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OTTAWA—The Liberal government has unveiled another free-spending budget that doubles down on a progressive agenda with billions to boost women in the workforce, to back a feminist foreign aid agenda, and improve Indigenous services, along with record support for science and innovation.
The 2018 fiscal blueprint — revealed by federal Finance Minister Bill Morneau on Tuesday — builds on priorities laid out by the Liberals in their previous two budgets. It especially eyes next year’s election with fuzzy promises of goodies to come such as a national pharmacare program — a clear play to steal votes from New Democrats who claim it as their idea.
Entitled “Equality + Growth” it is a fiscal and economic plan that Morneau says will lift workplace barriers to women, Indigenous people and youth and leverage their economic potential.
Topping this year’s priority list is Ottawa’s effort to draw more women in the workforce — and ensure they are paid at the same level as their male counterparts. Morneau called it an “economic no-brainer.”
Overall, the 367-page document proposes $21.5 billion in new spending over the coming five years, up dramatically from last year’s modest budget, which had $5.7 billion in new spending.
What’s not in the budget, once again, is any timeline to balance the books, nor any specific fund to backstop Canadian industries, workers or government revenues in case North American free trade talks collapse.
Morneau said the government will study needs as they arise, but Ottawa intends to stay at the negotiating table as long as it takes to get a new NAFTA deal, while making the case at the negotiating table that this remains a good place for international partners to invest.
Morneau’s budget projects the deficit for the 2017/18 fiscal year will be lower than forecast, coming in at $19.4 billion (half a billion less than projected in the fall). It says annual deficits after that will drop at a faster rate than expected, finally dropping below $10 billion in 2022. That was the magic number that was supposed to be the deficit ceiling, according to their 2015 election platform, which was supposed to lead to balance in 2019/20. This budget plan makes no projection for balance.
“It’s time to start showing some results,” said Conservative Leader Andrew Scheer. “But here’s the sad reality after three years of Justin Trudeau: never has a politician boasted so loudly and spent so much to achieve so little.”
Scheer could not say what cuts he would make to balance the books, saying only his party will present a campaign plan “based on fiscal responsibility.” “I’m pointing out today that Justin Trudeau has failed to keep his promises. He promised that this year’s deficit would only be $6 billion. It is 300 per cent higher than that. This is clearly an irresponsible government.”
Throughout the budget document and his speech to the Commons, Morneau highlighted contributions of women in the workforce, saying they boost family incomes, which means fewer children living in poverty.
But he told the Commons there continue to be “persistent barriers that hold too many women back.”
Those include wage inequality and the demands of caring for children and older parents, which Morneau said disproportionately fall to women.As Prime Minister Justin Trudeau had hinted, the budget unveiled additional parental leave — an extra five weeks of leave for two-parent families who share the leave — making it easier for women to return to work.
The government will introduce pay equity legislation — equal pay for work of equal value — for federally regulated sectors, a move hailed as “long overdue” by Canadian Labour Congress president Hassan Yussuf. Details — such as how much it could cost to achieve pay equity for federal government workers, and whether the law will create an independent pay equity commission — remain sketchy. But Yussuf said the Liberal promise to extend pay equity to federal contractors bidding for jobs worth more than $1 million, along with regulating pay equity in broad influential sectors such as banking, telecommunications and transport is a significant step.
And the budget provided new details on an important measure for poor working families. In the fall update, Morneau had promised a $500 million boost to the Working Income Tax Benefit. That benefit is getting a new name — the Canada Workers Benefit — but more importantly, the government will be paying out a lot more in benefits to a lot more families starting next year.
The budget also opens up the taps on funding for research, pledging almost $4 billion over five years which includes $1.7 billion for granting councils and research institutes, and $1.3 billion for labs, equipment and infrastructure. That builds on the recommendations by a review panel last year led by David Naylor that called for federal investments in fundamental science.
It proposes a $1 billion Nature Fund — half coming from the federal and government and half from private and charitable sectors — for new conservation efforts.
Ottawa is pledging an additional $2.3 billion over five years for foreign aid with most of the funding earmarked to support the Liberals’ recently announced “feminist” international assistance efforts, aid that is focused on helping women and children. It prompted Bono, the lead singer of U2 and co-founder of The ONE Campaign to enthuse: “Oh Canada! Prime Minister Trudeau’s budget — and the smart, women-centered policy that guides it — is leadership in action.”
The budget has a separate chapter titled “Reconciliation” that details almost $5 billion in new funding for Canada’s Indigenous people in the areas of skills development, housing and child and family services.
Other spending measures are a grab bag of wide-ranging initiatives such as cracking down on tax cheats ($90 million), fighting the opioid crisis nationwide ($231 million) and improving the no-fly list ($81.4 million), in part to reduce the number of children unfairly targeted.
And though it signals Ottawa’s interest in a national pharmacare plan, with the appointment of Dr. Eric Hoskins — who stepped down as Ontario’s health minister — to chair an advisory council to recommend options to “move forward” on the issue, it provides no money.
NDP Leader Jagmeet Singh fumed that the cynical move shows the NDP is the original and only real champion of pharmacare. “What the government is proposing is a fantasy. We don’t see even a single dollar of investment in a plan to implement pharmacare,” he told reporters.
At Queen’s Park, Ontario Finance Minister Charles Sousa, who is finalizing his provincial budget to be tabled in late March or early April, praised his federal counterpart for pushing forward on areas of key importance to the province.
But Sousa acknowledged he “was looking for some timelines” on when a national pharmacare program could be launched. Hoskins told the Star he would have a report before spring next year. Observers expect the Liberals to have it ready to dangle before voters for the 2019 election.
For all its claims of taking on big business, the Liberal government gave in to loud protests within the business community, and scales back Morneau’s attempt last year to target passive income sheltered in private corporations.
Morneau ditched what was seen as an overly complex scheme and now plans to allow small businesses to shelter up to $50,000 of passive income untouched within their corporations. The government will instead only start clawing back the benefits of low corporate tax rates in line with how much wealth a business has accumulated as passive income above $50,000.
Combined with a measure to prevent corporations from “sprinkling” income among family members to benefit from lower business tax rates, the more targeted measures will take in $925 million a year when fully implemented. Morneau says more than 90 per cent of that tax take will come from business owners whose household income is in the top 1 per cent.
As for cleaning up messes in its own workplace, the Liberal government confirmed in the budget it will ditch the Phoenix payroll system, which has been a costly failure, and begin development of a new system to pay federal workers.
There is an old-style revenue grab — the Liberals will increase tobacco taxes by hiking the excise duty on a carton of 200 cigarettes by $1 per carton, with corresponding increases on other tobacco products.
In his Commons’ address, Morneau touted the strength of the Canadian economy — exports are up, unemployment is at 5.9 per cent, near its lowest level in years and major sectors are growing. But there are uncertainties, including the likelihood of rising interest rates and the uncertain fate of the North American Free Trade Agreement, which is currently being renegotiated, and Washington’s move to cut corporate taxes.
“We know there are challenges in the immediate term, and we are responding to those challenges,” Morneau said.
