.8 billion by 2023–24, with a budgetary revenues projected to grow faster than expenses and a projected continuous decline in the federal debt-to-GDP ratio from 31% to 28% over the same time frame.

Political impact

The Liberal government is hoping that this budget will put the SNC Lavalin/Jody Wilson Raybould saga in the rear view mirror. The surest sign was yesterday’s pre-budget news dump, where in the span of a few hours, embattled Privy Council Clerk Michael Wernick announced his retirement, the Liberal majority on the Justice committee wrote a letter outlining their rationale for ending hearings, and former Liberal cabinet minister Anne McLellan was appointed to advise on the future role of the Attorney General and Minister of Justice.

While opposition parties and the media will try to keep the scandal alive, the government will use this budget to campaign through the summer in a bid to show voters that they care about the issues that truly matter to them. Expect new policies to predominate after the September writ drop, when the party platforms will take centre stage.

 

For more information:

Sheamus Murphy

VP Federal Advocacy

smurphy@counselpa.com

613-323-7607