Trudeau Government Puts Forward First Budget

Cameron Soltys - 3A Mechanical
Posted on: April 4, 2016

The Trudeau government introduced its first budget to the House of Commons on March 22. Keeping with their campaign platform of “A New Plan For A Strong Middle Class,” (a platform first unveiled at Laurier on October 5, 2015), the budget is titled Growing the Middle Class, which is proudly displayed in slanted letters on the front of the document.

In the speech he gave to accompany the budget, Finance Minister Bill Morneau keep the same theme strong. He harkened back to the Great Depression and World War Two, after which “Canadians believed the future could be brighter.” Morneau supported this claim with essentially a description of the American Dream; middle-class Canadians could expect to buy a house and car, send their children to college, retire decently, and expect their kids to live an even better life than them.

Morneau went on to contrast that optimism with the current economic conditions, in which older Canadians didn’t feel secure in their futures, in which young Canadians didn’t feel that they could get the best education due to rising tuition costs and a job market where continuous long-term employment was not guaranteed. This budget is to restore that optimism by improving the economic conditions for the middle class, thereby growing the economy for everyone.

The Introduction

The budget itself is a 200-page behemoth, as one might expect for a document that will largely dictate the policy of the government for the next one to five years. While it touches on many things, some items of interest do pop out.

For instance, in the introduction of the budget there is specific mention of how “paying for the basics is sometimes tough,” a possible allusion to the basic income that the government had previously said it wanted to explore. (See “Liberal Government to Explore Basic Income”, The Iron Warrior vol. 37 i 4, pg. 11) However, no money was budgeted for the proposed exploration.

The introduction also notes that the number of working Canadians is expected to go down, as the number of people 65-and-over is for the first time larger than the 14-and-under group. It suggests that this budget will help to prepare Canada for the drastic oncoming demographic changes. In another section, an emphasis on growing trade relations with Asia is described, pointing out that Asia is expected to remain the large-growth sector of the global economy over the medium term.

The introduction wraps up with the suggestion that Canada should look to plan for the future by accruing government debt to invest in their ambitious projects.  In its words, the low debt-to-GDP ratio of Canada (the lowest of the G7 nations) gives it the flexibility “to make strategic investments now that will grow the economy well into the future.” Further justification for this proposal is given by the fact that the Canadian Government currently has extremely low interest on its debt.

Indigenous Peoples

With the recent publicity of the suicide crisis in Aboriginal communities (“State of Emergency Declared…”, The Iron Warrior vol. 37 i 4, pg. 12) and the continuing efforts of the “Silent No More” campaign to raise awareness about the epidemic of missing and murdered Indigenous women, the state of Indigenous peoples is a central topic in Canadian Politics. The Liberal budget proposes $8.4 billion in investment in Aboriginal communities over five years to help bring their services to the standards of other Canadians. While $1.8 billion of this money is allocated for the fifth year, after the next federal election, this part of the budget has gotten some high praise. Assembly of First Nations National Chief Perry Bellegarde said “It’s way better than Kelowna,” referencing a $5 billion dollar 10-year deal proposed by the then-governing Liberals in 2005 and not implemented by the Conservatives who have been in power since.

One item in this part of the budget is $40 million over two years for a national inquiry into the aforementioned missing and murdered aboriginal women. This is yet another in a string of inquiries that have taken place, including one funded by private citizens published last year.

Some people critique the Indigenous Peoples budget as not doing enough. For instance, Cindy Blackstock, president of the First Nations Child and Family Caring Society, says that she is disappointed that the budget for welfare is going up only $71 million, given that a $109 million shortfall in welfare services to aboriginals versus the rest of Canada was identified in 2012. Similarly, Sheila North Wilson, Grand Chief of the northern Manitoba First Nations, claims that her communities need $2 billion in housing infrastructure investment alone.

Helping Young Canadians Succeed

In keeping with one of the themes that were used to introduce the budget, the government have put forward new initiatives that they hope will help students and young adults deal with rising tuition costs and lack of job security. For one, they have increased Canada Student Grants by 50%, meaning that students may now be eligible for $800 to $3000 in aid depending on their financial status. Another proposal will raise the salary that a student must obtain before they are forced to pay back their student loans from $20 210 per year to $25 000.

A more interesting proposal, designed to encourage students to take on part time or coop jobs, is to neglect a student’s personal income when considering financial aid. Instead, it will be assumed that all students have the ability to pay for some amount of their tuition (an amount that has been left unspecified), and financial aid will be calculated based on the remaining tuition. The hope is that this change will make coop programs and part time jobs, that give useful work experience, more attractive.

Another change proposed by this budget is the removal of the education tax credit and textbook tax credit. Both of these credits are currently awarded to all students based on their full- or part-time enrollment in school. Two arguments are given for the removal of these credits: firstly, the credits are not targeted based on income, and therefore do not help those that need it most; and secondly, the credit comes at tax time, not when it is needed.

A final proposal that is of particular interest to coop students is that of a $73 million initiative over 4 years to support collaborations between employers and post-secondary institutions to cater what is being taught to the needs of industry. This proposal would, among other things, support coop placements.

What Happens Now

The budget must now be voted on by the House of Commons. Since the failure of a budget is seen as a vote of no-confidence, forcing a re-election, the members of the Liberal party will be expected to maintain party discipline and vote for the budget. In governments where the ruling party has a minority, they generally have to make major concessions to convince an opposition party or member of parliament to support the budget. Given that the Liberals have a comfortable majority that is unlikely to be necessary for this budget.