Budget 2016: Significant Progress, Glaring Omissions

Budget 2016:

“Growing the Middle Class” is the title of the first budget presented by Canada’s new federal government. The Liberals hope that citizens will find “sunny ways” inside these pages – and in several ways we should. But this budget also raises some important, longer-term challenges for Canadians.

Below, you can read how the budget responded – and could have responded better - to our neighbours living in poverty, to the need for environmental justice, and to refugee rights.

Poverty in Canada

Canada Child Benefit: CPJ is pleased that the 2016 Federal Budget is following through on the federal government’s commitment to launch the Canada Child Benefit in July 2016. The CCB will offer a progressively distributed, non-taxable benefit, with a maximum benefit of $6,400 a year for each child six and under, $5,400 for each child six to 17.

Housing: CPJ is also pleased to see an investment in affordable housing of $2.3 billion over two years, with a commitment to consult in the coming year with stakeholders to develop a National Housing Strategy. However, we hoped to see a more substantial funding commitment to address urgent affordable housing needs.

Employment Insurance: We are glad to see commitments to employment insurance reform so that fewer insurable work hours (420-700 hours) are required for eligibility. What's more, benefit weeks are extended in 12 certain regions (extra five weeks to a maximum of 50). However, we are concerned about the regional restrictions of the benefit extensions, as the impacts of unemployment are being experienced significantly by people across the country.

Guaranteed Income Supplement: The government has also increased the guaranteed income supplement top-up benefit for single seniors by up to $947 annually for those most vulnerable. This will provide improved income security for seniors who are increasingly struggling with the rising cost of living.

Indigenous Peoples: We are very pleased to see that the government has committed to investing $8.3 billion over five year in Indigenous communities through funding for education and training, as well as funding to address immediate housing needs and improving water quality.

The government has also committed to expanding the Nutrition North program by investing $64.5 million over five years to ensure nutritious food reaches northern communities. We hope that the program will also be improved so that it is more effective in reaching this goal.

National Anti-Poverty PlanWe had hoped, however, that the budget would include plans for the development and implementation of the Canadian Poverty Reduction Strategy, which the government committed to in the Prime Minister’s mandate letter to Jean-Yves Duclos, Minister of Families, Children and Social Development. CPJ recommended in our pre-budget submission that Budget 2016 include the commitment by the federal government to initiate the process for developing a national anti-poverty plan that would be comprehensive in scope, would be legislated, and would include funding allocations. We hope that the federal government will move forward this year with a consultation process for a Canadian Poverty Reduction Strategy, so that it can proceed with funding commitments in the next budget. The 4.9 million people in Canada living in poverty need the government to act.

Climate Justice

Canada’s Liberal government made good on its commitment to taking an integrated approach to both the economy and the environment, including a full chapter on “A Clean Growth Economy,” in Budget 2016. This refreshing approach to addressing the realities of climate change in the context of economic well-being offers hope for a better future. Yet it leaves many questions unanswered.

Meeting our Climate Goal: In CPJ’s pre-budget submission, we called for the implementation of measures consistent with Canada’s climate change goal of limiting global warming to 1.5 C over pre-industrial levels. Specifically, CPJ recommended the immediate elimination of federal subsidies to the fossil fuel industry, the introduction of a harmonized carbon tax, and investments in a green economy.

While Budget 2016 acknowledged Canada’s Paris commitments and included preliminary funding to support the development of “the Pan-Canadian Framework on Clean Growth and Climate Change,” ($36 million in 2016 to a total of $109.1 million over five years), two key factors fall short:

  1. Fossil fuel subsidies. On the question of subsidizing the oil and gas industries, the federal government held to its election platform commitment, reiterating a commitment to eliminate these subsidies over the “medium-term,” but doing nothing now.
  1. Putting a price on carbon. Budget 2016 includes a clear indication that a carbon price is forthcoming, and will be identified as part of the pending framework, but gives no indication of what form this price might take, or the potential revenue it would generate for federal coffers.

Clean Economy: Budget 2016 offers important recognition that Canada’s transition to a clean economy needs to be grounded in science, strong policy, and regulation. It also makes significant strides in investments in green technology and electricity infrastructure, and reiterates a strong starting point ($2.65 billion by 2020) for international climate financing. At the same time, it includes new investments in “cleaner oil and gas” ($5 million), which need to be eliminated and replaced with strong regulation of the fossil fuel sector.

Going forward, the federal government must follow-through on stated commitments. It must offer clear, strong leadership in the development of a carbon price that is consistent across the country and rises predictably over time. And, it must deliver on the much more significant commitments to addressing climate change identified for 2017-2018 and into the future.

Refugee Rights

Syrian Refugees: Refugees, especially those from Syria, have been at the front of the government’s agenda since the moment the Liberals stepped into office. CPJ is happy to see that the federal budget has pledged $245 million over five years to resettle an additional 10,000 government-assisted Syrian refugees by the end of 2016. The government’s target to welcome 300,000 new permanent residents in 2016 will also mean that more refugee families will be reunited.

Loan Repayment: The funding provided for the additional 10,000 Syrian refugees will go towards overseas processing and transportation costs, which means a lesser loan burden for these incoming refugees. CPJ would like to see the government provide loan relief for all future refugees, not just those from Syria.

Refugee Resettlement: The government’s focus has moved to family reunification and refugee resettlement. It is welcome news that the Budget 2016 has proposed an additional $25 million in 2016-17 to target backlog and to reduce application processing times. Private sponsorship groups rely on the government to process their applications and those of their sponsored families. Hopefully, these additional funds will reduce wait times so that families can quickly be brought together in Canada.

The budget promises $56 million over the next three years to increase settlement programs for new permanent residents – including refugees. These programs will include language courses and skills training, which will help refugees transition into Canadian society – and flourish.

Finding the Revenue

The almost $30 billion 2016 federal deficit does not scare most independent economic analysts – interest rates are at historic lows today, Canada’s debt-to-GDP ratio is smaller than any other G7 country, and Canadians voted for a Liberal Party that ran on a platform of deficit spending in order to address many outstanding societal needs. However, the government also announced that $120 billion will be spent in infrastructure over the next decade, while cutting taxes 1.5% for middle class tax filers and promising that the country’s debt-to-GDP ratio by the end of their mandate will be lower than it is today. Can all this be done?

Over the long term, deficit spending can be useful, or can give us reason to pause. Spending should be directed to productive purposes in aid of the common good, should create more societal equality, and not jeopardize life possibilities of future generations. With spending due to rise, Canada’s ability to pay for the type of society we need must also be enhanced. Unless future budgets find the revenue to pay for social benefits, the only other option is for governments to revert to often painful spending cuts.  There was no indication in “Growing the Middle Class” as to how our government will face this revenue challenge over the medium term. And yet, for the good of all, it is a challenge we must address.


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